This is how Britain’s Treasury saves transport projects from disaster

Things were so much easier in the old days. A tram at Sydney's Moore Park in 1960. Image: Ian Brady.

Sydney’s new tram line is facing significant cost blowouts. The tram network in Edinburgh failed even more spectacularly. But new English transport projects like the East London Line and Crossrail are coming in to time and to budget.

Why? Because in order to get any funding from the UK government, you need to follow some simple rules that remove the vast majority of project blowout risk. Perhaps it’s time for the rest of the world to adopt HM Treasury’s Green Book.

To explain why, it’s worth considering an example. Along with many cities in the English-speaking world, Sydney closed its tram network in the years after the Second World War. The final line, to the south-eastern beachfront suburb of La Perouse, closed in 1961. At the time, the state of New South Wales had a left-leaning Labor government – but advised by transport planners and by the motorists’ association NMRA, it had joined the consensus that the car was the future of urban transport.

Like many of its peers, Sydney has subsequently tried to revive its light rail system.  Its first new light rail line, opened in 1997, followed the example of modern segregated light rail networks like the Docklands Light Railway and Manchester Metrolink, by using the trackbeds of disused heavy rail lines. Following extensions that opened in 2000 and 2014, the 13km line now runs from the city’s main Central heavy rail terminus to a suburban rail interchange station at Dulwich Hill.

The success of the Dulwich Hill line encouraged the NSW government to commit to a new 12km light rail scheme, connecting the major urban transport interchange at Circular Quay to south-eastern suburban centres at Randwick and Kingsford. Much of the southern half of the route, which will interchange with the existing light rail service at Central, follows the same alignment as the old La Perouse line.

There’s just one problem: the cost.

In early November 2014, with initial work on the street-running portion of the line between Central and Circular Quay under way, the government admitted that projected costs for the project had risen by almost 40 per cent, from AU$1.6bn to AU$2.2bn. It blamed the rise on the increased costs of dealing with the cost of moving utilities and managing traffic during construction on the street-running part of the route.

This followed analysis that consultants Evans & Peck had carried out for the NSW government in 2013, which the Sydney Morning Herald published in February 2014, identifying these exact factors as key risk areas.  In other words, the government had known for a year that its cost estimates were flawed; and yet, to quote Transport Minister Gladys Berejiklian in February, it doggedly maintained that "all project risks and contingencies are contained within the $1.6 billion project cost”.

The Sydney Monorail, which operated from 1988 until 2013. Image: AFP/Getty.

To people watching in England, this must feel like the bad old days of transport projects, with optimistic forecasts and large overruns as a standard feature. Projects like London’s Jubilee Line Extension, the Limehouse road link to connect central London to Canary Wharf, and the Channel Tunnel were all great engineering feats; they were also particularly high-profile examples of budget and deadline blowout.

But more recent projects, like the East London Line Extension and the world’s largest urban rail project, Crossrail, have come in close to time and budget (Crossrail isn’t finished yet, of course, but has met all its milestones and benchmarks, and the House of Commons Public Accounts Committee has called it “a textbook example of how to get things right”). So, what’s the secret?

The answer lies in a short book. Specifically, the UK Treasury’s Green Book, published in 2003. Following the disastrous overspends of the 1980s and 1990s, the Blair government decided that all transport spending needed to be subject to a thorough and detailed review process to ensure the process couldn’t fail in this way again.

The most important aspect of this process is recognising the hidden biases that project promoters and managers have. Professor Bent Flyvbjerg of Oxford University has written multiple studies in this area, highlighting the tendency of project managers across all project types and funding mixes toward optimism. Sometimes this is subconscious, because they want the project to happen; but sometimes, it’s deliberate subterfuge.


At the same time that it was dismantling Sydney’s tram network as unviable, the postwar NSW government followed the second of these approaches for the Sydney Opera House project, publishing deliberately lowballed cost estimates to ensure that the project would go ahead. Flyvbjerg notes that the result was a spectacular cost and budget blow-out: the building was completed 10 years late, at 17 times its expected budget.

The Green Book follows this, noting that “there is a demonstrated, systematic, tendency for project appraisers to be overly optimistic”. It seeks to allow planners to identify these biases, and ensure that they are corrected for at the earliest possible stage of the budgeting process, based on empirical analysis of similar projects.

It's probably significant that Edinburgh's new tram line opened in 2014 at half its planned length and twice its planned budget: funded by the Scottish government, the scheme wasn't required to follow the Green Book appraisal process.

This process has even gained Flyvbjerg’s seal of approval: in a 2009 paper, he highlighted the merits of the schemes “initiated by HM Treasury in order to gain better predictability and control in public budgeting”.

We might hate it when Treasury bureaucrats throw spanners in the works of our favourite schemes – but it’s this rigorous work which means that UK taxpayers don’t face the same disasters that they used to, and that those in Sydney are still stuck with.

 
 
 
 

Was the decline in Liverpool’s historic population really that unusual?

A view of Liverpool from Birkenhead. Image: Getty.

It is often reported that Liverpool’s population halved after the 1930s. But is this true? Or is it a myth?

Often, it’s simply assumed that it’s true. The end. Indeed, proud Londoner Lord Adonis – a leading proponent of the Liverpool-bypassing High Speed 2 railway, current chair of the National Infrastructure Commission, and generally a very influential person – stood on the stairs in Liverpool Town Hall in 2011 and said:

“The population of Liverpool has nearly halved in the last 50 years.”

