1.1.1 The distribution of impacts between government and society is a key issue in the justification of government action. Thus, the Department requires an analysis that highlights the impact of a proposal on public accounts.

1.1.2 This Unit has been updated to reflect the conclusion of the NATA Refresh process (see NATA Refresh: Appraisal for a Sustainable Transport System, DfT, April 2009). Within the NATA approach, the 'public accounts' impact is defined as net costs incurred by central or local government bodies (including public sector agencies). It includes investment and operating costs, grant and subsidy and changes in indirect tax and other revenues. Investment and operating costs incurred by private sector providers should be treated as disbenefits, offsetting changes in private sector providers' revenue. These costs are, therefore, included in the Transport Economic Efficiency (TEE) analysis, rather than under Public Accounts.

1.1.3 However, following the NATA Refresh, the 'costs' used in calculating the Benefit Cost Ratio (BCR) are for a "Broad Transport Budget", rather than for government as a whole. The "Broad Transport Budget" represents all impacts on Public Accounts except revenues that do not directly affect the budget available for transport. Other impacts on public accounts, such as indirect Tax Revenues, which benefit the Government as a whole but do not directly affect the broad transport budget, are treated not as costs but as benefits. They are, however, an impact on Public Accounts, so they should still be reported under "Public Accounts".

1.1.4 The Public Accounts (PA) table has been updated to reflect these changes. In particular, it separates indirect tax revenues (classified as "Wider Public Finances") from other local and central government costs (which are classified as the "Broad Transport Budget"). When calculating the BCR, the "Wider Public Finances" contribute to the scheme benefits, rather than reducing the scheme costs.

1.1.5 The PA table ("Public Accounts Table.xls") should be used to calculate the impact on the Broad Transport Budget and on Wider Public Finances. These are the figures which should be inserted in the 'assessment' column in the Appraisal Summary Table (AST).

1.1.6 The PA table differs from the TEE table, in that costs should appear as positive numbers while revenues should appear as negative numbers. All amounts in the PA table should be discounted to the Department's standard base year using the Department's standard discount rates. They should be converted to the market price unit of account and presented in £m in prices in the Department's standard base year. The Department's standard base year and discount rates are discussed in Cost Benefit Analysis (TAG Unit 3.5.4).

Revenues

1.1.7 Revenues may accrue to Local or Central Government from parking charges, congestion charges, road tolls and road user charges. Where services are directly operated by Local Government, revenues to Local Government may also accrue from bus and coach fares and rail fares. The amounts accruing are output by the Department's TUBA software which should be used for the calculation of the user benefits - see The Transport Economic Efficiency Sub-Objective (TAG Unit 3.5.2).

Investment and Operating Costs

1.1.8 Advice on the treatment of investment and operating costs in the PA table can be found in The Treatment of Costs (TAG Unit 3.5.9). Investment and operating costs should always be recorded as positive amounts in the PA table.

Grant/subsidy

1.1.9 Advice on the treatment of grants and subsidies in the PA table can be found in The Treatment of Costs (TAG Unit 3.5.9). Grants and subsidies should always be recorded as positive amounts in the PA table.

Developer and other contributions

1.1.10 Where developers or other private sector bodies make contributions to the capital or running costs of options, these reduce the net costs to public accounts. Thus, these amounts should appear in the PA table, as negative numbers. Note that equal amounts should appear, as disbenefits, in the TEE table - see The Transport Economic Efficiency Sub-Objective (TAG Unit 3.5.2).

Indirect tax revenue

1.1.11 This row in the PA table should show the expected change in indirect tax revenue to the Government due to changes in the transport sector as a result of the option. This is now accounted separately from the Broad Transport Budget, as it is treated as a benefit when calculating the BCR, rather than a reduction in cost.

1.1.12 The inclusion of fuel duty as well as VAT in the cost of fuel for road users means that options that increase road use are likely to lead to an increase in indirect tax revenue, as road users switch expenditure from other goods that are generally subject to VAT alone. Similarly, options that increase public transport use are likely to lead to a reduction in indirect tax revenue, because public transport fares are zero rated for VAT.

1.1.13 The calculation of Impacts on Tax Revenue is similar to the calculation of Transport Economic Efficiency user benefits. As such it is described in TAG Unit 3.5.3, Transport User Benefit Calculation, Section 5.

