HS2: Predicted benefits lowered in new government report

 

Transport Secretary Patrick McLoughlin: "I hope very much it comes below budget"

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The government's latest business case for the HS2 high-speed rail link has slightly lowered the amount of benefit it predicts relative to the cost.

The expected benefit-cost ratio (BRC) has fallen from £2.50 to £2.30 in benefits for every pound spent.

That fall is mainly due to a £10bn rise in the scheme's projected £42.6bn cost, which was added earlier this year.

The report is the latest update on questions such as who benefits and by how much.

It also has revised an earlier assumption that business people do not get much work done on trains, a view that was widely criticised at the time.

The new study has cut by one-third the value put on saving an hour's worth of time getting between meetings or workplaces on a quicker train, to reflect that productive work is also done while travelling.

Closures

Analysis

When I spoke to the people who wrote this latest business case, they said things like, "We've listened" and "We haven't over-egged it".

For example, in the last four business cases, the government's been ridiculed for assuming people don't get much work done on trains. Plainly unrealistic in the world of mobile phones and laptops.

So to tackle that, they've now cut by a third the value of business time lost on a train (from £47.18 an hour to £31.96 an hour, if you're interested).

They were also heavily criticised for using a 12-year-old survey for some of their data. They've updated that.

But the reality is, the last four cases have failed to convince enough influential people, people like shadow chancellor Ed Balls for example, that HS2 is worth the money.

And no Ed Balls, no HS2.

BBC transport correspondent Richard Westcott says the new report is an attempt to shift the focus away from a controversial assumption of people not working on trains, and towards the benefits of providing lots of extra capacity on the rail network.

One part of the report, which came out a day earlier, argued that the alternative to HS2 would mean 14 years of route closures and longer journeys.

A study, prepared by Network Rail and the management consultancy Atkins for the government, said that without the project, there would have to be 2,770 weekend closures on the East Coast, West Coast and Midland main lines for the same intended capacity of HS2.

This could lead to travel times between London and Leeds doubling.

'Play politics'

Transport Secretary Patrick McLoughlin said without the new line, the West Coast, East Coast and Midland Main Lines were likely to be overwhelmed.

He said it would also bring benefits for regional and commuter services, as well as increasing the amount of freight that could be carried by rail.

But he warned it needed broad political consensus or it would end in nothing: "You can't play politics with our prosperity. The new North-South line is a multi-billion, multi-year investment in the future of Britain."

Shadow transport secretary Mary Creagh said: "We must address the capacity problems that mean thousands of commuters face cramped, miserable journeys into cities like Birmingham, Manchester, Leeds and London. But there can be no blank cheque and ministers must get a grip on costs."

Map showing the route of phases 1 & 2 of the proposed HS2 rail service

Penny Gaines from the Stop HS2 organisation said: "The big flaw in the government's argument is that phase one of HS2 won't open to the travelling public until about 2027, meaning there would be no change for passengers until the middle of the next decade.

"But building HS2 would cause years of disruption at [London] Euston, and other places on the rail network as well as chaos along the route of HS2, with roads being diverted during the build and in some places permanently shut."

Graphic showing how HS2 will reduce journey times: London-Birmingham 32 minute saving; London-Nottingham 35 minute saving; London-Sheffield 46 minute saving; London-Leeds 49 minute saving; London-Manchester 60 minute saving.
 

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  • rate this
    +4

    Comment number 83.

    Why does it have to be highspeed? How much would building a normal speed railway cost?

    If people want to get somewhere in a hurry they fly! It'll be cheaper too given the price of train tickets.

  • rate this
    +49

    Comment number 82.

    @54

    It's not just Scotland that will pay for this, it's Wales, N Ireland and the actual North of England. Please note that Manchester and Birmingham are the Midlands to most of us. Why should the rest of the country pay for Londoners to reach Manchester 20 mins early? If this is supposed to help business and trade - high speed internet would benefit the whole country, not just londonshire.

  • rate this
    +6

    Comment number 81.

    I'm not sure what the problem is with the suggestion of the existing lines being closed at weekends for engineering works for 14 years if they were upgraded.

    Welcome to East Anglia!

    The line from Norwich to London has had this arrangement for over a decade, without any explanation or any promise of eventual improvement.

  • rate this
    +366

    Comment number 80.

