Rail 661: HS2 is an uncertain bet

Futurology is a dodgy business, but there is no better time than the beginning of a New Year to try a bit of crystal ball gazing on a rather longer time scale than Mystic Wolmar’s usual efforts. The announcement of the route for High Speed 2 raises the question of what the railway might look like in 20 or 30 years time and clearly the answer depends very much on whether the line is built or not.

How things change in rail policy. Even those with less than elephantine memories will recall that as recently as 2007 a strategy paper looking at the railway 30 years ahead, Delivering a sustainable railway, ruled out a new high speed line on the grounds that ‘it would not be prudent to invest today to address capacity issues that are unlikely to materialise until two decades hence, and may not materialise at all’. It went on to say that ‘just as future growth rates are uncertain, so is the way in which people will use rail.  In future, where people have double today’s income and half today’s carbon footprint, behaviour patterns may change significantly’.

I cite this not to suggest that the Strategy Paper was necessarily correct, but merely to show that predictions are, by their very nature, insubstantial and liable to change. Within a year of the publication of that report, a rethink was already underway with the arrival of Lord Adonis in the Department for Transport and, as we all now know, the Labour Party reversed its policy and decided to strongly support the construction of HS2.

Despite its limitations, a bit of futurology will be handy at this vital time for the railways. A reader who supports the construction of HS2, David Reed, suggests there are three possible scenarios to the shape of the railways in 2030. In the first, the high speed network is abandoned, but demand for domestic travel has continued to grow and the trains are becoming hopelessly overcrowded. Moreover, as he puts  it, ‘A number of expensive and disruptive palliatives have not proved sufficient ( as with the West Coast upgrade) and we still need to build a high speed railway.’ He goes on: ‘There has been a resurgence of domestic air travel and much demand for additional runways. Because train is such a hassle and no faster than today, most leisure journeys are still by car, and the motorways are clogged with freight, leading to constant demands from the motorway lobby to build more. The Daily Mail is full of stories about clogged up Britain, how hopeless we are compared to Europe….

Under scenario two  the line to Birmingham is complete and work is underway on the extensions to Manchester and Leeds. He suggests that the line has proved extremely popular and so fast that ‘so fast that most motorists choose to use it rather than drive’. He suggests that domestic air journeys would become unthinkable and ‘the connectivity between our major centres has boosted the economy so that revenue flows back to the Government through all forms of personal and company tax’. Moreover, on the classic network the extra capacity ‘has enabled substantial improvements in commuter, intermediate and freight traffic’

Or, Mr Reed suggests, there is the third scenario that appears to be the basis of my opposition which is that ‘the high speed network has proved to be an expensive white elephant with usage far below predicted’.

Which of these is the most likely? Or, what has made the Department for Transport change from its view that rather than demand being impossible to predict, it is now convinced that unless a line is built, we would get Mr Reed’s first scenario. I am, as regular readers know, deeply sceptical of the whole business case methodology which, as another contributor, RapidAssistant, to my website put it, ‘The crux of it is that the economic arguments both for and against HS2 aren’t worth the paper they are printed on and can be manipulated to say whatever you want…..the maths are so complex and the assumptions are so ambiguous that whatever number drops out at the bottom is likely to be meaningless’.

There are a couple of general points to make.  First, the roads and airports will continue to be clogged, whatever happens with HS2. The HS2 report, produced by HS2 Ltd for the government, suggests that traffic on the M1 will only be reduced by 2 per cent with the line’s construction. Moreover, there will be virtually no impact on domestic air travel since HS2 does not cover any busy routes. Secondly, the HS2 case is based on heroic demand assumptions, which are very unlikely to be realised.

That gets to the core of my argument. The business case is really just so much mumbo-jumbo and is so dependent on forecasts of demand as to be meaningless. For example, the HS2 report admitted that if there were just a 20 per cent shortfall in their forecast numbers, the benefit cost ratio is reduced from 2.4 to below 1.5, not enough to be given the go-ahead.

So, let’s just forget the business case and see what’s left. Here, somewhat randomly, are half a dozen arguments in favour of the ‘overcrowded’ scenario: :

1. Continued economic growth

2. More demand for rail travel as incomes growth

3. Need for capacity for freight and commuter services

4. Population growth requires extra rail capacity

5. The line is essential to help the regeneration of the North

6. The line would attract people out of their cars

And here’s a few possible arguments against:

1. Transport will become more expensive in future years, damping down demand,

2. New technology, such as teleconferencing, will further reduce transport use

3. Environmental pressures, notably to reduce carbon, will become much more important factors in determining government policy.

4. Rail technology – moving block signalling for example – could greatly increase capacity on existing railways.

5. Cars will become ‘greener’ reducing the environmental advantages of rail.

6. Pressure on government spending will result in delays and possibly cancellation.

7. The usual cost overruns on megaprojects will make HS2 unaffordable.

8. Transport demand overall has increased only at the rate of population growth in recent years rather than, as in the past, faster than the rate of income growth.

9. HS2 would not help large swathes of rail travellers, such as users of the Great Western and London commuters.

My snapshot of the network in 2030 without HS2 is that it will be full of modern trains, travelling faster than those of today and the quadrupling or sextupling of sections of track to relieve capacity, along with measures such as longer trains, a better second to first class ratio and improved technology to increase the number of train paths. Secondary routes will be upgraded and large swathes of the network will be electrified. Overall transport demand will be damped down by cost and new technology. Cars will, indeed, be much greener.

OK, that is not as exciting as a new line and my bit of futurology might be wrong, but so could the counter arguments. The point is, and I have said this before, the case for HS2 is not based on a solid business model, but rather on the desire to have a prestige line to match those in Europe. The case has weak foundations based more on emotion than rational argument and carries with it enormous risk, not just the third scenario above but also the fact that so much rail investment would be sucked away from the existing network. You do not have to be anti-rail, as many of my critics have suggested, to oppose HS2 and there are a surprisingly large number of people within the industry who privately are deeply sceptical of the plan.

Mystic Wolmar’s half dozen for 2011

Okay, Mystic has been accused of playing too safe in recent years, so here’s a few to stick my neck out:

1. Network Rail will not survive in its current form, but proposals will be put forward to break its monopoly, though these will not materialise until 2012 at the earliest.

2. There will be growing dissent over the HS2 and some ministers will resign over the issue

3. The Libdems will suffer huge losses at the May local elections, as well as losing the poll on electoral reform and will withdraw from the formal coalition, instead supporting the government on a case by case basis possibly under a new leader.

4. Philip Hammond will have gone on to other – in his view better – things.

5. I hate to suggest this, and hope I am wrong, but some sloppiness seems to be creeping into the industry on the basis of complacency, and I suspect that the long run of years in which no passengers have been killed in rail-caused accidents will come to an end.

6. The old Eurostar platforms at Waterloo will still not find a railway use.

Oh, and one just for me, QPR will be promoted as champions.