HS2 or upgrading existing lines? Response to Greengauge21

February 14, 2011 4:10 PM

Following the release of our report, High Speed Rail, High Spending Risk, the debate has begun over the project. We highlighted flaws in the business case and will continue to rebut the excuses given by proponents of spending billions of taxpayers' money on this white elephant project.

In this post we'll respond to the latest article by Greengauge21 (the taxpayer funded lobbying group set up to promote high speed rail), from Friday 11th February, considering which is better: HS2 or other rail upgrades.

But first a recap.  So far the ATOC, Department for Transport and Greengauge21 have all responded to our report. If you want to catch up with the debate since we launched it, here are our earlier responses to:

We have had a lot of support as well.  Steve Baker MP recently called our report "incredibly powerful" and his comments were reported in the Bucks Free Press.

To continue that debate, here are responses from Chris Stokes and Bruce Weston to the Greengauge21 article  Which is best - HS2 or rail upgrades?:

Chris Stokes, author of the TPA report and rail expert, has this to say:

"Greengauge21's recent response is yet again intellectually disreputable. They try to defend a different treatment of rolling stock costs in comparing HS2 with the Department of Transport's own work on alternatives (capital for HS2, leasing for the alternatives) because they know that on a comparable basis HS2 has a lower benefit cost ratio, and they also continue to suppress the best alternative (Rail package 2) which has a benefit cost ratio of 3.6 against a comparable figure of 2.4 for HS2

In addition, Greengauge21 claim that the limited upgrades proposed under RP2 would be "hugely disruptive", totally ignoring the fact that the HS2 proposals require a complete, enormously complex reconstruction of Euston station and its rail approaches over several years: this will be much more disruptive than the alternatives, and involves the demolition of a lot of houses as well.

HS2 only makes sense if you believe there will be indefinite compound growth in long distance rail use. This isn't happening with Eurostar, and the new high speed route in Holland is already in deep financial trouble as volumes are much lower than forecast. Let's have a rigorous independent review of the business case before this scheme goes anywhere near Parliament."

Bruce Weston, from the HS2 Action Alliance, responses to Greengauge21 here:

"Greengauge21 have posted a further defence of their contention that HS2 has a good economic case. Unsurprisingly they fail to take on board the points that have been made against HS2.

Greengauge21 return to the assertion that the benefit cost ratio is above the threshold that the DfT set. But this is before account is taken that:
  • Demand is greatly overestimated (as shown by the Network Rail numbers that Greengauge21 quoted - a conclusion they seem no longer to dispute).
  • Time saving benefits are greatly overestimated, as business travellers can and are productive on long distance rail trips (despite DfT's blatantly false assumption that every second is wasted).
  • If HS2 is compared with a realistic alternative, waiting time and crowding benefits disappear.

Greengauge21 now base the claim that the demand is not overestimated on the projected growth rates being lower than in the previous decade, conveniently ignoring:

  • That HS2 Ltd's forecasts are much higher than those made by others, e.g. Network Rail (as previously disputed by Greengauge21).
  • That the WCML has enjoyed greater improvements to services that those offered by HS2 - and for HS2 an additional uplift in demand is expected that doubles the background growth (which has been repeatedly pointed out to Greengauge21).
  • That long distance services have benefited from mobile technology greatly improving the usefulness of time on board long distance trains, which reduces the effective cost of the journey to passengers.

It is interesting that Greengauge21 seem to think that stopping projected growth after 2033 is very conservative. HS2 Ltd assume that for every 1 per cent more income, people in Glasgow will spend 2.8 per cent more on rail travel to London. Obviously people spending a higher and higher proportion of their incomes on travel to London could not continue indefinitely, or people in Glasgow would end up spending all their money on going to London by train! And there are good reasons to think that this sort of growth might stop much earlier. Total domestic travel per capital has not been going up at all for the last 15 years.

Greengauge21 defend assessing RP2a (a variant of uprating the WCML) on a different basis from HS2. They reason that it is normal for new rolling stock to be leased in the UK. But to compare one assessment which includes the costs of financing with one that does not biases the assessment. The simple truth is that RP2a is better than HS2 if the same assessment method is used.

Greengauge21 assert that RP2a is 'by far the the best performing of the rail alternatives to HS2 ', but they know this is not true. RP2 is better - with a benefit to cost ratio of 3.63, compared to 2.67 for RP2a and 2.4 for HS2.

They claim that the costs of uprating WCML may prove much higher than estimated. They may well be right, but what of the costs of HS2? RP2 is a series of local improvement schemes (like those successfully implemented on Chiltern Railways), not a decade long major project with a massive potential for over-run."

We will continue to represent the interests of taxpayers, who will be lumbered with a multi-billion pound bill they can ill afford if this project goes ahead. This is a major scheme which must not be pushed through without rigorous analysis of the business case, which our research shows is very weak.

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