HL Deb 17 March 1980 vol 407 cc140-53

9.10 p.m.

Lord BEAUMONT of WHITLEY rose to ask Her Majesty's Government whether they will set up effective machinery for auditing the second stage of the road planning process, expressed in cost benefit analyses and traffic models for individual schemes. The noble Lord said: My Lords, this appears on the face of it to be a singles match, although there was a moment when I thought that even my opponent might not be appearing on the court in time to pick up his racquet. Let me serve notice that I think it is none the less an important Question. I have given notice to the noble Lord the Minister of the various points that I was going to put to him, not only because I would wish to extend to him the courtesy that he has always extended to me and to others in your Lordships' House, but also because I think it is important that on this particular Question there should be no misunderstanding about the questions being asked or the replies being given.

Although the singles match this evening may merely result in one single slow rally of two shots, nevertheless Iserve notice to the noble Lord and to the Government that should the replies be unsatisfactory this is a matter which in fact must be pursued well beyond that. On the other hand, I have every hope that the replies will prove satisfactory. The Question is about the second stage of the road planning process. The motorway and trunk road construction programme in this country is planned in two stages. The first is what may be called the basic methodology of national trunk road assessment, and it incorporates methods of national traffic predictions. This is now subject to some sort of independent scrutiny, that of the successor to the Leitch Committee, the Standing Advisory Committee on Trunk Road Assessment—SACTRA. I see that our singles match is even more singles, for the noble Lord appears to be lacking any seconds in the wing.

The second stage is the application of that methodology which, combined with other factors involved in the mathematical traffic model and the cost benefit analysis, constitutes a financial, economic, and environmental case for a proposed section of road. I do not have to remind your Lordships that these days, as always, but I think particularly these days, the construction of new sections of road really does need extreme defence, because it is extremely expensive. This is the form in which road proposals come before local public inquiries, and it has been subject to no independent audit or scrutiny whatsoever. This is not through any ill will on the part of the Government or anyone else, but, as I shall goon to point out it is because basically it is a difficult thing to do and there has not been the realisation of the need to do it. I hope tonight to point out the need.

It is difficult to do so because there are only two means whereby such audit and scrutiny can be undertaken: either objectors are rich and skilled enough to employ the necessary expertise, as was the case with the Winchester Joint Action Group in 1976–77; or a statutory or quasi-Government body decides to object and calls on public funds in order to do so, and there is an interesting precedent in that that has been done in the past by bodies other than the Government. In those particular cases the precedents were Haringey Council in the case of the Archway proposals, and the Countryside Commission in the case of the A30 Dartmoor National Park proposals at Okehampton.

Without exception, when the individual models and cost benefit analyses have been subjected to scrutiny, they have been found to be subject to major error and inadequacy, and where that has been done in sufficient depth, they have been found to be characterised by such extent of error that the schemes and orders have had to be either withdrawn or substantially amended, and I will give just some of the evidence to hand. In the Hayle by-pass proposals there was revealed a loss of £650,000 on a discounted construction cost of £4.9 million, as a result of which the orders were amended. As a result of documents being prepared for the district auditor, it was discovered that the Cumnor Hill dual by-pass scheme had been constructed on an error of 40 per cent. in traffic assignment. Haringey Council's objections at Archway resulted in the orders being withdrawn and the inspector saying: From the evidence given, it is clear that there have been changes of sufficient magnitude that would justify the recomputation of the predictions … I am sure that Government would not wish to go ahead with such an expensive scheme unless it is sure that its future traffic usage will justify it.". There the inspector talked of change, but, although there was probably change, there was also error. The orders were withdrawn.

Last October it was discovered that Hampshire County Council's proposal for the Easton Lane linkroad could not even sustain an inquiry, so dubious had been the assignment and modelling process. The inquiry was adjourned until 1980. Major errors were discovered at the Swanley M25 inquiry in both the traffic model—Mr. George Dobry Q.C., the inspector appointed, said,"The differences are staggering "—and in the geological survey work. The money ran out before adqeuate testing could be done.

