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
    +3

    Comment number 103.

    The only people who will benefit will be the French and the Chinese as they will no doubt be building it using cheap Eastern European labour and it will be German companies building the rolling stock.

    How we ever had an empire or won two world wars I'll never know.

  • rate this
    +3

    Comment number 102.

    Like a few have already mentioned, i find it very difficult to believe that there are not close, economic ties between members of the government and the contractors who will be working on the project. If we have learned anything about British politics, it's never underestimate the ability of greed to drive decision making. Investment is needed, but on HS2 ?

  • rate this
    +2

    Comment number 101.

    No business would make undertake this venture on a return on investment ratio of 1 to 2.5. I thought the Treasury's own guidelines call for 1:4 and even then, they're often looking at 1:7. They're also looking for political consensus to prevent money being wasted. Why no political consensus over our Health and Education which are used as political footballs?

  • rate this
    +5

    Comment number 100.

    Whilst high speed rail make sense in larger countries where the time savings are large, I don't see the UK as really being large enough to justify it. Personally I would prefer the money spent on East-West lines connecting the existing North-South infrastructure. It is already easy to get up the country but very hard to get across it.

  • rate this
    +46

    Comment number 99.

    There is vast public opposition to this waste of money yet we are getting this propaganda rammed down our throats. Why not stay in the office and meet via the web. Much cheaper and more effecient. If you could hand over brown envelopes via the web I dont suppose there would be a problem?

  • rate this
    +2

    Comment number 98.

    So it becomes clearer, just the odd £10bn increase in cost then, how many more £10billions before completion?

    The actually cost:benefit ratio for the vast majority will be £100bn:0, it's ridiculous to suggest saving 30mins will provide these benefits, most won't be able to afford to use it anyway.

    If we have tens of billions available spend it on power infrastructure (new nuclear plants).

  • rate this
    +3

    Comment number 97.

    It seems a lot of money for the sake of half an hour (a journey to Birmingham at least)

    Personally if I need to get up North that fast I just fly. If booked early enough prices are usually cheaper than the train anyway

  • rate this
    +49

    Comment number 96.

    We would be better off investing in high speed broadband, and giving tax breaks to companies to encourage home working. Think of the benefits : less congested roads, less pollution, less congested trains, fewer stressed commuters, families able to spend more time with their loved ones etc etc.

  • rate this
    +4

    Comment number 95.

    Why worry about Labour unless you think they are going to win the next election? All these reports are designed to manipulate public opinion. Talk about disruption but not the disruption building it will cause. Talk about capacity but don’t mention the price of the tickets or that its all estimates. Try to associate it with projects like the Olympics seen as having being positive. Its all spin!

  • rate this
    +3

    Comment number 94.

    What they will not tell you is that a railways that costs so much to build will undoubtedly push up fares to astronomic heights to pay off the loans from the craven bankers in the City of London. (who will be donating money to the political parties)

    This project is ABOUT CORRUPTION and nothing else.

  • rate this
    +4

    Comment number 93.

    They said yesterday 14 years of weekend closures to upgrade the current network... it's only the same amount of time to complete HS2 so why not tell us the price and put it to a public vote?

  • rate this
    +5

    Comment number 92.

    I'd much rather see the £42bn put into providing South Korean levels of internet access for all (100MBps and counting..).
    I'm pretty sure a cost/benefit analysis would show a much better return for the money spent.
    Or how about a compromise- 20bn on upgrading existing lines capacity and the other 20bn on internet access.

  • rate this
    +5

    Comment number 91.

    I know shall we educate our children properly (we currently stand 43 in the world)
    Or shall we build a very fast train
    A train that our poorly educated children can watch go past will they sit there and would how they are going to get a job as the rest of the world leaves them behind

  • rate this
    +7

    Comment number 90.

    It's entirely sensible to invest sizeable sums in national infrastructure projects.

    HS2 is not sensible, or even particulalry credible. It doesn't link up airports and doesn't even go to Birmingham New St.

    £40bn could be spent much better elsewhere on other train infrastructure (let alone things like power generation, sewerage etc).

  • rate this
    +59

    Comment number 89.

    A colleague from Poland was telling me how the corruption there is stopping them catching up as fast as they should be.
    I suggested they solve it like we did, by legalising it, hiding it behind a wall of government projects, non-exec positions on quangos and related engineering companies.
    When a private company you've never heard of before suddenly is control of all of railways, that's corruption.

  • rate this
    +2

    Comment number 88.

    1. Construction projects in UK cost two to ten times more than in other countries. The reason is that they are usually a corrosive mix of public and private finance.
    2. We need to control population growth rather than use up more and more land.
    3. This particular scheme is centred on London, which is the most overcrowded part of UK, instead of building bigger links to there, we should close some

  • rate this
    -5

    Comment number 87.

    Please just get on with it, high speed rail is something that shouldn't be questioned due to it's importance in the future. We are falling behind the likes of France/Germany/Japan where high speed rail is becoming almost standard and rolled out on a lot shorter timescale.

  • rate this
    +16

    Comment number 86.

    This should be kicked in to the Long Grass ASAP, Government telling us that it will benefit the NE and NW, but this will of course be detrimental to the Economies of the South West and Wales in particular, also large areas of Scotland will see no benefit, it will just suck more money from deprived areas to the already overheated SE and London, this madness must be stopped now!

  • rate this
    +4

    Comment number 85.

    Produce as many fancy figures as you like, government has a very poor record on major capital projects, civil and military.
    This doesn't necessarily mean that the private sector gets it right either; the difference is that shareholders lose money instead of taxpayers.
    Though unaffected myself, I also think it's time to fairly consider the impact on the victims of HS2 and airport developments.

  • rate this
    +5

    Comment number 84.

    HS2 is an unnecessary White Elephant which needs to be scrapped.

    It would be far better to upgrade the existing line or use the cash to invest in environmentally friendly projects like high speed fibre. We could also use it to subsidise the R&D of green power solutions and abolish the fossil fuels tax.

    One hour off the journey to Birmingham is not going to do anything for anyone.

 

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