Appraisal of Road Pricing Schemes
TAG Unit 3.12.3

February 2007

Contents

1. Introduction

1. Introduction
1.1 Scope and Background

2. Completing the Appraisal Summary Table
2.1 The AST
2.2 Environment
2.3 Safety
2.4 Economy
2.5 Accessibility
2.6 Integration

3. Supporting Analyses and Other Strands of Appraisal
3.1 The Other Strands of Appraisal
3.2 Distributional and Equity Supporting Analysis
3.3 Affordability and Financial Sustainability
3.4 Practicality and Public Acceptability

4. Value for Money and Decision Making
4.1 Value for Money Guidance
4.2 Value for Money and Decision Making
4.3 Road Pricing in a Package

5. Further Information

6. References

7. Document Provenance

1. Introduction

1.1 Scope and Background

1.1.1 An overview of appraisal issues, including modelling and scheme design issues can be found in Introduction to Modelling and Appraisal for Road Pricing (TAG Unit 2.12). Further detailed guidance for analysts may be found in:

• Designing Efficient Local Road Pricing Schemes (TAG Unit 3.12.1), which provides advice on designing road pricing schemes;
• Modelling for Road Pricing (TAG Unit 3.12.2), which provides advice on the modelling of road pricing schemes; and
• Social and Distributional Impacts of Road Pricing Schemes (TAG Unit 3.12.4) which provides guidance on how to assess the social and distributional impacts of road pricing schemes.

1.1.2 Scheme promoters should also read The Appraisal Process (TAG Unit 2.5) for a comprehensive overview of the appraisal process. One of the key components of that process is the appraisal of options. This TAG Unit provides guidance on the appraisal of transport scheme options that involve elements of road pricing. It assumes that scheme promoters have clearly defined their objectives and/or have clearly identified the transport problems they want to tackle, and have identified a range of possible options to achieve their objectives and to tackle the identified problems.

1.1.3 As explained in Introduction to Modelling and Appraisal for Road Pricing (TAG Unit 2.12) the requirements for the appraisal of road pricing scheme options are not inherently different to those for other major transport scheme options. Much of the Department's guidance on appraisal was written on the assumption that road pricing could be an option to be considered. Nevertheless road pricing options call for some analyses not usually required for conventional scheme options. Consequently guidance on performing these analyses is required.

1.1.4 This TAG unit does not replace the guidance on appraising options included in other TAG units but supplements it. It draws heavily on the existing guidance in outlining the approach that should be followed in appraising road pricing options and provides links to other TAG units where more detailed guidance can be found.

2. Completing the Appraisal Summary Table

2.1 The AST

2.1.1 As explained in The Appraisal Process (TAG Unit 2.5) one of the key elements of the appraisal of options is the Appraisal Summary Table (AST). The AST provides a summary of the impacts of a scheme option against the five Central Government objectives for transport.

2.1.2 It is from the AST that a judgement can be made as to the overall value for money of the option in achieving Central Government's objectives. Section 4 focuses on how the AST can be used to assess value for money.

2.1.3 The AST has been developed to provide a framework for considering all of the potentially significant impacts of transport schemes. The Department feels confident that all of the most significant impacts of road pricing can be accommodated somewhere within the table. However scheme promoters are encouraged to contact the Department if they think their scheme will have significant impacts that cannot be accommodated in the AST.

2.1.4 The methods used to assess the impacts of schemes differ across the five over-arching objectives considered in the AST. Some impacts are assessed qualitatively whilst others are assessed quantitatively, and in some cases using money values. The techniques that are employed to assess different sub-objectives should not be taken to indicate their relative importance for any particular scheme. Promoters are required to follow the Department's guidance in assessing the impacts of their scheme against all of the sub-objectives in the AST.

2.1.5 The remainder of this section briefly describes each of the five central government objectives, highlighting what are likely to be the most significant impacts of road pricing and providing links to other TAG units, where detailed guidance on assessing the impacts of an option can be found. This section also identifies additional analyses that should be performed in assessing the impacts of options involving elements of road pricing, and provides guidance on how they should be performed.

