A fresh look at analysing the impact of transport investment

Research into the wider economic impacts of transport investment has transformed the way transport projects are assessed.

The work of Professor Tony Venables has caused a major shift in the Department for Transport (DFT)’s approach to appraising economic impacts in transport infrastructure. His research has informed a substantial update of the DfT’s ‘Transport Analysis Guidance’ (TAG), which is used by DfT officials, local authorities, transport bodies and private consultancies looking to secure funding for transport projects in the UK.

The benefits of being better connected

Venables’ research explores how transport investment can help raise the productivity of an area by allowing urban employment to grow. 

Traditional cost-benefit techniques applied to transport projects looked at static effects arising from reduction in travel times and costs. In contrast, Venables’ research explores the broader economic benefits that come from transport improvements, such as the boost to employment, productivity and incomes that come from making a place better connected. 

A fresh approach to transport analysis

All transport projects seeking UK government funding need to use the DfT’s ‘Transport Analysis Guidance’ (TAG) to develop their business case and apply for support. The TAG represents best practice in assessing the costs and benefits of transport projects, and sets out guidelines for how to undertake appraisals.

In 2013, the DfT proposed an update of its appraisal framework to take better account of wider economic impacts. Venables, along with co-authors Overman (LSE) and Laird (University of Leeds) were then commissioned to create a new framework that would take this into account, with a view to updating the TAG to incorporate the new approach.

The following year, Venables and co-authors Overman (LSE) and Laird (University of Leeds) published The Transport Investment and Economic Performance report. The report gives policymakers clear guidance on how to extend traditional appraisal methods to account for the wider economic impacts of transport investments, and provides a framework to capture and evaluate these impacts.

Updating best practice

The work went on to inform a major update of the TAG. This was a major shift in the DfT’s analytical strategy and marked a shift towards a better understanding of local context.

The guidance was implemented in May 2018 and is now a central part of the development of transport business cases across the department and beyond.

It has been used for major transport projects including HS2, Crossrail, Northern Powerhouse Rail and West London Orbital.