Treasury Select Committee Chairman writes to Chris Grayling and Philip Hammond to question economic benefits of runway

Andrew Tyrie, Chairman of the Treasury Committee, wrote to Chris Grayling, Secretary of State for Transport, on 14th September, questioning the economic case for HS2 and airport expansion. Andrew Tyrie says in his letter:  “The economic case to support the conclusions of the Davies report lacks crucial information.” On 27th November 2015, he tabled 15 parliamentary questions on details of the economic justification [all copied below]. These have yet to be answered 10 months later (they just had a standard holding reply from Robert Goodwill).  Andrew Tyrie says: “For the fifth time I am attaching these questions. Failure to answer them will lead people either to conclude that this work has not been done – in which case it would be unacceptable for a decision to be made without the evidence to support it – or that it has been done, and gives answers that do not necessarily support the conclusions of the Davies report. I do not suggest that either of these are the case. The best way to answer these concerns is to public the information immediately. As we discussed, I have written in similar terms to the Chancellor.”  “Without this information, the evidence in support of any decision that the Government takes on airport capacity will be incomplete.” His Parliamentary Questions focus, in particular, on Table 7.1 in the Airport Commission’s Final Report, of July 2015. (Table copied below). Mr Tyrie spoke to Chris Grayling on 15 August 2016.
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HS2 and airport expansion: Committee Chair writes to Transport Secretary

16.9.2016 (Treasury Select Committee website)

Rt Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, has written to Rt. Hon Chris Grayling MP, Secretary of State for Transport, about the economic case for HS2 and airport expansion. Letter from Committee Chair to Transport Secretary regarding airport expansion and HS2, 14 September 2016

The letter says: 
Inline images 1

Chair’s comments

Commenting on the correspondence, Mr Tyrie said:

On HS2

“The economic justification for High Speed 2 is not supported by the evidence so far presented by the Government.In the last Parliament, the Treasury Committee examined the proposals for HS2 and exposed the lack of rigour in the economic case. In particular, the Committee took evidence from KPMG and identified shortcomings in the statistical analysis.The question as to whether it is possible to improve capacity at lower speed and, consequently, at a lower cost, has yet to be comprehensively answered.The case for providing sufficient detail, therefore, to enable other ways of improving rail capacity to be fully assessed remains very strong.”

On airport expansion

“The economic case to support the conclusions of the Davies report lacks crucial information.This is the fifth time that I have written to require it to be provided.In November 2015, I tabled parliamentary questions to secure it. These have yet to be answered, over 10 months later. Without this information, the evidence in support of any decision that the Government takes on airport capacity will be incomplete.”

Background

HS2

Drawing on evidence taken as part of a short inquiry into the economics of HS2 in November 2013, the Treasury Select Committee concluded in its Spending Round 2013 report that ‘the Treasury should not allow HS2 to proceed until it is sure the cost-benefit analysis for HS2 has been updated to address fully the concerns raised by the National Audit Office’.

Commenting at the time, Mr Tyrie said:

“There appear to be serious shortcomings in the current cost-benefit analysis for HS2. The economic case must be looked at again.

The Bill should not proceed until this work has been done and the project has been formally reassessed by the Government.

At £42.6bn, including a large contingency reserve, the construction cost of the project has increased by 17 percent even before it has started. It is a huge infrastructure project.

A more convincing economic case for the project is needed.  We need reassurance that it can deliver the benefits intended and that these benefits are greater than those of other transport schemes – whether in the department’s project pipeline or not – which may be foregone.”

The House of Lords Economic Affairs Committee published its report on the ‘Economics of HS2’ (PDF 2.12 MB) on 25 March 2015.

Airport expansion

On 27 November 2015, Rt Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, tabled a number of Parliamentary Questions, requesting more detailed information on the economic case that supports the conclusions of the Airport Commission’s final report. These questions are included in an annex in the letter.

The Parliamentary Questions focus, in particular, on Table 7.1 in theAirport Commission’s Final Report (PDF 6.08 MB), published in July 2015.

Over the period 25 January 2015 to 13 June 2016, the Chairman had three exchanges of letters with Rt Hon. George Osborne MP, then Chancellor of the Exchequer, in an effort to get him to back up the government’s economic case for an expansion of the UK’s airport capacity. Each time, Mr Osborne responded with a request for Mr Tyrie to speak to the Transport Secretary before the questions would be answered.

On 21 July 2016, Mr Tyrie wrote to Rt Hon. Philip Hammond MP, Chancellor of the Exchequer, to urge him to respond to the same request put to his predecessor.

Mr Tyrie spoke to Rt Hon. Chris Grayling MP, Secretary of State for Transport, on 15 August 2016.

 


Table 7.1 of financial benefits of runway


See also

Questions asked by Mr Andrew Tyrie,

Chairman of the Commons Treasury Select Committee

 

See link

Written questions allow Members of Parliament to ask government ministers for information on the work, policy and activities of government departments.

Historical written answers can be found in Hansard.

 

Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 30 November 2015

Department for Transport Airports: South East  Question 18147

To ask the Secretary of State for Transport, what his timetable is for reaching a decision on plans to increase airport capacity in the South East.

A Answered by: Mr Robert Goodwill Answered on: 08 December 2015

The Government is currently considering the large amount of very detailed analysis contained in the Airports Commission’s final report before taking any decisions on next steps. A decision on airport capacity will be made in due course.

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for Transport London Airports  Question 18078

To ask the Secretary of State for Transport, if he will make an assessment of the probability that the net present value of each of the three shortlisted schemes examined by the Airports Commission is zero or negative.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

The Government is currently considering the large amount of very detailed analysis contained in the Airports Commission’s final report before taking any decisions on next steps.

The Government will carefully consider all the evidence set out, including that on costs, when making a decision on additional runway capacity.