2.2 Environment

2.2.1 All appraisals should follow the guidance given in The Environment Objective (TAG Unit 3.3) in assessing the impacts of an option against the environmental sub-objectives.

2.2.2 It is likely that road pricing schemes will have some significant impacts on the environment objective. Indeed improving the environment may be an objective of the road pricing scheme. The nature of the impacts will be scheme specific and depend on the scheme location and the scheme's impact on traffic levels by location, time of day and the composition of traffic. The environmental impacts of a scheme will also depend on the extent to which road pricing is combined with other non-road pricing measures.

2.2.3 The Feasibility Study of Road Pricing in the UK (DfT, July 2004) highlighted a number of ways in which road pricing could have a beneficial impact on the environment. These included helping to reduce greenhouse gas emissions in line with UK and international climate change targets, contributing to improvements in local air quality and reductions in noise and nuisance by cutting down on congestion. However the report made it clear that the extent to which the impacts are beneficial rather than adverse will depend on the behavioural response to road pricing.

2.2.4 It is important that the impacts of options are considered across all of the environmental sub-objectives and that the impacts are assessed sufficiently early to inform scheme design.

2.3 Safety

2.3.1 All appraisals should follow the guidance given in The Safety Objective (TAG Unit 3.4) in assessing the impacts of an option against the safety sub-objectives.

2.3.2 The impact of road pricing on accidents is likely to be primarily driven by changes in the number of accidents on road. Numbers of road accidents are closely related to the total level of traffic and how it is distributed across road types and by time of day. Therefore as road pricing is likely to have significant impacts on the distribution of road traffic, and to a lesser extent the total level of road traffic, the impact on accidents may be significant. The Feasibility Study of Road Pricing in the UK (DfT, July 2004) highlights the possibility that rerouting could in certain places and at certain times result in an increase in accident levels. The reason for this is that shifts in traffic on to smaller roads, not build to accommodate high levels of traffic, is likely to result in higher accident rates. However it also notes that a well-designed scheme should minimise the incentives to re-route.

2.3.3 Impacts on the security sub-objective are likely to be less significant except where road pricing is combined with investment in public transport.

2.4 Economy

2.4.1 All appraisals should follow the guidance given in The Economy Objective (TAG Unit 3.5) in assessing the impacts of an option against the economy sub-objectives.

2.4.2 In addition to the methods described in The Economy Objective (TAG Unit 3.5) some additional analyses are necessary in assessing the economic impacts of road pricing options. The rest of this sub-section highlights the aspects of the existing guidance that are likely to be most important in the context of road pricing and provides guidance on where additional analyses should be performed.

Public Accounts

2.4.3 The guidance and methods described in The Public Accounts Sub-Objectives (TAG Unit 3.5.1) should be used to assess the impact on the public accounts. The guidance in The Estimation and Treatment of Transport Scheme Costs for Appraisal (TAG Unit 3.5.9) provides more information on the estimation of scheme costs for use in appraisal.

2.4.4 The Public Accounts impact of a scheme is the net cost incurred by central or local government. The net cost of a scheme includes investment and operating costs, any grants or subsidies, and changes in indirect tax and other revenues. Road pricing options could potentially have a significant impact through all of these channels. The Department's standard software package, Transport User Benefit Appraisal or TUBA, should be used to calculate the impact on public accounts. The software estimates public sector provider revenues, changes in indirect tax revenues and, provided the appropriate inputs, the investment and operating costs associated with the scheme in a format that can be input into the Public Accounts tables and ultimately into the AST.

2.4.5 The guidance and methods described in The Transport Economic Efficiency Sub-Objectives (TAG Unit 3.5.2) should be used to assess the impact on consumer and business user benefits, as well as on private sector transport providers.

