East West Rail, Western Section Phase 2: accounting officer assessment (February 2019)
Updated 30 July 2024
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Background
An accounting officer assessment was completed to proceed with EWR-2 Western section outline business case (OBC) by DfT’s accounting officer Bernadette Kelly in February 2019.
Overview
East West Rail Phase 2 (EWR-2) is a project that is part of the wider East West Rail programme. The programme will provide a direct rail link between Oxford and Cambridge, and joins up key towns and cities across the Oxford to Cambridge Arc corridor.
Phase 1 has successfully delivered the upgrade between Oxford and Bicester, and Phase 2 will reinstate and upgrade railway lines between Bicester and Bletchley to enable new train services to run between Oxford and Milton Keynes. Phase 3 – also known as the central section – will connect Bedford and Cambridge. The upgrade between Bletchley and Bedford (the Marston Vale line) sits across both phases.
DfT’s Board Investment and Commercial Committee (BICC) [now Investment, Portfolio and Delivery Committee (IPDC)] endorsed the strategic and economic cases as part of the approval to publish the case for East West Rail, Western Section Phase 2 in December 2018 (which supported Network Rail’s Transport and Works Act order application) with formal approval of full OBC in February 2019.
Regularity
Expenditure incurred by the programme in 2018 to 2019 and prior years has been provided for in the relevant Parliamentary estimate.
For future years (control period 6, 2019 to 2024), work was required to progress the case from OBC to final business case and was assessed as affordable when considered alongside the wider DfT rail group enhancements portfolio funded by the government’s statements of funds available 2017.
Propriety
The OBC for the EWR-2 enhancements programme has been reviewed by DfT’s tier 1 investment committee, BICC [now IPDC] and HM Treasury. It does not breach any parliament control procedures or expectations.
Value for money
Based on an anticipated final cost of £1.1 billion (nominal), the cost benefits analysis conducted for the OBC showed that the EWR Phase 2 had an initial benefit: cost ratio of 1.1, increasing to 1.3 (low value for money) when wider economic impacts were considered, and to 2.4 (high value for money) depending on assumptions made about economic and housing growth in the Oxford-Cambridge Arc.
The lower end of the range reflected baseline forecasts of population, housing and employment growth and the upper range represents a ‘higher growth’ scenario, which broadly reflects the National Infrastructure Commission’s ambition, supported by the government, of up to one million new homes across the Arc by 2050. No benefit has been included from EWR actually unlocking housing that would not otherwise be viable without the scheme.
At OBC stage, I was satisfied that the analysis demonstrated the expected growth in housing would represent significant value for money for passengers.
Feasibility
An Infrastructure Projects Authority project assessment review of the programme was conducted in June 2018 giving an amber delivery confidence assessment for the programme. A significant amount of work has taken place to address all recommendations and to ensure that the EWR programme is aligned with the wider corridor ambitions.
Conclusion
As the accounting officer for the DfT, I have prepared this summary to set out the key points that informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.
I have considered this assessment of the EWR-2 enhancements programme against the four accounting officer standards of regularity, propriety, value for money and feasibility.
I am satisfied the programme:
- relies on clear legal powers
- meets the standards of managing public money and accords with the generally understood principles of public life
- represents good value for money for the Exchequer as a whole
- is feasible to deliver.
Therefore, I am satisfied that the programme is a good use of public resources.
Bernadette Kelly, Permanent Secretary, DfT
18 February 2019