Economic impacts of new and improved rail lines

The Department of Transport (DfT) commissioned Steer to provide evidence for the impact of investment in rail infrastructure on the economy.

While there is a commonly held belief that investing in transport supports economic growth, the House of Commons’ Public Accounts Committee, the National Audit Office, HM Treasury and the What Works Centre for Local Economic Growth, identified a lack of robust evidence. 

To start to provide a reliable evidence base, Steer used six case studies including three retrospective, two baseline and one which had both retrospective and base-lining elements. These case studies included a mixture of new rail lines, new stations, electrification, and new signalling with associated benefits in terms of access to the rail network, faster journey times, more frequent services and an improved passenger experience.

Each of the case studies involved a bespoke combination of primary research including interviews with passengers, local residents and local businesses, analysis of secondary transport and economic data, and econometric analysis using a sophisticated Difference-in-Difference (D-i-D) method. 

The project provided three categories of output.

1. Some evidence for the economic impacts of rail investment on mode choices, where people chose to live and work, where businesses chose to locate, and on the productivity of businesses.
2. Baseline data which enables further evidence to be collected once further post-implementation work has been conducted.
3. Important lessons for how this type of evidence can best be collected, given the associated challenges.

The significance of the study is demonstrated by the fact that the Department of Transport is publishing the results and presenting them at the European Transport Conference.