IEA report mixes the good, the bad and the ugly

There are good reasons and bad reasons to oppose – or indeed support – HS2. The report by the right wing Institute of  Economic Affairs published yesterday is a mix of both.

It is excellent on debunking the business case. which it tears asunder, quite rightly. It shows quite clearly that the fundamental arguments for HS2 are based on very flimsy foundations.  I  do not buy, however, the notion that HS2 will need a new underground line at Euston at a cost of £6-9bn. That seems to negate the very thrust of the IEA report which suggests projected demand has been overcooked. Nor do I think the £1,000 per household argument holds water. That makes it look as if we will all get a £1,000 bill through the post when clearly that is nonsense. Yes there will be a cost, but it will be over a long period of time and much of it will be recouped from business, and, of course, higher level taxpayers will contribute more than their share.There is, too, much nonsense about blight which is, of course, a problem, but would be with any scheme, even the motorways which I suspect the people at the IEA would like to see built.

The clear recommendation from the report with which I totally concur is that the HS2 business case has been put forward without any proper comparable analysis for the alternatives. One scheme has been selected, in great haste and without any context, and driven through. The other measures, such as Rail Package 2 are merely scenarios that have been put in to then knock down, and no serious analysis has been applied to them.

Therefore, the consultation is presented as an ‘either this or nothing’  choice whereas a range of suggestions should be assessed in the same depth. The crucial point made by the IEA is ‘The whole case for HS2 is predicated on a single scenario projection of future demand, a mistake accepted by the DfT in its 2007 White Paper but now to be repeated for HS2’. To my mind – as a sceptic, a very deep one – that is irrefutable.

The business case is widely accepted as a nonsense, and in a way all the arguments about whether time savings are productive or not are irrelevant. The key point is whether HS2 can be shown to be needed according to various scenarios, not just the one presented by the government. That would be a real test.

  • I’m a bit surprised by this analysis to say the least. The notion of an ‘all or nothing’ offer has been put forward by numerous commentators, but quite clearly both HS2 and any other alternative (RP2, RP2+, Scenario B etc) are incremental. This is why the Pendolino lengthening is happening, and the Norton Bridge grade separation too, as part of HS2 preparations. Both of those come out of the Network Rail RUS assessments, which are the statutory statement of network capacity and future needs. If NR were ambiguous about HS2 (which at times under Coucher, it was), then you might have a point – but NR is emphatically behind it.
    I don’t think that the suggestion of another WCML upgrade (with presumably ECML and some MML work thrown in too) is one that hasn’t been considered, it’s more that recent memories of the WCRM debacle are still fresh. The growth forecast for HS2 are modest compared to trend, and the current desperately poor reliability of both WCML and ECML are show without question that we are running too many trains on infrastructure that is struggling to cope, despite billions of pounds of investment (a comment I’ve heard from more than one senior industry representative in recent weeks).
    I suggest reading William Barter’s careful analysis of the options put forward by Atkins (RP2) and HSAA; it is simply untrue to suggest alternatives have not been explored enough to discover they simply won’t work in anything other than a very low growth scenario.

  • Christian,

    I agree with the bad and the ugly bit, but I’m afraid the third word is specious not good.

    The ‘business case’ (neither of us like this term, but benefit:cost appraisal is what we mean) is the area where you say the IEA has got it right (hence good) and I would say is wrong (hence specious): simply recycling points made by local objector groups and the tax-papers’alliance is not proper research, so shame on IEA.

    But you swallowed this part of their analyis, so permit me to challenge your comments.

    The busines case is not based on a ‘single scenario of future demand’: HS2 Ltd has presented a range of scenarios to show the sensitivity of the results (to changes in growth assunptions for example). And any unprejudiced mind would see that the forecasts used are conservative, certainly well below trend growth levels. The real risk with opposing HS2 is that if the anti-campiagn is successful, there will be insufficient rail capacity (for commuitng as well as intercity, for freight as well as passenger). Treasury would direct future Transport Ministers to the readily available policy tool in such circumstances: continuous real increases in rail fares.We will all suffer from this: not just those who would have travelled by high-speed train.

