29 Oct 2013

The numbers are good – but HS2 was always a political project

The weary political journey to quicken the core north-south journey on Britain’s train system took another important step today.

The government published a new analysis of the strategic case for a full high-speed rail network connecting London, Birmingham, Manchester and Leeds. (Remember that HS1, the existing high speed line to Kent, is a by-product of the Channel Tunnel rail link connecting London and Paris).

These calculations are fraught, and that’s before reckoning with the Department for Transport’s rather creative spreadsheets.

The headline today is that the key measure of value for money for the full HS2 project, the BCR – or benefit cost ratio – has gone down a bit, from 2.5 to 2.3. That means that, including wider economic benefits, the government expects £2.30 of benefits for every £1 it spends.

If you remember, the government costs for HS2 have gone up since last year, from £25.7bn to £31.5bn. Luckily for the government, the benefits have magically gone up by almost the same proportion: from £48.3bn to £57.7bn, but not quite as much, hence the slight reduction in BCR to 2.3. (These figures are costs over 60 years, in net present value terms).

Two things: this measure of value for money compares well with London-based infrastructure projects, such as Crossrail and the Jubilee Line extension (remember all the fuss about the public money spent on those projects? Nope. I don’t either).

Having said that, the increase in forecast benefits will raise an eyebrow or two.

They did adjust downwards considerably the value of an individual hour of travel time saved by a business traveller from £47.18 to £31.96 (which is still over five times the valuation of a commuter or a leisure traveller).

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Yet the forecast business travel benefits were greatly increased, from £34bn to over £40bn – the vast bulk of the increase in benefits arising from the scheme, according to the government. This seems to have come from assuming much greater connectivity across England, say from Bristol to Newcastle, using HS2 as a spine (in this case between Birmingham and Leeds).

All of this, as I said, is rather fraught. They top it all up by essentially ripping up the traditional Treasury green book methodology and pointing out that it is entirely feasible that passenger numbers grow after 2036 (currently the numbers presume zero growth just three years after the line opens). With this new “long term BCR” method, the benefit goes up sharply into the “very high” range.

Of course these numbers are spuriously exact. HS2 is and was always a political rather than economic project. And more on that to come later.

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3 reader comments

  1. Kenneth Collins says:

    Hey Faisal, Here is the bare bones of an article I read some days ago, but can’t remember where, maybe the Guardian which presents a viable alternative to high cost and disruption of the currently proposed scheme……

    Railway line shut by Beeching ‘can save us £36bn’

    Rival scheme would see reopening of former Great Central line
    Track ran from London to Nottingham with links to Leeds and Manchester
    Line was closed in 1966 by Dr Richard Beeching
    Supporters claim it would cost £6bn, compared to £42.6bn HS2 scheme
    By Arthur Martin

    PUBLISHED: 00:39, 28 October 2013 |UPDATED: 01:19, 28 October 2013

    Critics of the HS2 rail project have put forward an alternative route using a train line which was closed in the 1960s.

    The rival scheme would see the reopening of the former Great Central line, which ran from London to Nottingham, with links to Leeds and Manchester.

    Supporters of the proposal claim it would cost around £6billion, instead of the £42.6 billion which the HS2 project is set to cost.

    Rival scheme: HS2 critics have put forward an alternative route using the former Great Central line, which ran from London to Nottingham and was closed in the 1960s

    Kelvin Hopkins, the Labour MP for Luton North, has joined leading supermarket groups and hauliers to draw up plans to reopen the disused line.

    Mr Hopkins said reopening the Great Central railway would avoid many of the environmental concerns associated with HS2.

    ‘It could be built for £6billion, a fraction of what HS2 would cost, and it avoids all the environmental problems,’ he told the Sunday Telegraph.

    ‘We have a very precise route, we have been working on it for a very long time and we are carefully trying to get political support.

    ‘Tesco, Sainsbury’s and Marks & Spencer are desperate to get more of their goods on rail and they have written letters backing this scheme.

    Axed: The southern section of the Great Central Railway was closed in 1966 by Dr Richard Beeching

    ‘HS2 is clearly a white elephant, but the problem is that when governments announce something they find it difficult to back down.’

    Axed by Dr Richard Beeching, the southern section of the Great Central Railway has been closed since 1966. Its express trains ran from London to Rugby, Leicester, Nottingham, Sheffield and Leeds, with a branch to Manchester.

    Supporters of the plan say that since much of the infrastructure still exists, the disruption to local residents caused by rebuilding the line would be substantially less than a new railway.

    ‘So much of the railway still exists, and it would be billions of pounds cheaper to build than HS2,’ said Brian Holyland, a member of the Great Central Railway Society who worked on the line before it was closed.

  2. andrew west says:

    re C4News..

    You can’t spell HS2 defense with an S!

  3. Robert Taggart says:

    NO2 HS2.
    The numbers are bad – for us opponents – but we still hope to de-rail this vane project !

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