Government needs to ensure its growth plans for Cambridge are aligned with its £6-7bn investment in a new regional railway (East West Rail, Oxford to Cambridge), so it can maximise the economic benefits of the line, a new report by the National Audit Office says (NAO).
The independent public spending watchdog’s report examines the evolving context for the East West Rail (EWR), Department for Transport’s (DfT) assessment of its benefits and costs, and the arrangements in place to deliver it. The report does not provide a judgement on EWR’s value for money or examine delivery progress.
At the 2017 Autumn Budget, government announced plans to support economic growth in the region between Oxford and Cambridge. The plans included a new road project, ambitions to build up to one million homes, and investment for EWR, which the Department for Transport expects will cost around £6-7 billion.
The improved connectivity is intended to make the region more attractive to businesses and new housing development, supporting growth and jobs. The EWR project is being delivered by the East West Railway Company (EWR Co2), an arms-length body established by the DfT. However, in March 2021, DfT cancelled the road project due to value for money concerns, and in July 2021 government confirmed its approach was to support locally led planning for housing development.
Separately, in July 2023, the Department for Levelling Up Housing & Communities (DLUHC) announced a new long-term plan for locally led housing development, including plans to expand Cambridge. DLUHC intends this to enable significant housing and business development in a new section of the city, while the business case for EWR depends on development along the rail route.
Government risks the planning for both projects being at cross purposes. The two departments are now working together to align plans ahead of EWR Co’s statutory consultation on the EWR route, planned for 2024.
DfT’s cost-benefit analysis suggests that the costs of the project may outweigh the benefits. In 2021, DfT assessed that every £1 spent on the project would result in between 50p and £1.10 in benefits.3 The calculated benefits have reduced further since then; DfT estimates that there would be between 30p and 60p of benefits for every £1 spent on connection stages 2 and 3. However, these assessments do not quantify the benefit from the wider aims of the project to transform the economy of the region. DfT has concluded, most recently in May 2023, that there is a strong strategic case for the project.4
DFT has not yet decided how to power EWR trains, so the projected costs do not include the costs of electrifying the line. The department is committed to achieving a net zero carbon emissions rail network by 2050 and wants to remove diesel-only trains from UK railways by 2040. Initial estimates suggested that full electrification of the line could cost up to £1 billion. However, DfT and EWR Co are considering options, including partial electrification or alternative approaches to full electrification of the line, which they consider could be delivered at a lower cost.
EWR Co is coordinating activity with local authorities, universities, local enterprise partnerships and England’s Economic Heartland5 to identify growth opportunities at stations along the EWR route. The company still has more to do to respond to the concerns6 of local residents, some of which could be negatively affected by the project and are unhappy with how EWR Co has engaged with them.
HM Treasury has recently established a cross-government board (the Board) to support the development of a shared vision for growth associated with EWR. To improve the chances of unlocking the economic benefits from its investment, the NAO recommends that DLUHC, DfT and the Board should establish effective cross-department governance that complements and bolsters the local stakeholder partnerships being created in the region, to focus on achieving the benefits of East West Rail.
"The rationale for East West Rail rests on its wider strategic aims of increasing economic growth in the Oxford to Cambridge region.
“To maximise the economic benefits from its investment in East West Rail, government must ensure stronger strategic alignment between departments and with wider local growth initiatives, so that there is a shared, coherent vision for the future of the region, and the contribution that the East West Rail project will make to it is clear.”
Gareth Davies, head of the NAO
Read the full report
Investigation into the East West Rail project (Oxford – Cambridge)
Notes for editors
- The independent public spending watchdog latest report Investigation into East West Rail examines the reason for and how government is delivering East West Rail.
- East West Railway Company is a non-departmental public arms-length body, set up in 2017 to oversee and accelerate delivery of the East West Rail project.
- It is common for transport projects to achieve low benefit to cost ratios, under Green Book analysis. The Green Book is guidance issued by HM Treasury on how to appraise policies, programmes and projects.
- In both its April 2021 assessment of EWR and in May 2023, DfT concluded there is a strong strategic need for the project.
- England’s Economic Heartland is one of seven sub national transport bodies in England, representing a region across central England that includes the Oxford-Cambridge Arc. It is jointly funded by DfT and local authorities in the region. It advises the government on transport infrastructure in support of sustainable economic growth across the region.
- The concerns expressed by local people can be found in figure eight of the report.