    Many transport economists can point to improvements they would like to see in appraisal techniques, but I haven’t seen a single serious commentary that would support your suggestion that ‘it is widely accepted as a nonsense’. Most of the deficiencies (for instance, in the simplified treatment of business travel time savings), if refined, would result in an increase in the estimated benefits of HS2. Or take the much-discussed question of regional benefits, as a further example. None of the modelling allows for a redistribution of jobs as a result of HS2. Yet here we have a case where it is foreseeable that  the impacts would be significant – rather like with the Jubilee Line Extension, if acting on a wider geography. By all means make this a sceanrio test, but don’t delude yourself that if examined the case for HS2 would get any the weaker.

    No, for me that IEA ‘research’ is simply specious, but I’m ahppy to go along with your bad and ugly too.

    Jim Steer
    Greengauge 21

  • Windsorian

    Interesting article about the NIMBY authors of this report :- 

  • NewtonBugler

    What I find so frustrating about this debate is the lack of attention given to new and emerging technologies which over the next few years will completely transform our lives. The Government and HS2 Limited have been rightly criticised for failing to take into account the fact that most trains now have wi-fi and therefore an extra 20 minutes or so spent sitting on a train isn’t wasted time at all. But what they’ve completely overlooked is the revolution in videoconferencing, which is only just beginning.  Studies have shown that virtual rather than face-to-face meetings will be the norm in a  few years’ time; indeed it’ll soon be possible to shake the hand of someone on the other side of the world without leaving your home or office. A whole range of events that people have traditionally travelled to – shareholders’ meetings, lectures, seminars, training sessions etc – will simply be streamed live on the internet – saving us huge amounts of time and money. The Government could invest a tiny fraction of the £34bn earmarked for HS2 in investing un ultra-high-speed broadband for the whole of the UK – and achieve far more by way of an economic regeneration, narrowing the north-south divide etc, than high-speed rail. 

  • Anonymous

    Well NewtonBugler, I would like to believe that, but what are these studies? So far the evidence has been that new technology has created more demand for travel rather than the opposite. Have you got details?

  • Anonymous

    Some people are using the WCRM debacle as an argument for not doing another upgrade programme – when much of that was down to mismanagement and the fact it was carried out as the rail industry was adjusting to privatisation.  The original WCML modernisation and electrification was before my time, but the ECML electrification was done much more efficiently just when BR had reached full maturity as an organisation – even allowing for the el-cheapo OLE.

    My point is that the costs seem to assume this will be a model project that will run like a swiss watch, but can we be sure that HS2 will not be another mismanaged mess which ends up having to be baled out with taxpayer billions – as both HS1 and the WCRM have shown??

  • Chris

    It doesnt matter how you manage rebuilding the WCML yet again, another massive upgrade will mean massive disruption. Its dreamland to think that constantly pulling the WCML apart to lengthen trains is an answer to increasing demand – there’s a practical limit. Currently planned and completed upgrades have sorted out the ‘easy gains’, whats left costs a huge amount compared to the benefits, hence why the HS2 business case is so superior.

  • Anonymous

    Doesn’t answer my question – it is how can we be sure there will be no massive cost overruns on HS2.  Lets look at some recent examples:

    HS1 = procrastinated over for years, baled out + nationalised, and then reprivatised at massive loss to taxpayer.
    WCMR = didn’t do what it originally promised and was years late, and went billions over budget
    Edinburgh Trams = years late, and hundreds of millions over budget and may still yet be cancelled
    Stirling-Alloa-Kincardine reopening = millions over budget (it is, albeit a good piece of railway!)
    Thameslink 2000 = over a decade late, not even properly started and now billions over original budget
    London Crossrail = still in its early stages yet, but all bets are on for the money to run out at some point, the project to be put in jeopardy, and the government has to inject more cash save face.  (after all, they’ve dug those massive holes along Oxford Street now haven’t they??)

