by Harry Fone, grassroots campaign manager at the TaxPayers’ Alliance
Now that the dust has settled on the government’s decision to proceed with HS2 it’s worth analysing the report that was instrumental in the decision making process. Commissioned by transport secretary Grant Schapps in August 2019, the Oakervee Review was designed to be an independent review into HS2. Before publication the report was dogged by criticism, most notably from its own deputy chair, Lord Berkeley, who resigned mid-way through proceedings. Unfortunately, much of the criticism was very well founded. The report is a whitewash that gives HS2 the go-ahead despite the overwhelming evidence to the contrary. With the Public Accounts Committee casting their eye over HS2 tomorrow, there are a number of key factors they should consider.
The review’s chairman, Douglas Oakervee, admits that there wasn't sufficient time to “develop its own robust, bottom-up estimate of costs” and used a recent £81-88 billion estimate given by the chairman of HS2 Ltd. An estimate by respected infrastructure and procurement specialist Michael Byng was noted but ultimately ignored. This might well be because his estimate of £106.6 billion would have completely scuppered what remains of an already obliterated benefit-cost analysis. It’s worth noting that neither figure includes the cost of the rolling stock, estimated to be at least £7 billion.
Trains per hour
Early on it was claimed that the new line would run 18 trains per hour at speeds of up to 400 km/h. As I have written before, this is nonsensical. In fairness, the report acknowledges this, which makes its conclusions even more ridiculous. It argues that HS2 Ltd and the Department for Transport (DfT) should reduce the trains per hour to a mere a 14, “with passive provision for 16 trains per hour”. “Passive provision” is a fanciful term straight from the spin-doctor’s playbook. In reality, 14 is likely to be the most that passengers can expect. Even worse, when Phases One and 2a have “fully opened” there will only be a measly 10 trains per hour.
The report lays the blame squarely at the door of HS2 Ltd for propagating falsehoods about a top speed of 400 km/h. A more realistic 330 km/h will be the operational speed with a maximum speed of 360 km/h possible to help late running services make up time. But as the review acknowledges, 360 km/h will only be possible on “around 60% of the Phase One route, and probably less on the Phase 2b route”. The report doesn’t properly investigate how these reductions in speed will affect journey times. Those rapid journeys we were all promised are looking more and more like the travel times we already have. It seems HS2 isn’t particularly high-speed after all!
The public have been repeatedly told that “HS2 will support the transition to a net-zero carbon UK economy”. Yet this argument is, at best, on a shaky track. Construction of the full network alone will produce between 8 and 14 million tonnes of carbon dioxide equivalent (tCO2e) emissions. Over 60 years of operation, the estimated savings are in the region of 11-12 million tCO2e. So the best case scenario is emissions reduced by 4 million tCO2e and in the worst case, they would increase by 3 million tCO2e. Given how poorly everything from procurement to cost estimates have been handled on the project thus far, we wouldn’t bet against the worst case scenario.
The business case
When the cost of HS2 was “only” £56 billion, the positive arguments were feeble. Unfortunately, The Oakervee Review substantially weakens an already poor case. It concedes that “it has been hard for this Review to assess the likely size of impacts on regional economic growth that will result from HS2 or other transport improvements.” Indeed, a separate government report laid out that nearly half of the benefits will go to London and the South East. It is very hard to see how HS2 will help to “level up” the country north of the Watford Gap.
Despite all its chicanery, the Oakerview Review admits the benefit-cost ratio (BCR) of a much cheaper version could be as low as 1.3. Remember, this is based on costs of £81-88 billion which have been all but disproven. In 2011, when Philip Hammond was transport secretary, he told a select committee that “if [the BCR] was to fall much below 1.5 then I would certainly put it under some very close scrutiny.” This limit of scrutiny has been more than reached. As we have previously discussed we welcome the appointment of a new HS2 minister and hope they will get costs under control.
The calculation of a cost-benefit ratio of between 1.3 and 1.5 is also dependent on the review’s recommendation the appraisal period be extended from 60 to 100 years. When one adds £20 billion to the expected costs (based on Michael Byngs estimates) and sticks to the original 60 year appraisal, the BCR comes out at a woeful 0.78. In his minority report, Lord Berkeley goes even further, arguing it could be 0.6. The sad truth is that taxpayers will be losing money hand over fist if HS2 goes ahead.
It is apparent that serious concerns about the viability and costs of HS2 have been willfully ignored to suit a political agenda. To say the review was independent is laughable. The report acknowledges that HS2 has been oversold to the public. It won’t run as many trains as promised, it will be slower than advertised, it will likely damage the environment and the economic case has been obliterated. Ultimately, this decision will haunt the country for many years to come and it’s the taxpayer who will be left footing the bill for this white elephant.