Business and Consumer Users, and Private Sector Providers

2.4.6 The most significant impacts of road pricing options are likely to be those on transport users. By imposing additional money costs on road users, road pricing is expected to have an impact on the distribution of traffic, and to a lesser extent the total level of traffic, on the road network. This has implications for traffic speeds which in turn affect travel times, vehicle operating costs and travel time reliability. As reliability impacts are treated separately (see below) the net impact on road user benefits is defined here as the sum of the additional money charges, the impacts on travel times and any changes in vehicle operating costs. There will also be impacts on the users of other modes as some road users switch modes. There may also be impacts on public and private sector transport providers. Potentially significant impacts on transport providers include changes in: vehicle operating costs; operator revenues; investment costs; and public sector grant or subsidy.

2.4.7 Where Road Pricing is combined with other demand measures and/or investment in public transport infrastructure and services it will tend to increase modal shift and make the impacts on the users and providers of other modes more significant. The impact on public sector transport providers should be considered as part of the assessment of the public accounts impact.

2.4.8 Introduction to Modelling and Appraisal for Road Pricing (TAG Unit 2.12) highlights that options involving road pricing are likely to have differential impacts on different groups of transport users, largely because the different user groups are willing to trade off different amounts of money for given amounts of time savings. As explained in Modelling Road Pricing (TAG Unit 3.12.2) the department expects these differential impacts to be reflected in behavioural modelling through the use of segmented values of time.

2.4.9 For the purposes of appraisal, time savings should be valued according to the guidance in Values of Time and Vehicle Operating Costs (TAG Unit 3.5.6) Separate values are provided for journeys in the course of work, commuting journeys and other journeys. Values for journeys in the course of work vary by mode but the values of other journey purposes do not. Despite there being empirical evidence that people's willingness to pay for non-work time savings (i.e. values of time) vary according to the income of the traveller and factors relating to journey distance, the values used in routine appraisals do not vary with income and journey distance. The current practise is to use a single 'equity' value to all time savings in non-work time. For more information on this see Value of Time Savings in the UK, Institute for Transport Studies, University of Leeds, 2003.

2.4.10 The Department intends to publish guidance on using segmented values of time in appraisal in due course. In the meantime, and because road pricing is expected to have significantly differential impacts across income groups, the Department expects to see the results of a sensitivity analysis using segmented values of time for all options involving road pricing. The sensitivity analysis should use the same market segmentation and be based on the same values of time as are used in the demand modelling. Guidance on using segmented values of time in modelling road pricing options is provided in the Annex of Modelling Road Pricing (TAG Unit 3.12.2). Please note that whilst perceived values of time should be used in modelling, the values in the market price unit of account should be used in appraisal.

2.4.11 An estimate of user benefits based on segmented values of time should provide a more accurate indication of the value of such benefits in terms of transport economic efficiency (i.e. in the absence of any adjustments for equity) than an estimate based on standard appraisal values. A comparison of the user benefits generated using segmented values of time with those generated using the standard appraisal values indicates the magnitude of the equity adjustment implied by using standard values of time. This is discussed further in section 3 under Social and Distributional Impacts.

2.4.12 As explained in The Transport Economic Efficiency Sub-Objectives (TAG Unit 3.5.2) the Department has prepared standard software to estimate user benefits for all modes, TUBA. The TUBA software is designed to deal with trip, journey time, journey distance and user charge matrices segmented by user classes. User classes are defined according to some combination of journey purpose, person type and vehicle type/submode. It is necessary to define separate user classes for each of the segments modelled. The headline appraisal results can then be obtained by running TUBA using the standard appraisal values of time reported in Values of Time and Vehicle Operating Costs (TAG Unit 3.5.6).

2.4.13 In order to apply segmented values of time it is then necessary to redefine the values of time for each user class by manipulating the economic parameters file. TUBA can then be run using the segmented values of time to derive the results of the sensitivity test. For more details see Transport User Benefit Appraisal User Manual (DfT, 2001).

2.4.14 The results of the two TUBA runs should be used to complete two separate TEE tables. The TEE tables should be clearly labelled and submitted to the department as part of the business case.