This raises two questions. Firstly, did the population of the City of Liverpool really nearly halve in the 50 year period to 2011? That’s easy to check using this University of Portsmouth website – so I did just that (even though I knew he was wrong anyway). In 2011, the population of the City of Liverpool was 466,415. Fifty years earlier, in 1961, it was 737,637, which equates to a 37 per cent drop. Oops!

In fact, the City of Liverpool’s peak population was recorded in the 1931 Census as 846,302. Its lowest subsequent figure was recorded in the 2001 Census as 439,428 – which represents a 48 per cent decline from the peak population, over a 70 year period.

Compare this to the population figures for the similarly sized City of Manchester. Its peak population also recorded in the 1931 Census as 748,729, and its lowest subsequent figure was also recorded in the 2001 Census, as 392,830. This also represents a 48 per cent decline from the peak population, over the same 70 year period.

So, as can be seen here, Liverpool is not a special case at all. Which makes me wonder why it is often singled out or portrayed as exceptional in this regard, in the media and, indeed, by some badly briefed politicians. Even London has a similar story to tell, and it is told rather well in this recent article by a Londoner, for the Museum of London. (Editor’s note: It’s one of mine.)

This leads me onto the second question: where have all those people gone: London? The Moon? Mars?

Well, it turns out that the answer is bit boring and obvious actually: after World War 2, lots of people moved to the suburbs. You know: cars, commuter trains, slum clearance, the Blitz, all that stuff. In other words, Liverpool is just like many other places: after the war, this country experienced a depopulation bonanza.


So what form did this movement to the suburbs take, as far as Liverpool was concerned? Well, people moved and were moved to the suburbs of Greater Liverpool, in what are now the outer boroughs of the city region: Halton, Knowsley, St Helens, Sefton, Wirral. Others moved further, to Cheshire West & Chester, West Lancashire, Warrington, even nearby North Wales, as previously discussed here.

In common with many cities, indeed, Liverpool City Council actually built and owned large several ‘New Town’ council estates, to which they moved tens of thousands of people to from Liverpool’s inner districts: Winsford in Cheshire West (where comedian John Bishop grew up), Runcorn in Halton (where comedian John Bishop also grew up), Skelmersdale in West Lancashire, Kirkby in Knowsley. There is nothing unique or sinister here about Liverpool (apart from comedian John Bishop). This was common practice across the country – Indeed, it was central government policy – and resulted in about 160,000 people being ‘removed’ from the Liverpool local authority area.

Many other people also moved to the nearby suburbs of Greater Liverpool to private housing – another trend reflected across the country. It’s worth acknowledging, however, that cities across the world are subject to a level of ‘churn’ in population, whereby many people move out and many people move in, over time, too.

So how did those prominent images of derelict streets in the inner-city part of the City of Liverpool local authority area come about? For that, you have to blame the last Labour government’s over-zealous ‘Housing Market Renewal Initiative’ (HMRI) disaster – and the over enthusiastic participation of the then-Lib Dem controlled city council. On the promise of ‘free’ money from central government, the latter removed hundreds of people from their homes with a view to demolishing the Victorian terraces, and building new replacements. Many of these houses, in truth, were already fully modernised, owner-occupied houses within viable and longstanding communities, as can be seen here in Voelas Street, one of the famous Welsh Streets of Liverpool:

Voelas Street before HMRI implementation. Image: WelshStreets.co.uk.

The same picture after HMRI implementation Image: WelshStreets.co.uk. 

Nonetheless: the council bought the houses and ‘tinned them up’ ready for demolition. Then the coalition Conservative/Lib Dem government, elected in 2010, pulled the plug on the scheme. 

Fast forward to 2017 and many of the condemned houses have been renovated, in a process which is still ongoing. These are over-subscribed when they come to market, suggesting that the idea was never appropriate for Liverpool on that scale. 

At any rate, it turns out that the Liverpool metropolitan population is pretty much the same as it was at its peak in 1931 (depending where the local borough boundaries are arbitrarily drawn). It just begs the question: why are well educated and supposedly clever people misrepresenting the Liverpool metropolis, in particular, in this way so often? Surely they aren’t stupid are they?


And why are some people so determined to always isolate the City of Liverpool from its hinterland, while London is always described in terms of its whole urban area? It just confuses and undermines what would otherwise often be worthwhile comparisons and discussions. Or, to put it another way: “never, ever, compare apples with larger urban zones”.

In a recent Channel 4 documentary, for example, the well-known and respected journalist Michael Burke directly compared the forecast population growths, by 2039, of the City of Liverpool single local authority area against that of the combined 33 local authority areas of Greater London: 42,722 versus 2.187,708. I mean, what bizarre point is such an inappropriate comparison even trying to make? It is like comparing the projected growth of a normal sized-person’s head with the projected growth of the whole of an obese person, over a protracted period.

Having said all that, there is an important sensible conversation to be had as to why the populations of the Greater Liverpool metropolis and others haven’t grown as fast as maybe should have been the case, whilst, in recent times, the Greater London population has been burgeoning. But constantly pitching it as some sort of rare local apocalypse helps no one.

Dave Mail has declared himself CityMetric’s Liverpool City Region correspondent. He will be updating us on the brave new world of Liverpool City Region, mostly monthly, in ‘E-mail from Liverpool City Region’ and he is on twitter @davemail2017.