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Roads to Nowhere

Rising costs mean Bexhill-Hastings Link Road is now 'low value for money'

5 August 2013
Department for Transport admits the economic case for the road now depends on ignoring £31 million of the total cost.

Campaigners have accused the Government of allowing East Sussex Council to "perform a financial conjuring trick" to prevent the spiralling cost of the Bexhill Hastings Link Road from affecting its official value for money rating.

The Department for Transport has today revealed that £31 million of the cost of the road was ignored in its recent calculation of value for money because it has already been spent.

Campaign for Better Transport has calculated that, with the full costs included, the benefit-cost ratio (BCR) of the road falls to just 1.3, making it 'low' value for money. With £82 million still scheduled to be spent by East Sussex County Council, local and national campaign groups have called for the project to be cancelled.

The Department for Transport (DfT) released its latest value for money estimate for the Bexhill Hastings Link Road (BHLR) in a letter to campaigners. The documents confirm - as claimed by East Sussex Council when the cost increase was announced last month - that the additional £13 million has not changed the DfT's value for money category of the road, which is officially still 'low/medium' with a ratio between costs and benefits of 1.5.

However, the letter also reveals that the only reason the value for money category didn't change when the costs went up was that DfT procedures mean deducting money already spent from the total cost before making their final calculation. A total of £31 million has been spent on the road so far, and £15 million has been spent on preparation work since the DfT first approved the road. The DfT rules mean that the new spending cancelled out the new costs and so East Sussex can continue to claim a benefit-cost ratio of 1.5 for their road.

Campaign for Better Transport has now taken the figures supplied by the DfT and run the value for money calculation again, as it should have been had the full cost of the road been provided by East Sussex County Council at the time the road was first approved. The new BCR of 1.3 puts the road firmly in the category of 'low' value for money and campaigners say this shows the road should never have been approved for government funding and the council should now cut their losses and cancel it.

Sian Berry from Campaign for Better Transport said:

"By having procedures that ignore money already spent, the Department for Transport has allowed East Sussex County Council to perform a financial conjuring trick. Any realistic review of the decision to fund the road would have to conclude that they have made a huge mistake, that the road is a waste of public money and that the Combe Haven valley should never have been touched. Yet with these rules in place, as long as the council keeps spending money, they could increase the amount they are spending on this road forever."

Andrea Needham from the Combe Haven Defenders said:

"This shows clearly that the Combe Haven is being trashed under false pretences. If East Sussex had been honest about the true cost in the first place, the Department for Transport would not have given them a penny towards their project. It's outrageous that by waiting until the extra costs have been spent on devastating the valley they can profit from this loophole in the calculations. The true figures revealed today show that the work should be stopped immediately. It is not too late to stop the waste of another £82 million scheduled to be poured into this road to nowhere "

Speaking for the Hastings Alliance, Derrick Coffee said:

"The Bexhill Hastings Link Road is shockingly poor value for money. It was ranked as the very worst of the local authority schemes approved by the Department for Transport in 2012 and since then things have got worse. Construction under way is already causing damage to a beautiful valley and faced with deep cuts in public spending, the link road is a shockingly   wasteful way to use funds."

In a local newspaper report, Hastings MP Amber Rudd said of the recent rise in costs: "Of course I hate costs going up but as long as this still represents value for money, that is what is important". [8]

The DfT's own guidelines are clear that only projects with 'high' value (a ratio above 2.0) should be funded, but the Department already agreed to let the BHLR go through with a lower 'low/medium' rating of 1.5. Any project with a ratio below 1.5 falls in the 'low' value for money category and should not be given funding.

ENDS

Further information Campaign for Better Transport Press Office 020 7566 6483 / 07984 773 468

Notes

1. Documents showing the DfT's calculation of the benefit-cost ratio (BCR) for the Bexhill-Hastings Link road were released by the DfT to Andrea Needham of the Combe Haven Defenders and Campaign for Better Transport. The findings and a new calculation of the BCR based on the current cost of the scheme are summarised in this briefing on the Campaign for Better Transport website: http://www.bettertransport.org.uk/files/BCR_calculations_after_cost_increases_Jul2013.pdf

2. In a letter accompanying the calculations, DfT officials explain how the increase in scheme costs has not reduced the value for money estimate by saying:

"It is important to note that it is standard practice in appraisal to exclude 'sunk costs'. These are costs that have already been incurred and are irrevocable and which, under Treasury guidance in The Green Book: Appraisal and Evaluation in Central Government, (section 5.15) should be ignored in an appraisal. This means the costs included in the revised BCR do not include costs already incurred since the scheme was assessed at “Full Approval” stage earlier this year."

Copies of the full DfT letter and documents are available from Campaign for Better Transport on request, with the June 2013 letter and tables published today on the DfT website: https://www.gov.uk/government/publications/value-for-money-of-the-bexhill-hastings-link-road

6. Campaign for Better Transport (www.bettertransport.org.uk) is the UK's leading authority on sustainable transport. We champion transport solutions that improve people's lives and reduce environmental damage. Our campaigns push innovative, practical policies at local and national levels. Campaign for Better Transport Charitable Trust is a registered charity (1101929).

7. Combe Haven Defenders www.combehavendefenders.org.uk contact: 07565 967 250

8. Link Road costs have spiralled by £13 million. Hastings and St Leonards Observer, 12 July 2013. http://www.hastingsobserver.co.uk/news/local/link-road-costs-have-spiralled-by-13-million-1-5277969