Reliability

2.4.15 Road pricing may have a significant impact on the variability of journey times across modes, times and locations. The Department has been researching the appraisal of reliability and plans to update the TAG guidance on journey time variability to reflect current findings. Forthcoming guidance will focus on modelling the impact of interventions on travel time variability and will be developed to provide guidance on valuing travel time variability in due course. Scheme promoters should continue to follow the existing guidance given in The Reliability Sub-Objective (TAG Unit 3.5.7) for the time being. Where reliability improvements are a key scheme objective and considered to be an integral part of the economic benefits, then promoters may wish to discuss the assessment of these benefits with the Department.

Wider Economic Benefits

2.4.16 Transport, Wider Economic Benefits and Impacts on GDP (DfT, July 2005) provides draft guidance on assessing the wider economic benefits of transport. The guidance represents a first step, in many cases, to identify the broad scale of each of these effects. The Department may incorporate these wider economic benefits into transport appraisal in due course.

2.4.17 All potential productivity TIF schemes will be assessed for their contribution to wider economic benefits and GDP. Bidders to the congestion TIF will also be required to assess these wider impacts of their schemes, but here a lower level of detail is expected where impacts are not thought to be an important part of the total costs and benefits of the scheme. All promoters that are bidding for TIF funding are encouraged to discuss the analysis that is required with the Department.

2.5 Accessibility

2.5.1 All appraisals should follow the guidance given in The Accessibility Objective (TAG Unit 3.6) in assessing the impacts of an option against the safety sub-objectives.

2.5.2 The most significant impact of road pricing on the accessibility sub-objective is likely to be the impact on Severance. The Feasibility Study of Road Pricing in the UK (DfT, July 2004) highlights the opportunity for a sensitively designed charging scheme to reduce severance and the detrimental impact it has on beneficial physical activity such as cycling and walking. Equally a badly designed scheme could, by diverting traffic into residential areas, have an adverse impact on severance.

2.5.3 The other two sub-objectives are only likely to be very significant when road pricing is combined with other elements as part of a package. For example where road pricing is combined with investment in the provision of public transport services in an area of low car ownership it is likely to have a significantly beneficial impact on access to the transport system and in terms of increased option values.

2.6 Integration

2.6.1 All appraisals should follow the guidance given in The Integration Objective (TAG Unit 3.7) in assessing the impacts of an option against the Integration sub-objectives.

2.6.2 Of these sub-objectives the third - integration of transport policy with other government policies - is likely to be most significantly affected by road pricing elements of options. Scheme promoters should consider whether the introduction of road pricing will have a significant effect on any Government policy commitments.

2.6.3 The road pricing elements of an option may not have a significant impact on any of the other integration sub-objectives when considered in isolation. However where schemes include other non-road pricing elements the impacts on the sub-objectives may be very significant. For example a scheme combining road pricing with investment in public transport infrastructure may be expected to have a significantly beneficial impact on the transport interchange sub-objective.

3. Supporting Analyses and Other Strands of Appraisal

3.1 The Other Strands of Appraisal

3.1.1 As explained in The Appraisal Process (TAG Unit 2.5) the AST is one of four strands of appraisal. The other three strands include:

• an assessment of the extent to which the local and regional objectives of the study would be achieved; and
• an assessment of the extent to which the problems identified would be ameliorated; and
• supporting analyses of distribution and equity impacts, affordability and financial sustainability, practicality and public acceptability.

3.1.2 These groups of issues are integral to the appraisal of options but do not fit easily within the AST. This is because the AST is designed to assess the impacts of options against the Government's objectives for transport from the point of view of the overall public interest, whereas these additional groups of issues are related to the implications of options on particular groups. Summaries of the results of all four strands of appraisal should be provided to the decision maker alongside any other information relevant to the choice between options.

3.1.3 The Appraisal Process (TAG Unit 2.5) outlines the main issues and provides some guidance on carrying out these assessments. More detailed guidance is provided on preparing the supporting analysis in Supporting Analysis (TAG Unit 3.8). The remainder of this section provides additional guidance on how each of the supporting analyses should be performed for road pricing options.

