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29.10.14

DfT made decisions that ‘lack common sense’ – NAO

The Department for Transport made major rail project decisions that lacked common sense and used unrealistic analysis, according to a new report from the National Audit Office (NAO).

The NAO report, released today, says that the DfT did not query why its original analysis that HS2 would bring £2.40 benefit for every £1 spent was higher than for other projects.

It was only later that the DfT identified that errors meant some benefits had been counted twice and the ratio has now been changed to a benefit of £1.40 for every £1 spent.

A simple ‘sense-check’ would have shown that this was far higher than for other project, according to the report.

The report said the DfT "does not always recognise the limitations of its analysis nor scrutinise outputs to make sure they make sense".

It adds: "This means that its analysis has been open to challenge and, in some cases, decisions have been made using unrealistic analysis."

The report is the result of an NAO review of five major rail projects sponsored by the Department for Transport since 1998: HS1, HS2, the West Coast Main Line upgrade, Thameslink and Crossrail.

Their report said the DfT was “slow to take into account potentially-significant changes to passenger behaviour in its initial economic analysis for HS2”. This included taking account of people working productively on trains rather than dismissing it as wasted time.

But the transport department has subsequently “revised its business case to include new evidence on the value of business travellers' time and has a programme of further research to understand how passenger behaviour has changed now that new technology is available, such as laptops, tablets and internet connections on trains”.

The report went on: “On HS2 there remains uncertainty as to how much private sector contribution the Treasury is seeking and for which elements it would wish others to pay.

“The department needs a better understanding of the wider benefits transport investment brings, through evaluation, to negotiate larger contributions for future programmes.”

According to the NAO programme management capacity and skills need to be developed at the DfT. It pointed out that on the Crossrail scheme the department did not secure all the contributions it initially expected and it might have to contribute an extra £160m.

Mick Cash, general secretary of RMT, said: "Due to the continuing shambles at the DfT, and a chronic shortage of core in-house skills, a whole army of consultants, analysts, accountants and other private operators are making a killing out of essential rail projects that are absolutely key to meeting the continuing surge in demand for rail travel.

"From delays to upgrades and electrification, the chaotic approach to urgent fleet replacement and the general slow progress which make the words 'high speed' sound like a sick joke, Britain's railways have been left in the slow lane while other parts of Europe race ahead."

A Department for Transport spokesperson said: "We welcome the NAO's findings about improvements in our sponsorship of major rail infrastructure programmes as part of our long-term economic plan.

"There are no new findings in this report. Our own checking processes uncovered these errors a number of years ago. We have been completely open about these and included them in the revised economic case for HS2, which is robust."

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