    Don’t get me started on 2012, but the above is hardly a great track record for the delivery of major rail projects, and here we are about to start the biggest one of our generation.

  • Rich

    No idea who can answer your question. It seems you don’t want anything done because you’re worried it won’t go to plan.

  • Rich

    Of all the daft anti HS2 arguments I’ve heard, this “video conferencing” one is the most ridiculous. Video conferencing is not new – it’s been around for yonks, and unless you insist on seeing everyone in glorious 1080p HD, it works fine over a basic ADSL link. Giving everyone higher internet connection speeds is not going to let you do anything you can’t do right now, and all the time rail travel is going up. If hoping something might happen despite there being evidence to the contary is the best the anti HS2 camp do, then maybe it’s time to give up.

  • Anonymous

    It makes me sigh when I watch the programme “Megaprojects” on the Discovery Channel, and you see other nations that manage to pull off massive public infrastructure projects on time, and on budget.  I can scarcely remember any that fit into this category that have happened in this country in my relatively short lifetime.

    Not wanting to do nothing as such, I still believe that embarking on this when the existing railway is in an organisational and up to its eyeballs on the never never already is plain madness.

  • Steveotti_3

    In all the discussion, I have seen little
    (or any) evidence that the forecasts and traffic projections will be any more
    accurate than those for Eurostar and rail freight through the Channel Tunnel
    were.  At the time the decision was taken
    to build the Chunnel the prediction was that approaching 16million passengers
    would use Eurostar trains in the first year. Sixteen years later, passenger
    numbers reached just over 9.5 million. 
    Oh, and those regional Nightstar trains? Well at least the Canadians
    were able to benefit from that folly at some massive discount.  The level of freight carried by through trains
    against that anticipated was an even greater disappointment.


    So, planners, what makes you think you’ve
    got it right this time?

  • Fandroid

    Coming from a project management background I feel that I have to butt in here! Projects only overrun if they try to do too much or are inadequately planned (or are grossly interfered with). HS1 was a resounding success as a piece of infrastructure delivered, once a team was involved that were realistic about the time it would take and how much it would cost. It being sold off at less than cost to raise a few bob for the Treasury is irrelevant. It is good infrastructure and will eventually prove its worth once the politicians stop interfering and let all those who want to use the whole link to continental Europe. Edinburgh ignored the real (and well-known) issue of underground utilities and then tried to dump all risk onto their contractor. Seen it many times, especially with inexperienced clients – utterly stupid. Thameslink ‘2000’ would have got going a lot sooner if BR was still around. The barmy privatisation, dreamland Railtrack, divided responsibilities followed by an understandably hesitant Network Rail, all conspired to pile up cost. ‘Time is money’ was true then, is true now, and will always be true. Stirling -Alloa-Kincardine did cost more (ie the right amount!) because the local councils thought they knew better than the railway professionals and underestimated the true cost. However, as you say, it is a good railway, and a piece of infrastructure that will benefit Scotland. Crossrail looks good to me. The management looks gritty and realistic. Many of the contracts have now been let. London tunnelling is well understood these days, so only really unusual problems should cause trouble there. I do worry a bit about Network Rail signalling on the Great Western Main Line (ETCS) but the Crossrail team have planned how to avoid that being a catastrophe, and fully intend the core infrastructure, the London tunnel, to be up and running on time. 

    Back to HS2. Some of the claims seem ambitious, and that worries me, as it makes the justification vulnerable to argument (followed by delay, followed by increased cost !) However, the core plan, to build two new fast tracks to Birmingham and then beyond, is perfectly good and, as additional infrastructure, will allow increased capacity on the WCML for those who are now denieda decent service, including commuters who live in the eastern part of the Chilterns and in Bucks. All to be achieved without endless misery for the current WCML users. In reality, it’s not a terribly ambitious scheme. It just happens to  run through country inhabited by people who thought they had bought themselves immunity from the rest of England.