At the Okehampton A30 inquiry, counsel for the Countryside Commission so undermined the department's model and cost benefit analysis that he invited the inspector to ignore the entire financial and economic evidence, it being without a shred of value. At the Uxbridge M25 inquiry, counsel for a very wealthy objector gained the department's agreement after a mere month's work that a short stretch of an alternative route would give a saving of £5.8 million, a finding totally different of course from that which was being put forward.

Those are merely samples, and I return to the statement that universally they have been found subject to serious error. In order to get a scrutiny of cost benefit analysis, it is important to show that all the rules have been complied with; to establish that all the assumptions for the production of a model are correct; to ensure that no tinkering has taken place, for whatever good motives; to check whether the cost benefit analysis has been fed the right input; to check whether correct use has been made of its output; to check for validation and calibration the exercises on traffic assignment; and check the engineering and geological work. I do not need to tell your Lordships that such a task is immensely complicated and expensive.

No one is casting stones at the Government or at the various bodies concerned for ill-will or for in any way trying to do something which may eventually prove to be wrong. What we are talking about is the difficulty of all these matters and the importance that the difficulties should be understood and explained. For instance, the Leitch Report said—and it was a very valuable step forward in this field, as all your Lordships know: Complicated mathematical models are sometimes necessary, but they can only be of value if they are used with discretion by people who understand them ". The report went on to say: There were certainly several ways in which cost benefit analysis results can be influenced by someone who understands how it works, and the staff at Departmental Headquarters see it as a major part of their work to prevent this happening. Of 80 schemes they have examined in recent months at least 60 have had some major corrections made. That is an error rate of 75 per cent. undetected until that particular stage of the examination.

Elsewhere the report reveals that, out of 3,282 staff employed on the Trunk Road Programme, only eight are classified as economists, statisticians, et cetera. More relevantly, these eight are out-numbered by 2,231 professional and technical staff—for example, engineers and highway planners—which gives a ratio of 278 to one.

Furthermore, from page 6 of the report we learn that these few economists and statisticians are concerned at any one time with supervision of no less than 300 road schemes costing in excess of £1.5 million each. It is virtually impossible to accept that there can be adequate scrutiny by such limited personnel, and indeed all the facts and instances that we have, show that there is not—and no blame to them.

The validity of major road proposals depends very much on what is called traffic assignment. Dr. Outram, the department's principal expert on traffic assignment, admitted at the Swanley inquiry that: our knowledge does not enable us to determine the best assignment method in an urban area ". Work so far done is admitted to be unsatisfactory. Major disagreement exists within the department regarding general traffic assignment. Should it be based on time alone—the amount of time that it takes vehicles to go in one direction or the other—or should it be based on the generalised cost, should it be measured in money? The mind of the department has been changed between 1976 and 1978. One road construction unit uses both methods at different times; some use one method; others use the other. Yet the differences can be startling. Evidence at the Swanley inquiry revealed that the traffic flow at Wrotham doubled when time only was used, as against generalised cost. A measure of the imprecision and uncertainties of the traffic assignment process is a report last year when the AA announced findings under the headline: Motorists desert motorways in their thousands ". That headline must have struck such dismay into the hearts of those who had built those motorways for the motorist.

External scrutiny by Parliament, the Exchequer, and the Audit Department fails for want of time and resources. Internal scrutiny fails for the quite obvious reasons that we all know: that in any organisation for which one works internal harmony is important, and it is not enhanced by civil servants questioning their colleagues' spending plans. I do not want that to be misunderstood in any way. I am not casting any criticism at all on the civil servants concerned. I am merely telling your Lordships what you all know—and it is just one of the universal laws of any particular organisation, whether it be a company, a Civil Service department, or whatever. One always knows that in order to test things to their utmost, one must have outside validation, outside criticism, outside testing.

