To provide committee members with the full business case for Hereford Western Bypass Phase One, along with the assessment criteria that will be used alongside the full business case by Cabinet to determine whether to proceed with the project.

 

The Service Director introduced the Full Business Case (FBC) for the Hereford Bypass Phase One and advised that it was the culmination of approximately two years of technical development, analysis and evidence gathering. It explained that significant work had been required to review policy alignment, planning matters, funding arrangements, traffic modelling and technical assessments before the scheme could be fully evaluated. The purpose of the FBC was to determine whether the scheme represented value for money and to provide Cabinet with sufficient evidence to support decision-making.

 

Members were informed that the FBC built upon earlier work completed in 2018 and included updates to the Hereford traffic model, a full design review, engagement with Network Rail and National Highways, ecological surveys, planning reviews and procurement planning. Extensive ecological work had also been undertaken over the previous eighteen months to support environmental licensing requirements.

 

The Service Director also explained that the FBC had been prepared in accordance with HM Treasury Green Book methodology and structured around the Five Case Model: Strategic, Economic, Financial, Commercial and Management Cases. Members heard that the scheme achieved a Benefit Cost Ratio (BCR) of 1.6, representing medium value for money under government guidance. The assessment identified benefits of more than £58 million, increasing to approximately £64 million when wider economic impacts were included, compared with discounted costs of approximately £39.6 million. Officers advised that Phase One demonstrated value for money in its own right and would deliver measurable benefits independently of any future phases.

 

The Committee was informed that the scheme remained forecast to be delivered within the approved £45.3 million budget. Value engineering exercises had identified potential savings of between £4 and £8 million, while a quantified risk assessment had established a contingency requirement of just over £3 million.

 

In concluding the presentation, the Service Director outlined the governance arrangements supporting delivery of the scheme, including oversight by a Member Steering Group, Project Board and external stakeholder forums. Members were advised that a joint risk management process was in place between the council, consultants and the contractor, and that a detailed evidence framework would accompany the report to Cabinet.

 

The Chair thanked officers for the short presentation and summary.

 

The Committee were invited to examine each section of the Full Business Case (set out in the accompanying papers for this item) using the previously circulated Lines of Enquiry document to guide discussions.

 

The principal points of the subsequent discussion are summarised below:

 

1. Strategic Case and Need for Intervention

 

A.1 The Committee considered the Strategic Case and discussed whether the FBC clearly demonstrated the need for intervention, its alignment with wider strategic objectives, and the consequences of maintaining the status quo. Members highlighted the importance of ensuring that Cabinet received a clear description of the "business as usual" scenario, including the likely impact of future growth on the existing road network should the scheme not proceed.

 

A.2 Officers advised that traffic modelling indicated worsening congestion and network performance over time without intervention and agreed to set out this information more explicitly within the assessment criteria presented to Cabinet.

 

A.3 Members also discussed the distinction between the consequences of taking no action (the Counter Factual) and the concept of opportunity cost. Concern was expressed that the FBC did not sufficiently explain how the proposed investment compared with other potential uses of public funding for other initiatives that may offer alternative solutions.

 

A.4 The Committee questioned whether alternative transport interventions had been adequately assessed. Members noted that the documentation gave limited prominence to options such as park and ride facilities, enhanced public transport, improved rail connectivity, bus priority measures and other sustainable transport solutions. It was argued that Cabinet should be able to understand not only why the proposed scheme had been selected, but also why other potential interventions had been discounted and whether those alternatives could achieve similar objectives.

 

A.5 Discussion also centred on the long-term effectiveness of bypass schemes. It was acknowledged that new roads can attract additional traffic over time; however, members heard evidence that the modelling had already taken account of induced traffic and that the scheme continued to demonstrate overall benefits despite anticipated increases in vehicle movements. A.6 The Committee was advised that, while traffic growth would occur, the appraisal concluded that the scheme would still provide a net positive outcome compared with no intervention being undertaken.

 

A.7 Members considered whether the strategic contribution of the scheme to broader transport and planning objectives had been sufficiently articulated. Particular attention was given to the relationship between the scheme, the Local Transport Plan and anticipated future housing and employment growth across the county. It was noted that future development requirements, including significant housing growth, would place additional pressures on the existing network and should be considered when assessing the need for infrastructure improvements.

 

A.8 In concluding the discussion, the Committee agreed that Cabinet would benefit from a clearer presentation of the strategic rationale for the scheme, including the case for intervention, the implications of maintaining existing conditions, the assessment of alternative options, the opportunity costs associated with investment decisions and the scheme’s contribution towards wider transport and growth objectives.