3.2 Distributional and Equity Supporting Analysis

3.2.1 The Distribution and Equity Supporting Analysis is designed to show how the impacts of transport options (including social impacts) differ for different groups of people. These groups could be defined, for instance, by income, age, ethnicity, socio-economic groups etc. It is particularly important to understand the impacts of a scheme on vulnerable groups within society and to factor such impacts into decision making. The Appraisal Process (TAG Unit 2.5) presents some ideas on the types of distributional analysis that should be performed.

3.2.2 As explained above, in comparison to infrastructural investment, road pricing may have significantly differential impacts on different groups in society. In particular, a badly designed road pricing scheme may result in some significant and undesirable impacts on vulnerable groups. As explained in Designing Efficient Local Road Pricing Schemes (TAG Unit 3.12.1) these should be avoided through careful scheme design or mitigated through other planning and provision of transport services. The Department will expect promoters to use the Distributional and Equity supporting analysis to provide evidence that they have considered distributional impacts and have factored them into their decision making.

3.2.3 Conventional appraisal techniques can provide useful information on the distribution of impacts across different groups in society. For road pricing options, it is likely that the impacts that are most unevenly distributed are those on transport users. As explained in Modelling Road Pricing (TAG Unit 3.12.2) the department expects these differential impacts to be reflected in behavioural modelling through the use of segmentation. The use of segmentation makes it possible to analyse the distribution of user benefits across the defined user segments.

3.2.4 As explained in section 2.4, whilst standard appraisal values of time rather than segmented values of time should be applied to the user benefits for each user segment in deriving the headline appraisal results, the Department also expects promoters to use segmented values of time as part of a sensitivity test. Estimates of user benefits based on segmented values of time provide a more accurate indication of the value of such benefits in terms of transport economic efficiency (i.e. in the absence of any adjustments for equity) than estimates based on standard appraisal values. A comparison of the results generated using segmented values of time with those generated using the standard appraisal values of time helps to highlight the magnitude of the equity adjustment implied by using the standard values.

3.2.5 It is important to note that whilst the use of standard appraisal values can be seen as being equivalent to adjusting the value of time benefits to take account of the distribution of time savings across different groups in society, it is an incomplete approach to reflecting distributional issues in appraisal. In particular no adjustments are made to reflect the distribution of the other elements of user benefits (i.e. user charges, vehicle operating costs, and disruption during construction and maintenance.). A detailed explanation of why this is the case is provided in Value of Time Savings in the UK, Institute for Transport Studies, University of Leeds, 2003^[1]. In order to more fully take account of the distribution of user benefits it is necessary to consider the distribution of all of the elements of user benefits across the user segments used in modelling.

3.2.6 As part of the Distribution and Equity supporting analysis the following table, which illustrates how each of the elements of total user benefits^[2]differs across specific user segments / classes, should be completed for each scheme option. Note that the table should be completed using the user benefit calculations based on the application of segmented values of time. Scheme promoters will wish to consider across which of the user segments to compare user benefits in the table. As a minimum promoters should produce a table to illustrate the distribution of user benefits across segments defined by combinations of mode, journey purpose and income. The information in the table can also be used to produce simple bar graphs to illustrate the relative size of user benefits estimated for different user classes.

* Note all entries in this table should be in £m in 2002 prices and in the market price unit of account.

1: See discussion in section 8.5, pages 79 to 82.
2: The table does not include impacts during the course of construction and maintenance because the standard software used to estimate such impacts is not capable of segmenting user benefits into user classes.

3.2.7 In practise modelling constraints mean that the information that can be derived from conventional appraisal techniques may be too coarse to provide a detailed prediction of the impacts on specific vulnerable groups in society. To complement the coarser information derived from economic models the Department would like local authorities to make use of social research methods. Measuring the Social and Distributional Impacts of Road Pricing Schemes using Social Research (TAG Unit 3.12.4) provides guidance on how social research methods can be used to generate information to feed into the Distribution and Equity Supporting Analysis for road pricing options. The social research will provide additional detail and understanding of the range of social impacts, the different social groups involved and additional explanatory analysis of the impacts.

