Unclear how East West Rail provides benefit and aligns with growth plans, watchdog says
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The UK’s independent public spending watchdog has said it is not clear how the East West Rail (EWR) project will provide benefit nor how it aligns with the government’s growth plans.
EWR is a £6-7bn project to build a brand new railway between Oxford and Cambridge, linking up several smaller settlements in between. This is intended to form a crucial part of boosting the Oxford Cambridge Arc, which already supports over 2M jobs and adds £110bn to the annual economy, according to the government. EWR is intended to support up to 1M new homes in the region by 2050.
However, the National Audit Office’s (NAO’s) investigation into the project has found that the link between EWR and economic growth is unclear. This is despite the Department for Transport (DfT) having assessed, in May 2023, that there is a strong strategic need for the project as it will help achieve economic growth in the region as there is currently poor transport connectivity.
NAO’s report explains that the Department of Levelling Up, Housing and Communities (DLUHC) announced, in July 2023, its intention to support the expansion of the city of Cambridge rather than along the EWR route. DLUHC and DfT consulted a week before the announcement but the two Departments are still figuring out how their plans are aligned. This work is expected to be presented ahead of the consultation on the route for EWR’s final section, planned for 2024.
This will also have a bearing on the outline business case for the final stretch of EWR, from Bedford to Camrbidge, which will have to be submitted before the DfT considers whether to grant the project a development consent order.
The benefit-cost ratio (BCR) has fallen to a poor rating over time, the NAO reports. It started at 0.5 in a low housing growth scenario and 1.1 in a high housing growth scenario, but this fell even lower this year when the methodology for and growth assumptions were updated alongside the preferred route announcement. This means the benefit of the project will be significantly less than the amount spent to build it.
However, project promoter EWR Co argues that “not all of the benefits are captured in the conventional BCR”, which the NAO has also acknowledged.
The NAO’s investigation also makes mention of the fact that the first section of EWR will run on diesel trains when it opens and a decision has not yet been made about the power of the line in the long run. It has been estimated to cost £1bn to electrify the entirety of the line, which would add to the up-front costs and impact the BCR. However, it would be less expensive to run. EWR Co is also currently investigating other power options, which it intends to present at statutory consultation in 2024.
The NAO has noted that the DfT is reliant on other government departments and the private sector to deliver the expected benefits of EWR. As seen by the confusion with DLUHC over Cambridge, the alignment between Departments is not optimal. NAO says that the EWR project will require collaboration between DfT, DLUHC, Homes England, local government and HM Treasury to deliver the intended benefits.
The investigation further explains that a number of cross-governance arrangements to plan and deliver growth across the Oxford Cambridge Arc were put in place in spring 2018. These should also have aligned housing and transport policy decisions, but were disbanded in autumn 2021 after the government’s move away from a top-down approach to development in favour of a bottom-up approach, led by local authorities.
Despite the EWR project having been announced in 2017 with the promise of major growth possibilities, the NAO says that work to identify growth opportunities around the new stations on the route is still at an early stage. There was a £15M fund announced in the 2023 Spring Budget to support the setting out of potential to deliver homes, jobs and infrastructure in the region. The NAO says that this work will require collaboration with local partnerships.
Finally, the NAO says that – like most other major infrastructure projects – there needs to be greater engagement with residents about their concerns. The NAO says it spoke to local MPs, councillors, residents and campaign group who believe their concerns have not been adequately addressed.
The conclusion to the NAO’s report states: “EWR represents a £6-7bn investment to support growth in a part of the UK that the government regards as economically important, but it is not yet clear how the benefits of the project will be achieved nor how it aligns to other government plans for growth in the region.
“As with many transport projects, the rationale for EWR does not rest on the strength of the BCR for the project alone – which is poor – but on its wider strategic aim of overcoming constraints to economic growth in the Oxford–Cambridge region. This rationale has underpinned DfT’s decisions to approve and continue with the project to date.
“However, achieving the necessary value from the government’s investment in EWR will require stronger strategic alignment across government. Improved communication and joint working between central government and local bodies are needed to overcome barriers to progress and achieve the goals of the project over the long term.”
NAO’s recommendations for the EWR project are below.
A spokesperson for EWR Co. said: “The NAO report confirms what we set out when we announced the Route – that the case for EWR rests on the economic benefits that a new railway brings in terms of new businesses, jobs and investment, rather than just improved connectivity alone.
“As we’ve said, and as the NAO makes clear, not all of these benefits are captured in the conventional BCR, and therefore it is essential that we work closely with partners in government and locally to make sure these benefits are delivered for the communities that we serve. The report acknowledges that we are already doing so, but also makes clear that more needs to be done. We welcome that – and are committed to working with government to take forward the NAO’s recommendations.”
A government spokesperson said: “We have supported the NAO’s review of EWR and will carefully consider its recommendations.
“EWR will serve as a catalyst for economic growth in the Oxford-Cambridge region, bringing communities closer to job opportunities, and progress is already being made to deliver the first passenger service from Oxford to Bletchley and Milton Keynes by 2025.
“As the NAO report recognises, the region’s huge economic potential is an important factor in the business case for EWR, and we will continue to work closely across government to ensure the full benefits of the rail investment are realised.”
NAO recommendations for EWR
- Through the new East West Rail Economic Growth Board, HM Treasury should lead on establishing a cross-government shared vision for supporting locally led development and growth associated with East West Rail. Through the Board, HM Treasury and relevant departments should facilitate the following.
- Establishing and mapping interdependencies between the various projects linked to development in the Oxford–Cambridge region, with clear ownership and processes for managing the interdependencies.
- Reviewing and, if required, updating the approach to engaging with stakeholders in the region, including how proposals and plans for East West Rail are communicated and explained.
- Setting out the critical success factors for achieving the intended benefits from East West Rail, including ownership and how progress will be monitored. b DfT and DLUHC should build on the new Board to establish effective cross-department governance that complements and bolsters the local stakeholder partnerships being created in the region, to focus on achieving the benefits of East West Rail.
- DfT and DLUHC should work together on bringing forward a shared vision for growth in the Cambridge region, with future investment decisions on East West Rail and development in Cambridge taking account of progress on that vision.
- DfT and EWR Co should ensure that the full business case for East West Rail incorporates a well-advanced plan for economic growth in the local areas impacted, including Cambridge, and that the projects are complementary and strategically aligned. It should include:
- a clear plan for how the vision set out by the East West Rail Economic Growth Board will be achieved;
- how East West Rail will contribute to economic growth in the region; and
- the other projects and investments that DfT and EWR Co expect will need to occur to encourage economic growth, and how these are aligned.
- DfT and EWR Co should assess the options for how to power the trains on the route in the long term, setting out how the options align with DfT’s decarbonisation plans and provide cost-effective solutions.
- EWR Co should continue to revisit its approach to local engagement to ensure the needs of all stakeholders are met, particularly those whose homes and businesses are affected.
- To maintain an affordable programme of work, DfT and EWR Co should reflect on learning from other recent rail projects and assure themselves that they have adequate controls and governance in place to monitor and manage costs
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