 

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for Transport London Airports Question 18066

To ask the Secretary of State for Transport, if he will instruct the Infrastructure and Projects Authority to reproduce Table 7.1 of the Final Report of the Airports Commission, published in July 2015, using the Commission’s (a) global growth, (b) relative decline of Europe, (c) low-cost is king and (d) global fragmentation scenarios.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

The Government is currently considering the large amount of very detailed analysis contained in the Airports Commission’s final report before taking any decisions on next steps.
The Government will carefully consider all the evidence set out, including that on costs, when making a decision on additional runway capacity.

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports Question 18067

To ask the Secretary of State for Transport, if he will instruct the Infrastructure and Projects Authority to reproduce Table 7.1 of the Final Report of the Airports Commission, published in July 2015, using an appraisal period of (a) 10, (b) 20 and (c) 30 years.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

The Government is currently considering the large amount of very detailed analysis contained in the Airports Commission’s final report before taking any decisions on next steps.

The Government will carefully consider all the evidence set out, including that on costs, when making a decision on additional runway capacity.

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports  Question 18068

To ask the Secretary of State for Transport, if he will instruct the Infrastructure and Projects Authority to provide 90 per cent confidence intervals for each of the figures in Table 7.1 of the Final Report of the Airports Commission, published in July 2015.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports  Question 18076

To ask the Secretary of State for Transport, if his Department will make an assessment of the implications for his policies of the economic impacts of the recommendations of the Airports Commission’s Final Report, published in July 2015.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for Transport Airports: South East  Question 18077

To ask the Secretary of State for Transport, whether the Infrastructure and Projects Authority will assume responsibility for future projects to increase airport capacity in the South East.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports  Question 18072

To ask the Secretary of State for Transport, with reference to Table 7.1 of the Final Report of the Airports Commission, published in July 2015, if he will commission an assessment of the effect on the data in that table under the Commission’s (a) global growth, (b) relative decline of Europe, (c) low-cost is king and (d) global fragmentation scenarios.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

 

Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports  Question 18073

To ask the Secretary of State for Transport, with reference to Table 7.1 of the Final Report of the Airports Commission, published in July 2015, if his Department will make an assessment of the effect on the data in that table under an appraisal period of (a) 10, (b) 20 and (c) 30 years.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports18074

To ask the Secretary of State for Transport, if his Department will make an assessment of the effect on (a) the cost of passenger fares and (b) passenger demand of each of the Airports Commission’s three shortlisted schemes and the effect of that cost.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

The Government is currently considering the large amount of very detailed analysis contained in the Airports Commission’s final report before taking any decisions on next steps.

The Government will carefully consider all the evidence set out, including that on costs, when making a decision on additional runway capacity.

 

———

Q  Asked by  Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports  Question 18075

To ask the Secretary of State for Transport, if he will make an assessment of the effect on the conclusions of the Airports Commission’s Final Report, published in July 2015, of the Commission’s decision not to take account of high value-added international sectors in measuring the agglomeration benefits of the three shortlisted projects.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports  Question 18070

To ask the Secretary of State for Transport, whether the Airports Commission estimate of net present value of the three shortlisted schemes took account of the (a) extent to which the cost of each such scheme would be passed to passengers in higher fares and (b) effect of such higher fares on passenger demand.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

 

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Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports  Question 18069

To ask the Secretary of State for Transport, whether the Airports Commission estimated the probability that the net present value of the three shortlisted schemes would be zero or negative; and what that probability was for each shortlisted scheme under the carbon capped and carbon traded policy frameworks.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

 

Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for TransportLondon Airports  Question 18071

To ask the Secretary of State for Transport, for what reasons the Airports Commission used his Department’s National Air Passenger Demand Model and National Air Passenger Allocation model in its work; whether the assumption of homogenous capacity in those models affected the net present value figures in Table 7.1 of the Commission’s Final Report, published in July 2015, compared with a model that distinguished between long and short-haul, business and leisure, and domestic and international capacity; and what assessment he has made of whether the use of a model that distinguishes between such different types of capacity would increase or decrease the net present value of each of those shortlisted schemes.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

 

Q Asked by Mr Andrew Tyrie(Chichester)Asked on: 27 November 2015

Department for Transport London Airports Question 18065

To ask the Secretary of State for Transport, what account the Airports Commission took of the concern raised by its expert advisors that the failure to account for high value-added international sectors in measuring the agglomeration benefits of the three shortlisted projects was a significant limitation.

A Answered by: Mr Robert Goodwill Answered on: 04 December 2015

[Same standard reply as all those above]

.

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See earlier:

Andrew Tyrie says economic case for a new runway unclear and based on “opaque” information

Andrew Tyrie is the chairman of the influential Commons Treasury Select Committee. He has now said parliament and the public had been left partly in the dark on the case for a new runway, because the Airports Commission’s analysis is not good enough. He said the decision on airport expansion is being taken on the basis of information that was “opaque in a number of important respects.” Mr Tyrie said the robustness of the Airports commission’s conclusions could not be determined from the information in its report. “Parliament has demanded more transparency over the environmental case. At least as important is the economic case.”  Mr Tyrie said it was impossible to tell if the potential economic benefits for the UK of the proposals by Heathrow or Gatwick differed significantly from one another, or even if the benefits of building either are significantly different from not building any new runways. “A decision as controversial as this — one that has bedevilled past governments for decades — requires as much transparency as reasonably possible.”  Andrew Tyrie has written to George Osborne calling for more details of the calculations that led to the Commission recommending a Heathrow runway. He also called for the process to be moved from the DfT to the Treasury.   

http://www.airportwatch.org.uk/2016/02/andrew-tyrie-says-economic-case-for-a-new-runway-unclear-and-based-on-opaque-information/

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