3.2.8 Ultimately as part of the Distribution and Equity Supporting Analysis the Department will expect the results of the analysis of distributional impacts to be summarised in a report of up to 5 pages. This supporting analysis should include:

• Completed versions of table 1 illustrating how the user benefits are distributed across the non-work income segments, and by journey purpose.
• A brief summary of the package of social research undertaken.
• A summary of key findings from the social research analyses (e.g. what are the key social and distributional impacts that the social research indicates that the scheme is likely to have?).
• A summary of the key findings of any other analysis that has been performed to understand the distributional impacts.
• A summary of how the analyses has been used to inform the scheme design (including design of scheme cordons/boundaries etc, any planned exemptions, planned public transport provision or other mitigation strategies).
• A final summary outlining the overall strategy for dealing with the potentially non beneficial social and distributional impacts of the scheme and how impacts will be monitored before, during and after implementation to ensure they are successfully managed.

3.2.9 Local Authorities are also encouraged to attach supplementary information. This might include outputs from the social research such as maps and social survey/qualitative research report summaries (including details of the research methodology).

3.3 Affordability and Financial Sustainability

3.3.1 The role of the Affordability and Financial Sustainability (AFS) Supporting Analysis is to provide an overall assessment of the likely public expenditure impact to ensure the option under consideration is affordable. The AFS Tables are intended to assist analysts and Departmental assessors in their consideration of affordability and financial sustainability. Detailed guidance on completing the AFS table is provided in Completing the Affordability and Financial Sustainability (AFS) Tables (TAG Unit 3.8.1).

3.4 Practicality and Public Acceptability

3.4.1 The Appraisal Process (TAG Unit 2.5) provides some guidance on performing the Practicality and Public Acceptability Supporting Analysis. Assessments of practicality and public acceptability should be central to the appraisal and design of road pricing options.

3.4.2 The Department is taking steps to develop a better understanding of the issues of practicality and public acceptability that are of importance in appraising road pricing options. For example the Department has commissioned BMRB and Centre of Transport Studies, University of West of England to undertake a detailed research project to get underneath the drivers of attitudes and better understand how any public acceptability issues might be best addressed. The Department is also undertaking work with a view to providing information on the practicality of different road pricing options.

3.4.3 TIF pathfinders will also be provided with guidance in assessing the practicality of alternative road pricing options through the Operational Subgroup of the road pricing Local Liaison Group.

3.4.4 Local areas are encouraged to consult with DfT before embarking on research into public acceptability or considering the practicality of alternative road pricing options.

4. Value for Money and Decision Making

4.1 Value for Money Guidance

4.1.1 The information contained in the AST can be used to assess the overall value for money of individual options in achieving Central Government's transport objectives. Indeed the Department uses ASTs, and other supporting documentation, for schemes submitted for funding to assess their value for money.

4.1.2 The Department has published Guidance on Value for Money (DfT, December 2004) which can be found on the Department website. The guidance is used by all officials putting advice to Ministers. It has been published to encourage and facilitate the assessment of the value for money of different investment choices, by making clear the value for money considerations that will be put to Ministers. We encourage all scheme promoters and their partners/consultants to familiarise themselves with this guidance and build in considerations of value for money into all stages of the scheme development process.

4.1.3 Value for money measures the value of benefits to society per pound of government spending. It includes all the impacts of a scheme under the five Central Government objectives for transport including those that can be counted in monetary terms (which are traditionally described as a Benefit/Cost Ratio) as well as other non-monetised impacts.

4.1.4 Road pricing is an example of a wider group of schemes that rather than imposing a cost on the public sector could raise net revenue. This will be the case if the revenues obtained from pricing are returned to the public accounts and are sufficient to more than offset the initial setup costs and running costs. The annex to the published VfM guidance explains how to proceed in the case of schemes that raise net revenues. The headline is that schemes that raise net revenues can be regarded as high value for money terms if they generate net benefits to society.^[1]

1: The assessment as to whether a scheme generates net benefits to society must consider the value of all benefits and costs, including those that are not currently monetised within appraisal. See the value for money guidance for more details.