  • Fandroid

    The Channel Tunnel is a fine example of how a great piece of engineering is being wasted by politics, nationalism, protectionism ,and stupidity. The UK is so scared of foreigners that we insist on levels of border control that make very little sense when aimed at our near neighbours. eg from Brussels: we pass through a Belgian border point, followed by our beloved UK Border Agency, and on a bad night another border check at St Pancras ! The security obsession creates yet another obstruction to travelling. Both of these mean it is very difficult to extend services beyond London, Brussels and Paris. DB has already observed that there is a real demand for train travel beyond those points. Eurostar is the most unimaginative gang of twerps to ever run a railway. They sincerely believed that trying to pretend to be an airline would attract more passengers, when it just puts off those who enjoy the freedom of rail (Forcing people to buy a return when they only want a one-way ticket! -A madness that at last they have abandoned. Plus airline style check-in for goodness sake! ) They made zilch effort to expand their services – it took those pantomime villains, the EU Commission, to force them to face a bit of competition. SNCF were equally obstructive of competetive freight operations. The UK border problems made EWSR restrict its operations. The EU will force a much better use of the tunnel, but we had to wait a hell of a long time for it to happen. Unless a perverse extension of privatisation madness takes over, it’s difficult to see the same obstructions getting in the way of HS2 (Give it to Virgin – they’ll pretend it’s an airline too!)  

  • Windsorian

    Interesting article re Channel Tunnel usage over weekend 23/24July 2011

    “……..164 Eurostar trains, 362 Eurotunnel Truck Shuttles, 216 Le Shuttle trains, travelling from Calais to Folkestone, and 29 rail freight trains ran though the Channel Tunnel, a total of 987 trains, equivalent to one every 3-and-a-half minutes at peak time.”

  • Anonymous

    It’s a pity no transport journalists in the UK have ever shown the slightest interest in the fiasco that is Stuttgart 21. The lies that have been used to justify it make the arguments for HS2 sound almost reasonable. This project calls for the existing terminus station in Stuttgart, a listed building designed by Paul Bonatz and
    built between 1914 and 1928, to be replaced by a new underground station. It is
    effectively a massive real estate project to cash in on the land which would be
    freed up by removing the overground station and approach tracks. The official cost is put at 4.1 to 4.5 billion euros, but even the most
    conservative estimates of the true cost start at 5.3 billion euros.

    The lies about the costs of this project which Deutsche Bahn used to get it approved have recently been revealed in Stern magazine. But the vested interests are such that it now seems unstoppable. The results of a “stress test” using massaged figures supplied by Deutsche Bahn will be presented on Friday 29 July 2011. It will show that the planned station can handle 49 trains an hour (which represents a 30% increase on the current timetable). But the true capacity of the current terminus station is 54 trains an hour. So German taxpayers will be paying EUR 5 billion+ for a station that is inferior to the current one,

    Yes, but it will be nice and new and shiny and German, so surely it must be worth it?
    No. It is a collection of bodges and special exemptions graciously granted by the German rail safety authority (Eisenbahnbundesamt). The platforms of the new station will slope far more than the amount permitted in the regulations. This means it will be impossible for trains to change direction at the station as the obligatory brake test can only be performed on the level. There is no safety concept for disabled passengers. Deutsche Bahn has said it would expect DB staff and other passengers to carry disabled people out of the station in an emergency (the current terminus station provides level access from the road to the trains).

    At the same time as the DB is throwing taxpayers’ money away on this nonsense, it is proving unable to run its existing operation satisfactorily. Maintenance intervals have been stretched to breaking point and corners have been cut. A case in point is the air conditioning of the ICE high-speed trains which fails if the outside temperature exceeds 32 degrees Celsius.

    Sorry this is a rant, but Stuttgart 21 is a massive scandal (which in March 2011 brought down the CDU government of Baden-Württemberg which had ruled continuously for almost 60 years). If HS2 met with a fraction of the concerted, yet peaceful, opposition which Stuttgart 21 has encountered, it would be dead in no time.