    If there is such a great business case for this, why not let business investors pick up the entire £42.6bn tab?

  • rate this
    +4

    Comment number 79.

    Sounds that many have ingers in a big pie if they are really keen to push ahead with a vanity project like that.

  • Comment number 78.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +6

    Comment number 77.

    Why not invest all this money in the local rails networks, and improvements? Reopen some lines that were closed in the 60's. This might help to get some people off the roads, especially as they won't have to use their cars to get to major stations. They could take the local branch line there instead. Probably wishful thinking on my part!

  • rate this
    +2

    Comment number 76.

    #4
    I don't think they even consulted East Midlands airport either who don't know what effect it's going to have.

  • rate this
    +31

    Comment number 75.

    £42bn. is an awful lot of money to spend just to get to Birmingham or Manchester half an hour earlier. If you wish to get to these places earlier, then get and earlier train.

  • rate this
    +9

    Comment number 74.

    55.Craig
    "mean mass closures of those lines on the weekends" Or alternatively just provide longer carriages and longer stations to increase capacity, but I guess thats too simplistic for our idiotic chumley warner government. HS1 benefits were overstated, and thats on the eurotunnel route. People struggle to pay fares now, few will be able to afford HS2

  • rate this
    +123

    Comment number 73.

    Agree with 8 & 10 below. We have an energy crisis - get the begging bowl out for China and France for 10bn and then declare 52bn spend on railway!

    Sounds like a spoilt-child at Christmas crying for a trainset when the family are freezing!

    If we examine this economics from another angle - how can reducing travel times by 20 mins make our economy more competitive than access to cheap energy?

  • rate this
    +1

    Comment number 72.

    Are the cost benefits based on the total budget forecast including the £14bn contingency?
    I would have thought as it was contingency and one would hope not expected to be spent it would be excluded. £14 bn would make a huge difference to the figures.

  • rate this
    +1

    Comment number 71.

    @19 "I may not support HS2 but let's not resort to disinformation. We have the M74 to Glasgow."

    He meant from the north to the south of Scotland. The M74 runs from Glasgow going south, not north.

  • rate this
    +3

    Comment number 70.

    I've listened to numerous arguments by the supporters of HS2 and quite frankly none on them stack up and i'm pretty sure the latest Cost Benefit Analysis won't either, if it is properly scrutinised.

  • rate this
    +1

    Comment number 69.

    This is really the tip of the iceberg. From now on, I predict there will be further news stories about decreased benefit and increase costs.

    At best, this project might become like the channel tunnel, with benefits and profits not becoming apparent until many years after completion.

  • rate this
    -2

    Comment number 68.

    Excluded from benefits loss is that over time of HS2 build, the other mainline railways will suffer increasing inadequacies
    It is nonsensical to build HS2 without at the same time implementing full upgrade of other lines

    Useing more efficient technology & work methods & including 1 or 2 day a month weekday closure on mainlines could mean work completed quicker & actually with less disruption

  • rate this
    +5

    Comment number 67.

    We have wasted too much money on economic case studies.

    Start building NOW! (or don't do it at all!)

    Buy whatever choice is made do it quickly.

    I'd like to see a number of smaller projects, Like a network of suspension monorails for London (£15Bn), Birmingham( £8Bn), Manchester (£8Bn), Bristol(3Bn),Newcastle-U-T (£5Bn), Glasgow(£3Bn) = £42Bn

    I'd bet that will give more economic benefit!

  • rate this
    -1

    Comment number 66.

    Forget what the politicians think we need - ask the people.
    Looking back 20 years who would have predicted the vast army of people who can now work from home? Looking forward 20 years through the internet of things - what might arise that will mean this project is outdated before it is completed? What lies beyond autonomous cars nose to tail at high speeds taking us exactly where we want to be?

  • rate this
    +2

    Comment number 65.

    This is just another way of passing huge amounts of public taxes to private corporations. I wonder which MPs have got fingers in HS2 pies.

    People are struggling to pay for their train tickets now so who is even going to be able to afford to travel on it? Not Joe Bloggs

    £42B would be better spent putting solar panels on every house in the country

    We don't want to help the serfs though.

  • rate this
    -1

    Comment number 64.

    the tory boys are ready to bale out. but when they do will try to blame labour. please fellow countrymen get this lot out come 2015!!!

 

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