The Secretary of State and the Department are basically and ultimately on the side of the angels. Command No 7132, Policy for Roads, said: the aim must be to demonstrate that decisions are being taken on the best possible evidence, which should be available to all who have an interest in it.". Command No. 7133, Review of Highway Inquiry Procedure, said: …technical matters must not be immune from rigorous examination by an independent body. The Leitch Committee has already made recommendations on these subjects. The new Standing Advisory Committee, to be chaired by Sir George Leitch which is being set up by the Secretary of State for Transport, will have a continuing responsibility to monitor developments in methods of technical assessment ".

The general principle that is concerned will, again, be accepted, I have little doubt, by everyone in your Lordships' House. It is to do with natural justice. If I may quote Professor Wade in his book on Administrative Law, page 223, he said: The right to know the opposing case. One important requirement of natural justice is that the objector should have the opportunity to know and meet the case against him ". If a case is presented in such a form that it cannot be understood, then no objector can have much prospect of meeting it. The noble and learned Lord, Lord Reid, appeared to have this in mind in the case of Sloan v. General Medical Company in 1970, when, having dealt with the practice in America, he said: …even in our legal system the party concerned must be timely informed of the substance of the case he has to meet, which must be reasonably clearly formulated ". The Leitch Committee appeared to be saying the same thing when they said: The first criterion is that the assessment should be generally comprehensible to the public and should command their respect ". I can have very little doubt that your Lordships would go along with that. Comprehension may be difficult because one is dealing with very difficult facts and figures and with mathematical models, but respect can surely be absolutely demanded; and respect can be earned, I think, only by there being knowledge that not only the people who are party to the decision and not only the advocates of objectors understand the evidence, but that the other side does, too.

There is no doubt whatsoever that the ultimate responsibility is that of the Minister. In the House of Lords' ruling in Bushell, their judgment stated the constitutional principle that policy is the Minister's, that it is executed in his name by the civil servants in his department and that for his decisions, based upon their collective expertise, he is responsible only to Parliament. I am not seeking to challenge that, though it would be an interesting subject for a philosophical debate, but the fact remains that public accountability for the immense sums expended on roads—the GLC alone seeks to spend £1,100 million over the next 15 years—is non-existent. In an age when the Government are subjecting other fields of our national life to the and scrutiny of financial and economic appraisal—and I may say, my Lords, that, though I may quarrel with the way in which they are doing it, I in no way quarrel with the need for it to be done—the need for adequate accountability in road expenditure has never been greater, and, really, nothing is being done about this important second stage.

A leader in the Sunday Times on February 10th, commenting on the Lords' Bushell judgment, said: …the necessary expertise is very unlikely to be on call in Parliament ". We now have a specialist committee on transport. It may be that they will be able to call on greater resources, and it may be that that is the way forward. It certainly would not be for me, or for this House, to comment on the rights and duties of a committee of the other place.

I hope that I have said enough to your Lordships tonight to show that there is an immense gap in making the judgments as to the expenditure of an enormous amount of money in doing things which may affect our townscapes and countryside very strongly and seriously for the future as far as we can see it; and a gap in the process of justice whereby people whose houses, livelihoods, farms and gardens are disturbed by changes cannot yet have confidence that justice has been done. I hope that I have said enough to show that there should not be any difference between the two sides of the House or any of the people involved in this matter. It is merely a question of finding the machinery. That is what I am asking the Government tonight and that is why I beg leave to ask this Unstarred Question.

9.31 p.m.

Lord MOWBRAY and STOURTON

My Lords, I think that the House will be grateful to the noble Lord for asking this Unstarred Question on which so much interest has been aroused over the past few years in the country—interest which has been aroused by anxiety by individuals and by bodies looking after people who they think are not able to look after themselves. There is a problem. We in Government are most anxious that our trunk road proposals and the assumptions and forecasts underlying them are open to full and proper scrutiny. But the arrangements for scrutiny have to be relevant and practicable.