 

A.9 The Committee requested that these matters should be more prominently reflected within the final report to support Cabinet’s ability to take a more clearly informed decision.

 

2. Value for Money and Sensitivity Testing

 

B.1 The Committee considered the Value for Money (VFM) assessment and discussed whether the impacts of different growth scenarios had been sufficiently highlighted within the Full Business Case. Officers noted that sensitivity testing had been undertaken using high, medium and low growth forecasts. However, officers agreed to address committee members concerns that the implications of those scenarios should be more clearly presented to Cabinet. Officers confirmed that the final report could provide greater emphasis on the results of the sensitivity testing and direct Cabinet to the relevant sections of the Full Business Case.

 

B.2 The Committee heard that, whilst the Benefit Cost Ratio (BCR) provided an important measure of value for money, greater consideration should also be given to the assumptions underpinning both the benefits and costs of the scheme. The independent adviser highlighted that sensitivity testing should not focus solely on growth forecasts and benefits, but should also examine cost risks, optimism bias and the potential impact of unforeseen expenditure.

 

B.3 In this regard, members requested that a clearer explanation of the robustness of cost estimates would assist Cabinet in understanding the level of financial risk associated with the project.

 

B.4 Officers advised that affordability and cost certainty would be addressed in the final report through consideration of inflation, contingency allowances and project risk management. Particular emphasis was placed on the two-stage procurement process and the early involvement of the contractor in refining the design and construction approach. It was explained that this collaborative approach had enabled detailed review of potential risks, identification of efficiencies and improved confidence in cost estimates before entering into a construction contract.

 

B.5 The Committee discussed the importance of presenting information beyond the Benefit Cost Ratio alone. Members noted that while the BCR provided a single measure of value for money, it did not fully capture wider social, environmental and community impacts. Attention was drawn to a range of non-monetised considerations, including landscape, townscape, security, severance and environmental effects, which were recognised within Green Book appraisal guidance but were not always prominent within the assessment criteria being presented to Cabinet.

 

B.6 Concern was also expressed that the environmental appraisal and Environmental Impact Assessment findings had not been sufficiently integrated into the key considerations for Cabinet. Members noted that issues such as biodiversity, historic environment impacts, pedestrian severance and other environmental benefits and disbenefits formed an important part of the overall appraisal process. This should be presented alongside the economic assessment to provide a more balanced picture of the scheme’s overall impacts.

 

B.7 Officers acknowledged the importance of ensuring that relevant environmental information could be more clearly referenced within the final report.

 

B.8 In summing up, the Committee agreed that Cabinet would benefit from a clearer presentation of sensitivity testing outcomes, cost risks, non-monetised benefits and environmental considerations alongside the Benefit Cost Ratio. Members considered that this would provide a more comprehensive understanding of the scheme’s value for money and would strengthen the evidence available to support Cabinet’s decision.

 

3. Risk, Uncertainty and Affordability

 

C.1 The Committee considered the management of project risks and whether the information contained within the existing appendices provided sufficient clarity for Cabinet. Members expressed concern that a number of risks recorded within Appendix D appeared to be out-dated and that some mitigation measures may no longer reflect the current position of the project. It was suggested that Cabinet would benefit from a simplified and updated risk register, written in Plain English, to support transparent and informed decision-making.

 

C.2 Officers advised that, as the project had progressed towards delivery, a more comprehensive risk management process had been established. Members were informed that a joint risk register was now maintained by the council, its consultants and the contractor, enabling both strategic and delivery risks to be monitored collectively. While officers considered that Cabinet already had access to detailed risk information, they acknowledged that the full register could be made available and that greater clarity around risks would assist.

 

C.3 Members proposed that the various risk registers contained within the business case documentation should be consolidated into a single, accessible document. It was suggested that such a document should clearly identify key risks, describe mitigation measures, indicate associated costs and provide explanations of affordability under different scenarios. Members emphasised the importance of presenting uncertainty in a way that could be easily understood by Cabinet and members of the public.

 

C.4 The Committee also explored the potential for project overspend and the management of unforeseen costs. Concern was expressed that, despite value engineering savings and contingency provisions, major infrastructure projects frequently encounter unknown issues during delivery. Members sought assurance regarding how any future cost overruns would be managed, and that Cabinet are able to explain what the financial implications would be if the scheme exceeds its approved budget.

 

C.5 Officers confirmed that the current forecast remained within the approved budget of £45.3 million, including land acquisition, development costs and consultancy fees. Members were advised that lessons from previous infrastructure projects had informed the project approach, particularly through the early involvement of the contractor in identifying risks and refining costs before construction commenced. It was noted that, whilst risks could be reduced through detailed planning and investigation. However, that there will always be unforeseen issues, such as unrecorded utilities and ground conditions, which in turn could increase risk/costs. These unforeseen risks are a feature of all major construction projects.

