Greengauge 21 and ATOC respond to our report on high speed rail

There has been lots of media coverage of our report on high speed rail today.  Two organisations have written substantive responses: The Association of Train Operating Companies (ATOC) and Greengauge 21.  We asked Chris Stokes, experienced rail consultant and author of our research note, to respond to ATOC and Bruce Weston, from the HS2 Action Alliance, to respond to Greengauge 21.  Here are their responses.

Chris Stokes responded to ATOC's charge that HS2 was needed to address rising demand for rail travel:

"ATOC have responded supporting HS2 - given their members' position in relation to Government it would be surprising if they didn't!

ATOC say: “Demand for rail travel is expected to double in the coming decades and intercity routes are beginning to fill up as more and more people choose to travel by train.  A new high speed line, alongside sustained investment in the existing network, is key if we are to meet the significant growth in passenger numbers that is expected in the years ahead"

It's true that passenger volumes have been growing strongly, and rail's share of the total transport market has been growing as well. But the Department of Transport's own studies show that capacity on the InterCity routes from Euston can be doubled by modest incremental steps, operating longer and more frequent trains. This costs much less than the £17 billion+ for a new line. HS2's forecasts assume an implausible growth to three and a half times current passenger numbers, and even then the financial case is dreadful. And, at some point well short of this, demand is likely to be saturated, as is happening on London - Paris/Brussels, Paris - Lyon and Tokyo - Osaka

The Government should have a proper evaluation of future demand before it commits to HS2 - and it should remember how wildly optimistic the forecasts for HS1 have proved to be."

Bruce Weston responded to Greengauge's charge that, while there are cheaper alternatives to HS2, those alternatives produce a worse balance of costs and benefits:

"Greengauge21 have responded to the TaxPayers' Alliance, not to answer the serious flaws identifed in HS2's business case, but to suggest that DfT's own alternative to a new railway 'Rail Package 2' (RP2) isn't as good as the TaxPayers' Alliance have claimed, and that HS2 Ltd's demand forecasts are not as extreme as they seem to be.

In fact, it is Greengauge21 who are being misleading.  The case they describe is a variant on RP2, RP2a, that differs in two ways:

1. RP2a is a sensitivity on RP2, with journey time savings reduced to enhance reliability


2. In this version of RP2a, rolling stock is treated as leased rather than as a capital cost, which means higher costs and a lower net benefit ratio (NBR).  Given HS2's rolling stock costs are treated as a capital cost, Greengauge21 are not comparing like with like.

The TaxPayers' Alliance are right about RP2 - it has a net cost of only £2.0bn and an NBR of 3.63.  This is much better than HS2, which DfT says has a net cost of £17.8bn and an NBR of 2.4.  Even RP2a is better than HS2 when assessed on the same basis as HS2 - it has a net cost of £2.6bn and an NBR of 2.67.  And these comparisons ignore that RP2 could be implemented both earlier and incrementally - improving the NBR and avoiding the very real risk of overestimating demand (as happened with HS1).

Greengauge21 are also misleading about the increase delivered by RP2.  The figure that they quote (54 per cent) is the increase not against the 2008 base - from which demand increases are derived - but against the 'do minimum' case.  The figure is also for the increase in WCML and Chiltern Railways capacity combined.  The real figure for the increase in WCML capacity is about 138 per cent, which keeps pace with HS2 Ltd's demand projection of about 133 per cent to 2033 without HS2.

Greengauge21 also seems to see support for HS2 Ltd's demand forecasts in Network Rail's demand projections for WCML.  They refer to the Draft WCML RUS that gives forecasts to 2024.  However, in 2009 Network Rail forecast WCML demand to increase between 45 per cent and 89 per cent (depending upon the scenario) from 2007 to 2036.  All these forecasts are substantially below that made by HS2 Ltd of 133 per cent growth from 2008 to 2033 (without the demand uplift from HS2).  Importantly Network Rail also saw demand growth reduce to a lower rate from 2021.  All Network Rail's scenarios to 2024 in the draft WCML RUS have lower growth rates than HS2 Ltd project to 2033, consequently Network Rail's analysis shows that HS2 Ltd's forecast is substantially too high.

Just to put the demand forecasts in context, according to HS2 Ltd themselves, the NBR of HS2 plunges to 1.5 with just a 20 per cent shortfall in its projected demand."