In considering the arguments put forward by the noble Lord, Lord Beaumont, there are two points to be borne in mind: uncertainty, and the way the various elements of scrutiny mesh together. New trunk roads are intended to serve the nation's needs for many years ahead. Taking into account the lengthy design period which precedes their construction, they need to be considered against forecasts of traffic for some 20 to 30 years into the future. These forecasts, by their very nature, must be subject to a considerable degree of uncertainty.

The uncertainties stem from two principal sources. First, the factors influencing the growth of traffic are many and varied and themselves difficult to forecast with accuracy. The growth of national income and the level of oil prices are subject to substantial short-term fluctuations; population trends are notoriously difficult to predict in the long term. Secondly, people are individuals. How they will react to changes in economic circumstances, on the one hand, or to the provision of a specific new road on the other, can only be estimated in total in the light of experience. Our techniques for doing so have been improved over the years, as understanding of the factors influencing traffic growth and the effect of new roads has increased. The Government believe that the techniques now being used are the best currently available, but I agree that it would be foolish to claim that no further improvement is possible in the light of continuing research.

However, my Lords, despite all the uncertainties involved in traffic forecasting and the assessment of the costs and benefits of new road schemes, decisions have to be taken about the level of resources to be allocated to the trunk road programme, the respective priorities of individual schemes within the programme and the standard to which new roads should be built.

These decisions must take account of the uncertanties involved—and this is why the forecasts produced by the Department of Transport are expressed as a range of likely possibilities. In applying this range to individual schemes for design and assessment purposes. the department takes account of the likely consequences if traffic grows at the most unfavourable end of the range so that, for example, the highest forecasts are generally used for assessing the adverse environmental effects of a scheme, while the lowest may be used in the basic calculation of the net economic benefits. But, where the appropriate solution differs depending on whether the high of low forecasts turn out most nearly right, the"cost of being wrong"becomes an important criterion. For example, how would the"lost"cost to building an extra lane, if the lower growth happened, compare with the cost of delays to traffic, disruption and physical improvement later if the high forecast turned out right?

But given all these uncertainties, the proof of the pudding must remain in the eating. How well have the forecasts stood up in"before and after"comparisons? The record varies. For many of the early motorways traffic was clearly underestimated—as those who have suffered on the M5 in Worcestershire or the M1 in Hertfordshire are well aware. For some other schemes, the actual flows are well below the forecasts. The sort of range involved is illustrated in Chapter 16 of the Leitch Report: there is no consistent"bias ", but arrangements now in hand for more regular"before and alter assessments should help ensure that no unintentional bias does develop. But I repeat that I do not accept that forecasts are deliberately or in general misleading.

I now turn to the vaious types of scrutiny to which the traffic forecasts and economic assessments are subject. Underlying all of them are certain basic assumptions and policies: about the future growth of the economy; about the availability of energy and the priorities for its use; about the needs of industry and how they can be met; about whether or not we should direct traffic to use rail rather than road, and so on. The only forum which can properly debate such policies and whether it is sensible to plan on such assumptions is Parliament. The fact that we rarely do so is not the fault of Ministers—of any party. Annual reports and White Papers have provided occasions, rarely taken up. My right honourable friend therefore greatly welcomes the appointment of the new Select Committee in the other House, and its intention to consider the road programme when my right honourable friend's Roads White Paper is available. Perhaps we also might find time then to debate the subject, though I appreciate that we will be hard-pressed during the summer. It is now something like two years since we had a full-blown debate on transport in this House.

The present Government wholly accept the view expressed in the Report of the Review of Highway Inquiry Procedure that: local inquiries are unsuitable for examining technical issues, such as methods of trunk road assessment, which have a national impact. But technical matters must not be immune from rigorous examination by an independent body ". This has been precisely the role of the Advisory Committee on Trunk Road Assessment, which was set up in 1976, under the chairmanship of Sir George Leitch, to review the department's methods of forecasting traffic and appraising trunk road schemes.