 

C.6 In concluding the discussion, the Committee agreed that Cabinet should receive a clearer explanation of project affordability, contingency provisions and the arrangements that would apply if costs exceeded budget forecasts. Members recommended that future reporting should provide a more accessible summary of key risks, mitigation measures and funding options in order to support Cabinet and enhance transparency for members of the public.

 

4. Environmental Risk, Planning and Affordability

 

D.1 The Committee considered the environmental and planning risks associated with the scheme, focusing particularly on the implications of potential planning amendments and Environmental Impact Assessment (EIA) requirements. Questions were raised around the potential implications of future supplementary or amended planning applications. Could these in turn trigger additional environmental assessment requirements, resulting in additional costs, delays and risks. Members questioned whether the cumulative effects of future phases of the bypass had been adequately considered and whether sufficient provision had been made for these risks within the current project assumptions.

 

D.2 Officers advised that Phase One had been assessed as a standalone scheme and continued to demonstrate value for money independently of any future phases. It was reported that supplementary and temporary works planning applications would be required to support construction activities and that discussions had already taken place with planning officers regarding the level of environmental assessment necessary. Officers stated that they were satisfied that the current approach remained appropriate for Phase One but agreed to consider the concerns raised regarding future phases and cumulative impacts.

 

D.3 The Committee further discussed the potential legal and financial implications of environmental risks. Members highlighted the importance of ensuring that environmental assessments remained robust and up to date, particularly given the possibility of future development and growth proposals linked to the wider transport strategy. Views were expressed that environmental risks, whilst potentially low in probability, could have significant cost and programme implications if not fully addressed. Members suggested that Cabinet would benefit from clearer advice on these matters, including any legal implications relating to future phases of the project.

 

D.4 Consideration was also given to the management of project contingencies and value engineering savings. Members questioned whether the contingency allowance of £3.26 million, alongside identified value engineering savings, provided sufficient resilience against unforeseen costs. Officers explained that a number of value engineering measures had already been incorporated into the project budget, while additional options remained available should further cost pressures arise. It was reported that contingency arrangements had been informed by a quantified risk assessment and that opportunities for further efficiencies continued to be explored.

 

D.5 The Committee requested an update on ecological mitigation measures and environmental licensing. Officers advised that extensive ecological surveys had been undertaken over the previous eighteen months, covering protected species including dormice, great crested newts, bats and other sensitive habitats. Licence applications had been submitted to Natural England and discussions regarding mitigation requirements were ongoing. Members were informed that updates on licensing and environmental approvals would be provided to Cabinet before any final decision was taken.

 

D.6 In concluding the discussion, the Committee emphasised the need for Cabinet to receive a clear and accessible explanation of environmental risks, contingency arrangements, value engineering assumptions and funding options should projected costs increase beyond current forecasts. Members considered that presenting these matters transparently would strengthen the decision making process and provide greater assurance regarding the affordability and deliverability of the scheme.

 

5. Assessment Criteria

 

E.1 The Committee reviewed the assessment criteria proposed for Cabinet's consideration and discussed whether several appraisal factors had been omitted. Members highlighted a number of issues that were not explicitly included within the criteria. These included physical activity, journey quality, security, townscape, severance, vehicle operating costs, biodiversity, the water quality, the historic environment and uncertainty mitigation. It was suggested that Cabinet would benefit from greater visibility of these factors to ensure that all relevant impacts had been considered as part of their decision-making process.

 

E.2 Officers advised that some of these matters had been assessed within the Full Business Case but were not always referenced directly within the assessment criteria. It was noted, for example, that public rights of way, cycling links and access arrangements had been considered within the scheme design and that measures were in place to avoid creating significant severance.

 

E.3 The Committee heard that the Department for Transport's value for money framework includes a broader range of appraisal factors than those currently reflected in the assessment criteria. Members considered that these factors should either be included directly or supported by clear commentary demonstrating that they had been evaluated. It was suggested that a more detailed narrative would provide decision-makers with greater confidence that all relevant considerations had been examined and would reduce the need to navigate the extensive supporting documentation.

 

E.4 Officers acknowledged and agreed that greater explanation of these factors could be incorporated into the assessment framework presented to Cabinet.

 

E.5 Members discussed that some environmental and biodiversity assessments, including more recent ecological work, were not sufficiently visible within the material intended for Cabinet. It was argued that issues such as biodiversity impacts, pedestrian and cyclist severance, environmental mitigation measures and opportunities for active travel improvements should be presented more prominently. The Committee noted that some roads affected by the scheme could experience reduced traffic and potentially support enhanced walking and cycling provision, which represented benefits that should be more clearly articulated.

