3.27 There is no clear and agreed methodology for calculating the monetary impacts of the wider benefits of public transport projects, such as the regeneration of local economies, so they are not usually included in monetary terms in the value for money assessments of such projects. The impacts may be positive or negative, and should be considered on a case by case basis. The Link is the first new international railway project to be assessed by the Department, and the international aspects of the project raised issues not normally considered in the appraisal of domestic transport projects. It is understandable, therefore, that the Department should have considered impacts which have not been assessed in other public transport project appraisals. On this basis, the Department judged that the regeneration benefits expected from this project were likely to be positive and that monetary estimates of these impacts should be included in the final value for money assessment of May 1998.
3.28 The first value for money assessment of the restructured deal in March 1998 reflected more closely the Department's traditional approach to appraisal of domestic transport projects in that monetary estimates of regeneration benefits were not included. This was because the Department believed that to a large extent they represent the double counting of benefits to passengers which were already scored as a component of international and domestic benefits. The assessment also referred to a recent report by the Government's Standing Advisory Committee on Trunk Road Appraisal (SACTRA). This stated that "there are strong theoretical expectations that all or a part of a transport cost reduction will lead to economic impacts outside the transport sector, but the empirical evidence of the scale and significance of such impacts is weak and disputed". The report also stated that regeneration impacts should be considered on a case by case basis but it did not recommend that monetary values should be included.
3.29 The Department decided, however, that its methodology for estimating a monetary value for regeneration benefits in this case was sufficiently robust to allow their inclusion in the value for money assessment. The Department estimated that the government would be willing to pay £1,000 million through conventional regeneration funding routes to create the number of jobs the Link was expected to create (see Appendix 7 for a more detailed description). The Department then halved this figure to take account of double counting of benefits already reflected in the international passenger benefits to UK residents. This resulted in estimated regeneration benefits from non-UK residents of about £500 million. Including this figure helped to keep the value for money assessment positive by partially compensating for the removal of the estimated £1,800 million of international passenger benefits to Non-UK residents. If the Department had not included an estimate of regeneration benefits quantified in money terms in the final assessment, some other form of assessment of the regeneration benefits would have been used to inform Ministers of the estimated impact of the project on regeneration. For example, in previous assessments, the number of jobs expected to be created and increases in work floor space had been used.
3.30 The quantification and use of monetary values to assess the regeneration benefits of the Link resulted from the need to provide specific and detailed advice on a major transport project, which the Department judged to have major regeneration impacts. However, current economic appraisal guidance issued by the Department still states that regeneration benefits should be taken into account, but that methodologies are too uncertain to produce a monetary value. More recent and current Departmental guidance requires the production of an Appraisal Summary Table, which notes whether the project is in a designated regeneration area and whether any project dependent development sites exist. The decision-maker then uses judgement to assess this information against other impacts presented in the table. Following on from recommendations made by SACTRA, the Department is undertaking research on guidance on more generalised quantification of regeneration benefits for use in transport appraisals.