The Committee reported in October 1977 and made several useful suggestions for the improvement of traffic forecasting methods, most of which have now been implemented. On cost benefit analysis, the Committee had this to say: In general we believe that COBA "— that is the department's methods of cost benefit analysis— has been competently designed and feel that it has been implemented for the user with considerable skill … and later on, in considering the sensitivity of the cost benefit analysis technique to different inputs: … these are problems to be faced by any evaluation process and we feel that, subject to COBA's basic assumptions being reasonably closely observed, it uses the available information in a constructive and productive manner ". The Committee's successor, the Standing Advisory Committee on Trunk Road Assessment, continues to monitor the department's assessment methods. My right honourable friend the Minister of Transport has already announced his intention to publish their reports on the framework for appraisal and on the regional highway traffic forecasting project, which is aimed at improving forecasting on individual schemes. The Committee is currently considering with the department possible ways of improving the national traffic forecasts.

Lastly, and more directly relevant, comes the scrutiny of the forecasts and cost benefit analyses of individual schemes. For this, the main forum is the public inquiry, though of course the department's headquarters will have already monitored the work of the design team before that stage is reached.

The noble Lord has suggested that the Government should set up machinery for auditing such traffic forecasts and cost benefit analyses. It has been suggested in the past that this would help people in understanding the way in which the department carried out these operations and to test the reliability of the department's figures. The Government accept that it may often be difficult for members of the public to satisfy themselves that the traffic forecasts and economic analyses for individual road schemes are soundly based. As I have said, these techniques have become progressively more sophisticated over the years and, therefore, unfortunately, less easily comprehensible to the layman. I do not think however, than an independent audit would assist people in understanding the way in which these forecasts and analyses are carried out. The"auditors"would themselves have to be experts in the fields of traffic forecasting and economic analysis, and I doubt whether their conclusions would be more readily comprehensible to the layman. The Department of Transport itself—

Lord BEAUMONT of WHITLEY

My Lords, may I intervene to ask whether that is the end of that part of the noble Lord's analysis?

Lord MOWBRAY and STOURTON

Not quite, no, my Lords.

Lord BEAUMONT of WHITLEY

My Lords, in that case, would the noble Lord give way when he has finished that part?

Lord MOWBRAY and STOURTON

My Lords, the noble Lord has got me in some slight difficulty. Let me go hack for a moment. The Department of Transport itself publishes a wide variety of documents explaining, in simple terms, how the methods and techniques work and is always ready, at public inquiries and elsewhere, to explain any points which may be a source of difficulty. This explanation is best left to the originators of road schemes and does not require the setting up of an elaborate auditing mechanism. Moreover, it is difficult to see what an"audit"on the lines suggested by the noble Lord could achieve. In view of the unavoidable uncertainties attached to the assumptions and methods used by the department, the auditors would not be in a position to say whether or not the department's figures were right or wrong—only time will reveal this. They could only say whether or not they agreed with the figures and their view would, of course, be subject to the same reservations and uncertainties as the forecasts themselves.

What is important is that the department explains—as they do—the basis on which they have prepared forecasts and analyses and why, in their view, the traffic forecasts and economic analysis presented in evidence to the inquiry are appropriate to the scheme in its local setting, and represent a reasonable basis on which decisions can be taken. It is open to the department's critics to question this view in cross-examination of the department's witnesses, and to adduce such evidence of their own as they think fit in support of their view. In this way, the department's traffic models and economic analysis are frequently subjected to an exhaustive examination at public inquiries. It is then for the inspector to form his own view on these matters, after consideration of all the evidence placed before him, and to advise the Secretary of State for the Environment and the Minister of Transport accordingly.