 

E.6 The Committee also discussed the wider transport and economic impacts of the scheme beyond the immediate route corridor. Members heard that reduced congestion within Hereford could lead to changes in traffic patterns across a wider area, affecting both urban and rural communities. It was noted that some impacts would not become fully apparent until after the road was operational and that before-and-after monitoring would be necessary to assess how traffic redistributed across the network and whether further interventions were required.

 

E.7 In concluding the discussion, there was broad agreement that the assessment criteria should be expanded to include a greater range of appraisal factors and supporting evidence. The Committee indicated that Cabinet should be provided with a more comprehensive and transparent framework, incorporating wider environmental, social and transport considerations alongside the core business case evidence. This was considered important both for the immediate decision-making process and for providing a clear record of how the decision had been reached.

 

6. Safety and Accident Impacts

 

F.1 Members heard that the assessment used standard Department for Transport assumptions relating to road type, speed and accident probability. Concern was expressed that the modelling indicated a small increase in fatal and serious collisions despite an overall reduction in slight injuries, and members felt this issue should be more clearly highlighted within the information presented to Cabinet.

 

F.2 Members discussed the need for greater transparency regarding the assumptions underpinning the accident forecasts. It was suggested that the assessment should provide a more detailed breakdown of accident types and severity levels, rather than relying solely on headline figures. The Committee considered that a clearer explanation of how the forecasts had been derived would help Cabinet and the public understand the degree of uncertainty associated with the results.

 

F.3 Officers advised that the final assessment report would include evidence against each criterion together with a Red, Amber or Green rating. It was indicated that road safety would likely be classified as an amber issue, reflecting the fact that while the overall number of accidents was forecast to reduce, the introduction of a higher speed road created a greater potential for more serious collision outcomes. Officers agreed the importance of presenting both the benefits and associated risks more clearly within the report.

 

F.4 The Committee received clarification that the accident modelling was based on local accident records combined with nationally recognised Department for Transport accident rates. Members were informed that the appraisal forecast a small reduction in slight injuries but a marginal increase in fatal and serious injuries over the sixty-year assessment period. It was explained that these figures represented probabilities derived from national modelling assumptions rather than predictions of actual future incidents, with the design and safety auditing process intended to minimise such risks wherever possible.

 

F.5 Members questioned whether national assumptions fully reflected Hereford’s unique circumstances, particularly the presence of a major route passing through the city centre and the existing interaction between vehicles, pedestrians and cyclists. It was suggested that local accident patterns and the potential safety benefits arising from the removal of through traffic should be given greater consideration when presenting the results. The Committee also emphasised the importance of demonstrating how the scheme would accommodate future growth and the needs of all road users, including pedestrians and cyclists.

 

F.6 In concluding the discussion, the Committee requested that Cabinet be provided with a clearer explanation of the accident assessment methodology, associated assumptions and predicted outcomes. Members considered that a more detailed and accessible presentation of accident impacts, including the implications for different road users and the uncertainties within the modelling, would support a more informed Cabinet decision.

 

7. Benefits, Disbenefits and Distributional Effects

 

G.1 The Committee considered how benefits and disbenefits arising from the scheme would be presented to Cabinet and whether the assessment criteria adequately reflected both positive and negative impacts. Members noted that major infrastructure projects inevitably create both winners and losers and requested that Cabinet should receive balanced and unbiased information on these matters. This should clearly set out the principal benefits alongside any associated disbenefits and trade-offs. It was considered important that this information was presented in an accessible format rather than being dispersed throughout the extensive supporting documentation.

 

G.2 Discussion took place regarding the level of detail that should be included within the final Cabinet report. Whilst members recognised that the report could not replicate the full content of the Full Business Case, it was suggested that a concise summary of key issues, supported by evidence and appropriate ratings, would assist Cabinet and members of the public. The Committee emphasised the importance of drawing attention to significant impacts rather than requiring members or the public to navigate hundreds of pages of technical documentation.

 

G.3 The Committee also discussed localised impacts arising from traffic redistribution. Concern was expressed that while some routes would experience reduced traffic volumes and associated benefits, other roads could experience increases in traffic. Members highlighted examples where residents may face increased vehicle movements as a consequence of changes to travel patterns and queried whether sufficient information had been provided regarding mitigation measures and their associated costs.