1.2 Public Accounts Entries in the AST

1.2.1 Public Accounts are presented in one row in the AST, but separate values should be provided for:

Local Government: Broad Transport Budget (Local Gov't BTB);
Central Government: Broad Transport Budget (Central Gov't BTB);
Central Government: Wider Public Finances (Central Gov't WPF).

1.2.2 The "Qualitative Impacts" column should record any special considerations and any simplifications adopted in the analysis;

1.2.3 The "Quantitative Assessment" column should identify the main components of Public Accounts, including impacts on:

Local Government funding (all of which is included in the Broad Transport Budget);
Central Government funding: Broad Transport Budget;
Central Government funding: Wider Public Finances.

1.2.4 The "Assessment" column should show:

The total Present Value Costs, which can be calculated by aggregating the two Broad Transport Budget components;
The total Present Value Benefits, which can be calculated from the Wider Public Finances component multiplied by -1 (ie reversing the sign).

1.3 Assessment of Value for Money

1.3.1 On its own, the impact on Public Accounts does not provide an indicator of the extent to which the option would provide good value for money in relation to impacts on public accounts. The assessment of value for money should be made by combining the PVC to Public Accounts with all the other impacts in the AST, in the manner described in The Appraisal Process (TAG Unit 2.5).

1.3.2 It may assist in the assessment of value for money if all the important impacts are expressed in money terms. The Analysis of Monetised Costs and Benefits (AMCB) table (provided as a separate spreadsheet "Analysis of Monetised Costs and Benefits.xls") shows the impacts which are regularly or occasionally presented in monetised form in transport appraisals. However, there may also be other significant costs and benefits, some of which cannot be presented in monetised form or that are not sufficiently robust to be included in the AMCB table. Where this is the case, the analysis presented in the AMCB table does not provide a good measure of overall value for money and should not be used as the sole basis for decisions.

1.3.3 Further advice on cost/benefit analysis, types of transport cost and measures of value for money can be found in Cost Benefit Analysis (TAG Unit 3.5.4).

1.4 Public Accounts Appraisal of Major Highway Schemes

1.4.1 For many major highway schemes, the mode-specific entries in the standard Public Accounts table do not apply. The Public Accounts Table for Major Highway Schemes ("Public Accounts Table HWSchemes.xls") should be used when the following conditions are met:

Grants and subsidies do not apply;
The scheme does not give rise to changes in Central or Local Government revenues (other than indirect taxation revenues; an exception to this, therefore, would be road user charging).

1.4.4 Where these conditions are not met, the full PA table ("Public Accounts Table.xls"), should be used.

2. Further Information

The following documents provide information that follows on directly from the key topics covered in this TAG Unit.

For information on:	See:	TAG Unit Number:
Appraisal Summary Table	Transport Appraisal and the Treasury Green Book	Unit 2.7
The assessment of value for money	The Appraisal Process	Unit 2.5
PA appraisal of major highway schemes and major public transport schemes	Detailed Guidance on Major Scheme Appraisal in Local Transport Plans	Unit 3.9

3. References

DfT (2003) Transport Users Benefit Appraisal (TUBA) User Manual, Tuba User Guidance with accompanying TUBA Software
[www.dft.gov.uk/pgr/economics/software/tuba/]

DfT (April 2009) NATA Refresh: Appraisal for a Sustainable Transport System
[www.dft.gov.uk/consultations/archive/2008/consulnatarefresh/natarefresh2009.pdf]

4. Document Provenance

This Transport Analysis Guidance (TAG) Unit is an update of the previous December 2004 version, which contained material based partly on GOMMMS Supplement 3. This version of the Unit has been updated to reflect the document "NATA Refresh: Appraisal for a Sustainable Transport System", released in April 2009.

Some minor updates were made in January 2011.This unit is now definitive.

Technical queries and comments on this TAG Unit should be referred to:

Integrated Transport Economics and Appraisal (ITEA) Division
Department for Transport
Zone 3/08 Great Minster House
33 Horseferry Road
London SW1P 4DR
Email: itea@dft.gsi.gov.uk
Tel: 020 7944 6176
Fax: 020 7944 2198

Updated: April 2011