Further debate on high speed rail and a response to Greengauge21

February 09, 2011 2:09 PM

Our initial report on high speed rail has had quite a reaction.  Theresa Villiers, one of the Ministers responsible for the project, was challenged about it on BBC London.  Unfortunately, the presenter only put one of our points to her, that the scheme is never expected to produce a financial return and will cost taxpayers a fortune.  She responded that there were wider economic benefits, but for our research note an expert analyst looked at that case and found that many of the benefits didn't stack up.  The case for high speed rail hasn't been made and it looks set to become a huge white elephant.

Our research note has started a serious debate online, with a fierce response from the taxpayer funded lobby group promoting the new line - Greengauge 21 - in particular.  Here is a round-up of the debate so far:

  • The initial report.
  • Response to Greengauge21 and ATOC.
  • Further response to Greengauge21, ATOC and the Department for Transport.

Now we have a new response from Greengauge21.  Bruce Weston, from the HS2 Action Alliance has written a response:

"Greengauge21's latest response totally fails to deal with the points I made to their first response.

On comparing like with like, the issue is a simple one.  HS2 was assessed treating rolling stock costs as a capital expense not a leasing charge.  The assessment of RP2a that Greengauge21 presented treated rolling stock costs as leased.  This worsens both the costs and the benefit/cost ratio.  Treating these costs as capital makes the benefit/cost ratio 2.63 (not the 2.19 Greengauge21 quote).  2.63 is higher than the 2.4 of HS2 - and hence is better.  How can Greengauge21 possibly conclude 'RP2a does not have as good a business case as HS2 as it stands.'?

On reliability, Greengauge21's view that RP2 would worsen train performance is not supported by the DfT’s own documentation. DfT's consultants suggest that even with increased train frequency the improvements to WCML should improve reliability locally.  They conclude 'These locations may more than compensate for other areas where there will be an enhanced train frequency but no infrastructure enhancements.'

Greengauge21 make much play of HS2 potentially being more reliable than WCML, and so HS2 and RP2 cannot be compared.  But HS2 Ltd accredit HS2 with a monetarised benefit to reflect assumed improvements in reliability, so the HS2 case already takes this into account.

Although RP2a has a superior business case to HS2, it is still just a sensitivity on RP2.  RP2's benefit/cost ratio is excluded from DfT's White Paper, probably because it would have sunk the case for HS2!  That DfT use the figures of RP2a with rolling stock costed as leased for their 'mid-scale rail upgrade package' in the White Paper simply shows how far they needed to go to conceal the fact that upgrading WCML is better value for money than HS2.

Greengauge21 also question my suggestion that Network Rail's forecasts are 'substantially below' those of HS2 Ltd.  Again their position is puzzling.  Every growth rate from Network Rail's latest forecasts to 2024/25 is below that of HS2 Ltd.  And in NR's earlier work none of the scenario growth rates were higher for the period from 2021-2036 than the period to 2021, so we should not expect NR's forecasts to catch up by 2033.

The table below shows that NR's forecasts are far from 'very close' to those of HS2 Ltd:

<<Table Removed>>

HS2 Ltd's forecasts are dramatically higher than Network Rail’s, with the NR demand between 41 per cent and 80 per cent of HS2 Ltd's figures for 2033.  When a 20 per cent shortfall in demand destroys the case for HS2, these are not minor inconsistencies.  Yet Greengauge21 claim that the NR estimates are 'very close to (not ‘substantially below’) the forecasts that HS2 Ltd have used'!

Greengauge21 also refer to the high recent passenger growth rates on the route, as if the route modernisation and the dramatic improvements to services that have been achieved were not a factor, including the one-off modal shift from air to rail on the Manchester – London route.

Finally Greengauge21 caution that RP2 would destroy the value of the WCML franchise.  Their position is like an unscrupulous plumber, sucking his teeth before declaring that a whole new central heating system is required – when a new pump and a couple of control valves would entirely solve the problem.  Can I remind them that Virgin Trains have publicly promoted improvements to deliver better services to Birmingham International?  And that Chiltern Railways are near to completing another round of infrastructure upgrades at their own instigation and at no cost to the taxpayer?  The modern franchisee is no shrinking violet but eager to improve services - and of course their own profits!

The reality is that serious flaws have been found in the HS2 business case and that Greengauge21 have no answer to them."

Rest assured we will keep up our side of this debate.  In the past, too many major schemes have gone ahead without anyone ever properly scrutinising the business case.  And with so much pressure on the budgets of ordinary households, this incredibly expensive project needs to be cancelled.

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