 

G.4 In concluding the discussion, the Committee requested that the final report should present benefits, disbenefits and trade-offs in a clear and balanced manner. Members considered that Cabinet would be better placed to make an informed decision if the impacts on individual communities, traffic redistribution effects and any proposed mitigation measures were clearly summarised alongside the wider strategic benefits of the scheme.

 

8. Localised and distributional impacts

 

H.1 The Committee considered how localised and distributional impacts would be presented within the report to Cabinet. Officers advised that the Cabinet report would be supported by a concise appendix summarising the assessment criteria, identifying the relevant evidence within the Full Business Case and indicating whether each criterion had been met. It was explained that the intention was not to reproduce the extensive detail contained within the Full Business Case, but rather to provide Cabinet with a clear route to the supporting evidence whilst maintaining an accessible and publicly understandable report.

 

H.2 Members emphasised the importance of presenting information in plain English, particularly where communities could experience both positive and negative impacts arising from traffic redistribution. Concern was expressed that while some roads would benefit from reduced traffic volumes, other routes could experience increased traffic, potentially affecting residents who currently live on relatively quiet roads. The Committee considered that Cabinet should be provided with a clearer explanation of these distributional effects together with any proposed mitigation measures and the implications for affected communities.

 

H.3 The Committee heard that the modelling undertaken for the Full Business Case included a detailed distributional impact assessment showing changes in traffic levels, noise and air quality across the wider network. Members noted that this information could be presented more prominently within the final report, including examples of where increases or decreases in traffic were anticipated and how any adverse impacts might be managed. It was suggested that this would provide greater assurance that the consequences of traffic redistribution had been properly assessed and understood.

 

H.4 Discussion also focused on the wider economic and social benefits associated with the scheme, including opportunities for local businesses and contractors. Members sought assurances that local firms would benefit from the project and that robust payment arrangements would protect subcontractors throughout the supply chain. Officers confirmed that contractual requirements included prompt payment provisions, social value commitments, local employment opportunities and expectations relating to the use of local subcontractors where appropriate.

 

H.5 The Committee then considered environmental impacts and questioned whether sufficient prominence had been given to issues such as biodiversity, air quality, carbon emissions, noise and environmental mitigation measures. Members argued that Cabinet should receive a fuller understanding of both environmental benefits and disbenefits alongside the economic assessment. Officers acknowledged that while environmental matters had largely been addressed through planning and appraisal processes, further information on issues such as carbon management, ancient woodland impacts and ecological mitigation could be highlighted within the final assessment report.

 

H.6 In considering air quality and emissions, members discussed the methodology used to assess pollution impacts and the distinction between construction-phase and operational impacts once the scheme was completed. The Committee was advised that traffic and emissions modelling had been undertaken at an individual road-link level and included assessments of carbon emissions, nitrogen oxides and particulate matter. Members noted that existing air quality trends within Hereford had improved significantly in recent years but agreed that Cabinet should receive a clear summary of the environmental appraisal, including projected changes in emissions, carbon impacts and mitigation measures, to ensure that environmental considerations formed a visible part of the final decision-making process.

 

Resolved:

 

1. The Full Business Case Appendix I includes the alternative options considered that could have achieved the strategic case for the scheme and the reasons presented for discounting these options.

 

2. The Full Business case makes the strategic case for Hereford Bypass Phase One, based on SMART objectives that align with LTP5.

 

3. The Executive includes in the full business case further details of the non monetised costs and benefits to the environment. This information should be pulled through from the Environmental Impact Assessment and other environmental appraisals and assessments undertaken, in line with the DfT Green Book requirements.

 

4. Alongside the assessment criteria, the executive should include a document highlighting key risks, mitigations, and associated costs, drawn from appendices D, G and N, and to do so in Plain English.

 

5. That the Full Business Case provides greater detail to support the optimism bias contained in 2.2.4 Appendix F at 11.8%, rather than the standard 20% as outlined in 5.2.4 of Appendix J.

 

6. That collision data includes:

a.     Current safety outcomes

b.    Forecast safety outcomes

c.     Factors influencing those forecasts and

d.    Any mitigating measures available.

 

7. The full business case should include information on the following criteria:

a.     Physical activity

b.    Journey time and quality

c.     Security

d.    Townscape/visual character of towns and villages near to the route

e.     Severance

f.      Vehicle operating costs, including changes in fuel consumption and vehicle costs

g.    Biodiversity

h.    Water environment

i.      Historic environment and

j.      Uncertainty and mitigation.

 

8. The assessment criteria include a section on traffic distribution effects, taking into account:

a.     Localised impacts

b.    Communities experiencing benefits and

c.     Communities experiencing adverse effects.

 

9. The assessment criteria include additional context regarding:

a.     Biodiversity and

b.    Environmental mitigation measures.