4.2 Value for Money and Decision Making

4.2.1 Value for money is an important consideration in deciding between competing options. However there are other considerations that must also be factored into decisions. As explained in section 3 there are a number of other issues that are integral to the choice between options but that do not fit easily into the AST or considerations of value for money. Ministers therefore make funding decisions on the basis of a series of considerations, including:

• Value for money
• Contribution to central government, local and regional objectives
• The amelioration of identified problems
• Practicality / deliverability
• Public acceptability
• Distributional and social impacts
• Affordability and financial sustainability

4.2.2 In developing schemes it is important that as far as possible scheme promoters take decisions on the basis of the same set of considerations as are factored into Ministers' funding decisions.

4.3 Road Pricing in a Package

4.3.1 Road pricing will often be combined with other transport measures as part of a package. Chapter 4 of the COBA Manual provides guidance on how to appraise complementary measures^[1]. This includes guidance on the appraisal of component sections of a package. Key to this approach is 'Exclusion and Isolation' analysis. This form of incremental analysis will provide a check against possible over-provision and ensure the best value for money for the package as a whole. Clearly whilst the package as a whole may be viable an individual element of the package may prove to be neutral to the package or even in competition with other components. The COBA manual focuses on identifying the package that maximises economic benefits. However in performing this analysis the Department will expect promoters to consider the broader range of considerations set out above.

4.3.2 Road pricing is a demand management measure, reducing congestion and levels of traffic at peak times. It can be anticipated that the package of measures associated with road pricing may include components where appraisal methods are less advanced, for example, the provision of 'smarter choices' or changes to the cityscape/townscape. Promoters considering such aspects of a package should contact the Department for further advice.

4.3.3 Road pricing is expected to be an integral part of the majority of packages and schemes put forward for the congestion entry point of the Transport Innovation Fund (TIF). Further information on the operation of the TIF can be found in guidance published by the Department in January 2006. These overall packages are expected to deliver high value for money (a Benefit Cost Ratio of over two). For the overall TIF package the Department would expect to see a high level appraisal. An in-depth assessment will be required for the road pricing scheme as this is expected to be the core part of the package. A number of road pricing options would need to be considered in the business case, to show how the scheme design has been analysed and tested, and as there may need to be some flexibility in the details of a road pricing scheme, as it is developed.

4.3.4 For other major elements of a TIF packages such as new bus prioritisation and service improvements, tram schemes, road schemes, traffic management, or other major components, an incremental analysis will be needed against a base case including road pricing. These elements should be value for money under the incremental assessment and improve the NPV of a scheme. If these elements are poor value for money then it will be necessary to demonstrate why they are integral to the success of the overall scheme, for example in terms of their impact on public acceptability of road pricing or their distributional impacts. There will be some interaction between the appraisal and the scheme design discussed in TAG Unit 3.12.1. For TIF schemes which are to be developed in partnership with the Department, it is expected there will be an on-going discussion with promoters about what will be required for the business case at different decision stages and requirements may be firmed-up as part of a partnership agreement.

1: See Highways Agency DMRB Volume 13 (The COBA Manual) Part 3, Chapter 4.

5. Further Information

The following documents provide information that follows on directly from the key topics covered in this Unit.

6. References

P.J Mackie, M. Wardman, A.S Fowkes, G. Whelan, J Nellthorp and J Bates, Institute for Transport Studies, University of Leeds (2003) Values of Travel Time Savings in the UK.

DfT (December 2004) Guidance on Value for Money, DfT, London.

DfT (2004) Feasibility Study of Road Pricing in the UK, DfT, London.

DfT (July 2005) Transport, Wider Economic Benefits and Impacts on GDP, DfT, London.

DfT (2001).Transport User Benefit Appraisal User Manual.

7. Document Provenance

This Transport Analysis Guidance (TAG) Unit provides new guidance on the topic.

Technical queries and comments on this Unit should be referred to:

Integrated Transport Economic Appraisal (ITEA) Division
Department for Transport
Zone 3/08 Great Minster House
76 Marsham Street
London, SW1P 4DR
E-mail: itea@dft.gsi.gov.uk
Tel: 020 7944 6176
Fax: 020 7944 2198