Lord BEAUMONT of WHITLEY

My Lords, I am sorry to interrupt the noble Lord, but this really will not do. We are not talking about forecasts being wrong; anyone can be wrong in his forecast. We are talking about a situation where, every single time that a forecast has been challenged by independent people with the proper resources and working with forecasting material, the department's forecasts have been shown to be wrong and have been accepted as wrong by the inspector. This has happened not once or twice out of 10 times, but on every single occasion. In those circumstances, the public has a right to say that there should be a second opinion.

I entirely take the point of the noble Lord—I shall not go on with my intervention, but I must make this one quick point—and, in fact, I said in my speech that not all the public will understand it. But they will understand that a separate independent body has made an examination, and will accept that it has found either differently or the same as the department.

Lord MOWBRAY and STOURTON

My Lords, I am not certain why the noble Lord got up to say that. I do not think it is totally fair, in regard to what I have been saying. If he listens to and digests what I have been saying, I think he will better appreciate what we are trying to do. The Leitch Report is something which the noble Lord cannot just push under the carpet. He may want to push it under the carpet—

Lord BEAUMONT of WHITLEY

I do not, my Lords, I accept it.

Lord MOWBRAY and STOURTON

Good. I am delighted to hear that the noble Lord is willing to accept the Leitch Report. There has been comment made, and I should like to quote from the Leitch Report, which stated: We have received some comment that COBA can be manipulated to give the desired result ". This is getting at the gist of what the noble Lord said and at what people of his ilk—if I may use that term—are worried about, as regards over-building of roads through the countryside. The report went on: There are certainly several ways in which the COBA results can be influenced by someone who understands how it works, and the staff at department headquarters see it as a major part of their work to prevent this happening. Of 80 schemes they have examined in recent months, at least 60 have had some major corrections made. They feel that their considerable experience of scheme scrutiny enables them to identify serious cases of bias. We recommend that this scrutiny should continue ". That is what Leitch says.

This illustrates the way in which all schemes are scrutinised by staff at department headquarters who are independent of the design scheme. The high percentage of cases in which errors have been detected and corrected is indicative of the thoroughness of double checking. I wish only to add that the errors detected at headquarters were of various types, and by no means all of them tended to overestimate the benefits of the schemes concerned.

It has been suggested in the past that only rich objectors who employ consultants or statutory bodies can effectively scrutinise the forecasts and economic assessements. That is not our experience. Detailed and sometimes—though not always — constructive comments on the assumptions and methods used, especially in relation to local circumstances, are made at many inquiries. Certainly such complex matters call for a degree of numeracy, but not genius, while many objections on the grounds of the impact of the precise proposals can be fully considered without examination of these issues.

There are three main types of scrutiny; namely, that by Parliament of the policy and underlying planning assumptions; that by the standing advisory committee of assessment methods; that by objectors at the public inquiry of the local application of those methods. An"audit"of the latter could do no more than provide a second opinion on the methods used, and this the objectors are free to do in the course of the inquiry.

The overriding consideration is that setting up additional machinery to consider these matters would not cast further light on them, but would undoubtedly result in further delay in the provision of urgently needed new roads and give rise to a whole series of practical problems. It is worth remembering that traffic forecasts and economic analyses are not the only factors, or even necessarily the most important ones, to be taken into consideration in deciding whether new roads are needed. New trunk roads are built to solve the pressing problems which face us today. The costs to industry, and the general public, of deficiencies in the trunk road network can be seen today in traffic delays, high accident rates and the problems of the many towns and villages which have not yet been by-passed. Some of these costs can be quantified; others cannot. The Leitch Committee has warned against the dangers of attributing too much importance to the former, at the expense of the latter.

Traffic forecasts and economic analyses are useful aids to decision-taking, especially on the standard to which we should build to provide for the future, where something has to be built to meet present needs. But they cannot provide a formula for deciding whether or not particular roads should be built. This will remain a matter for judgment by Ministers in the light of all the available evidence.