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The Socio- Economic Impacts of Local Spending on the A465 Road Improvement Scheme in South Wales

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The Socio- Economic Impacts of Local Spending on the A465 Road Improvement Scheme in South Wales A road for regional recovery? The socio- economic impacts of local spending on the A465 road improvement scheme in South Wales Max Munday, Laura Reynolds and Annette Roberts, Cardiff Business School, Cardiff University Doi: https://doi.org/10.18573/wer.255 Accepted: 16/12/19 Introduction particular, the project investigates how pooling people and resources for a prolonged period In 2015, the Welsh Economy Research Unit may affect local supply chains, stimulating (WERU) was commissioned by Arcadis (Client demand and spending in other parts of the Advisor to Welsh Government) to prepare six- economy, and supporting employment. While monthly dashboards highlighting the socio- the road development is expected to provide economic impacts of the A465 Heads of the economic benefits once complete, it is Valleys road improvement project. The five- important that these interim ‘in-process’ year project involves estimating the direct, benefits are not ignored. The periodic indirect (supply chain) and induced dashboard allows policymakers and industry (household) economic benefits derived from stakeholders to examine the economic benefits spending on the road improvement. To do so, gained from spending on the road longitudinal data was collected on spending, improvement process, providing a snapshot of wages, employment and local procurement the impacts created by the construction and from the managing contractors for the road infrastructure work at different parts of the development. This data is used within the process, and revealing links to changes in local Input-Output framework for Wales to provide labour markets associated with the road the estimated economic benefits for local and development. regional economies. These findings are presented in terms of output, gross-value Transport infrastructure improvements in added (GVA) and full-time equivalent (FTE) Wales jobs supported in Wales. The approach is In Wales, improvements to road transport supported by qualitative insights, using case connectivity feature strongly among studies to provide information on the wider infrastructure priorities, with strategies economic benefits from sub-contractor’s focusing around improving capacity while perspectives. These qualitative insights can be reducing congestion and emissions (National overlooked when evaluating policy and Infrastructure Commission for Wales, 2018). practice surrounding transportation appraisals Pivotal to these commitments is a focus on (Marsden & Reardon, 2017). connecting and supporting parts of Wales A transport infrastructure project of this scale where these is less advantageous access to and duration provides a notable boost to the economic opportunity. Public spending on regional construction sector. As such, the infrastructure has gained increased attention in research explores the extent to which recent years, particularly in the wake of investments in transport infrastructure projects decisions to suspend a number of high-profile can act as an instrument to stimulate socio- projects, such as the M4 Relief Road and the economic development in parts of Wales. In Wylfa Nuclear Plant. These decisions have led This work is licensed under the Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/. 25 to a period of uncertainty for the regional following the improvements to connectivity construction sector. While the regional (Chandra & Thompson, 2000). The construction sector has experienced prolonged development of the A55 in North Wales is a periods of growth, recent forecasts of output good case study of these types of relocation and employment estimates are more modest, effects (see Bryan et al., 1997). reducing the sector’s estimated rate of growth Additional economic effects post-construction over the next four-year period. For example, include improving productivity (Farhadi, 2015), the Construction Industry Training Board agglomeration benefits (Melo et al, 2013), (CITB, 2019) predicts output growth to be 0.5% market expansion, and stimulation of further and employment at 0.7% (CITB, 2019) for the development (Pugh & Fairburn, 2008). Others construction sector in Wales over the four-year have questioned the extent that transportation period to 2023. These estimates are down infrastructure benefits local and regional significantly from the previous year, where the economies given the propensities of benefits to average output growth was previously forecast spill over into other industries and economies as high as 4.6% per annum and employment (Chandra & Thompson, 2000). Moreover, it is growth at 2.2% between 2018 and 2022 (CITB, difficult to isolate the benefits to the transport 2018). Infrastructure is where some of the key infrastructure spending itself, with ex post hits are occurring, with forecasts predicting no evaluations of road improvements having real significant growth in the 2019 report, in difficulty positing counterfactual situations. contrast to previous predictions putting the Other outcomes are also difficult to measure, average growth at 14.2% a year in the 2018 for example regeneration or securing of public- report (CITB, 2018b) and as high as 25% private involvement (Vickerman, 2007). annual growth in the 2017 report (CITB. 2017). It remains unclear how these fluctuations may Much of the existing research and data focuses influence the economy, labour markets and around evaluating the long-term outcomes for supply chains of the regions where the local and regional economies once the investment was set to take place. construction work is complete, such as in the economic assessment as described in the The wider economic benefits of local Design Manual for Roads and Bridges.1 spending on transport infrastructure However, these assessments omit the interim projects in-process benefits derived from regional There is a longstanding recognition that spending on transport infrastructure. Short investments in public infrastructure can help to term gains include creation of employment on stimulate economic growth (Farhadi, 2015; schemes, employment safeguarded and Holmgren & Markel, 2017) with improvements created in suppliers to road developments and to accessibility, connectivity and capacity more subtle spill over effects into local providing prospects for productivity communities. This paper build on an evolving improvements (Rokicki & Stępniak, 2018). body of literature that is beginning to focus on Better road infrastructure can bring direct time the construction and developmental stages of and cost savings for workers and businesses the infrastructure projects, focusing on how (Linneker & Spence, 1996), as well as creating infrastructure spending provides opportunities direct and indirect employment opportunities, for local economic development. sparking new investment, opening up national The Case: A465 Heads of the Valley road in and international trading opportunities and South Wales strengthening supply chains. Yet, the benefits are not always experienced equally across The A465 Heads of the Valleys road in South regions and across industries. Different Wales is a strategically important route forming industries benefit to greater and lesser extents, part of the Trans European Transport Network. with certain industries growing because of It extends from Abergavenny at its eastern reduced transportation costs, while others end, joining the M4 at Llandarcy. The route might contract if industries relocate elsewhere 26 provides an alternative east to west route from their designers (Jacobs formerly CH2M / Atkins the Midlands to west Wales and the Irish ferry & RPS) developed the scheme which was then ports beyond. Much of the original route, which presented at Public Local Inquiry in 2014 prior was constructed in the 1960’s, is now to Orders being made. Following a successful considered as substandard and the Welsh Public Inquiry, Costain was awarded the NEC Government objective is to dual the road in its target cost Design and Build contract to deliver entirety to modern highway standards, the construction phase, which in 2020 is together with providing grade separated nearing completion. junctions. To facilitate delivery, the National The aim of the scheme is to upgrade the Transport Plan divided these works into six existing three-lane carriageway to a two-lane sections. The scheme considered in this paper dual carriageway to improve the safety of a is the A465 Section 2, which extends for 8.1km notoriously dangerous road. Figure 1 shows an from Brynmawr in the West to Gilwern in the aerial view of part of the A465 Section 2 works. East. This is the fourth section of these The Jack Williams Gateway Bridge shown improvements to be delivered. The A465 is Figure 1 has since been completed and was considered to be critical to the social and opened to traffic in 2018. The bridge is named economic regeneration of the Heads of the after a local World War One hero. Valleys area, opening up access to key services, jobs and markets supporting inward investment to the area. Figure 1: Aerial view of part of the A465 Section 2 works Image: Bill Hiller Photography The Section 2 phase of the scheme has been Dashboards and methodology developed through an early contractor The case study combines longitudinal data on involvement (ECI) procurement route, with spending, wages, employment and Costain being appointed as the ECI contractor procurement from the project from 2015 to in 2011. During the ECI phase Costain with
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