There has been lots of media coverage of our report on high speed rail today.  Two organisations have written substantive responses: The Association of Train Operating Companies (ATOC) and Greengauge 21.  We asked Chris Stokes, experienced rail consultant and author of our research note, to respond to ATOC and Bruce Weston, from the HS2 Action Alliance, to respond to Greengauge 21.  Here are their responses.

Chris Stokes responded to ATOC's charge that HS2 was needed to address rising demand for rail travel:

"ATOC have responded supporting HS2 - given their members' position in relation to Government it would be surprising if they didn't!

ATOC say: “Demand for rail travel is expected to double in the coming decades and intercity routes are beginning to fill up as more and more people choose to travel by train.  A new high speed line, alongside sustained investment in the existing network, is key if we are to meet the significant growth in passenger numbers that is expected in the years ahead"

It's true that passenger volumes have been growing strongly, and rail's share of the total transport market has been growing as well. But the Department of Transport's own studies show that capacity on the InterCity routes from Euston can be doubled by modest incremental steps, operating longer and more frequent trains. This costs much less than the £17 billion+ for a new line. HS2's forecasts assume an implausible growth to three and a half times current passenger numbers, and even then the financial case is dreadful. And, at some point well short of this, demand is likely to be saturated, as is happening on London - Paris/Brussels, Paris - Lyon and Tokyo - Osaka

The Government should have a proper evaluation of future demand before it commits to HS2 - and it should remember how wildly optimistic the forecasts for HS1 have proved to be."

Bruce Weston responded to Greengauge's charge that, while there are cheaper alternatives to HS2, those alternatives produce a worse balance of costs and benefits:

"Greengauge21 have responded to the TaxPayers' Alliance, not to answer the serious flaws identifed in HS2's business case, but to suggest that DfT's own alternative to a new railway 'Rail Package 2' (RP2) isn't as good as the TaxPayers' Alliance have claimed, and that HS2 Ltd's demand forecasts are not as extreme as they seem to be.

In fact, it is Greengauge21 who are being misleading.  The case they describe is a variant on RP2, RP2a, that differs in two ways:

1. RP2a is a sensitivity on RP2, with journey time savings reduced to enhance reliability


2. In this version of RP2a, rolling stock is treated as leased rather than as a capital cost, which means higher costs and a lower net benefit ratio (NBR).  Given HS2's rolling stock costs are treated as a capital cost, Greengauge21 are not comparing like with like.

The TaxPayers' Alliance are right about RP2 - it has a net cost of only £2.0bn and an NBR of 3.63.  This is much better than HS2, which DfT says has a net cost of £17.8bn and an NBR of 2.4.  Even RP2a is better than HS2 when assessed on the same basis as HS2 - it has a net cost of £2.6bn and an NBR of 2.67.  And these comparisons ignore that RP2 could be implemented both earlier and incrementally - improving the NBR and avoiding the very real risk of overestimating demand (as happened with HS1).

Greengauge21 are also misleading about the increase delivered by RP2.  The figure that they quote (54 per cent) is the increase not against the 2008 base - from which demand increases are derived - but against the 'do minimum' case.  The figure is also for the increase in WCML and Chiltern Railways capacity combined.  The real figure for the increase in WCML capacity is about 138 per cent, which keeps pace with HS2 Ltd's demand projection of about 133 per cent to 2033 without HS2.

Greengauge21 also seems to see support for HS2 Ltd's demand forecasts in Network Rail's demand projections for WCML.  They refer to the Draft WCML RUS that gives forecasts to 2024.  However, in 2009 Network Rail forecast WCML demand to increase between 45 per cent and 89 per cent (depending upon the scenario) from 2007 to 2036.  All these forecasts are substantially below that made by HS2 Ltd of 133 per cent growth from 2008 to 2033 (without the demand uplift from HS2).  Importantly Network Rail also saw demand growth reduce to a lower rate from 2021.  All Network Rail's scenarios to 2024 in the draft WCML RUS have lower growth rates than HS2 Ltd project to 2033, consequently Network Rail's analysis shows that HS2 Ltd's forecast is substantially too high.

Just to put the demand forecasts in context, according to HS2 Ltd themselves, the NBR of HS2 plunges to 1.5 with just a 20 per cent shortfall in its projected demand."