Urgent improvements are needed to the way Government uses cost benefit analysis to rate the economic value of infrastructure projects, a think tank argues today.

 

The Institute for Government says that cost benefit analysis is often misused, inconsistently applied and poorly communicated. This, it claims, risks the wrong projects being approved while more valuable projects are delayed or turned down.

 

It also says that cost benefit analysis is sometimes used by Ministers to justify decisions that have already been made. But the Institute does say that cost benefit analysis can improve decision making when used properly and should not be abandoned.

 

It adds that getting better at cost benefit analysis could help the Government to commission projects that will help to transform the economy and avoid embarrassing U-turns such as the recent decision to scale back the rail electrification programme.

 

Institute for Government’s research manager Nick Davies said: “Government must get much better at learning from the successes and failures of previous projects.

 

“Equally, Ministers should be far more honest with the public about the limits of modelling and the real reasons behind their decisions. Cost benefit analysis is a useful tool but it will only ever be as good as the people using it.”

 

A Cabinet Office spokesperson said: “We welcome the Institute for Government’s contribution to this area and are already leading a review to identify how we can work with industry, to improve the quality, cost and performance of UK infrastructure.”

 

♦ Also this week the Urban Transport Group, which represents seven large urban transport authorities, has called on Government to work closer with transport authorities to deliver high quality and integrated transport networks.

 

It would like to see more of a long term approach to local transport funding, a more ambitious national policy framework on air quality for city regions and promotion of a national active travel strategy to promote walking and cycling.

 

(Photo: Highways England)