HS2 spending plan puts project at risk

It’s hardly surprising that the Spending Review announcement was seen as a good day to bury the bad news that the projected cost of HS2 has now soared to £42.6bn which amounts to £50bn if rolling stock is included. This is pretty catastrophic for the project – it effectively means that if the business case is recalibrated, it will barely come up with a benefit cost ratio of 1 -1 which under normal circumstances would spell the death knell for the scheme.

Don’t be fooled by the rubbish about this extra merely being contingency added to previous estimates since they, too, included contingency, a Treasury requirement of all schemes.

It is quite astonishing, therefore, that it still receives all party support at a time when very basic support for transport, far more effective in terms of ensuring people get out of their cars, is being cut. There would be so many better things to do with £50bn, like ensuring all our towns and cities had good public transport systems, with lots of trams – all of which would be much better value than the Edinburgh scheme I saw yesterday – modern frequent bus services, good cycle infrastructure  and so on. Supporters of the scheme must be starting to have doubts.

Talking to a senior transport planner the other day, he made it abundantly clear that very few of them believe this is a worthwhile scheme. They did a straw poll of how the money would be better spent, and the top two ideas were a nationwide fast broadband network and a series of tram and guided busway schemes in towns and cities across the country.

The gobbleydegook from HS2 Ltd suggests they are floundering. Here is what Alison Munro, the Chief Executive said: ‘We have managed the scope for Phase 1 to arrive at a reference design that meets the objectives set by DfT for HS2 and have done so broadly within the cost and contingency envelope of £16.3 bn set out by the previous Secretary of State in Jan 2012.’ Capice?

As I have said before, the fact that there is all party support means that there is no proper debate on the project. Last night’s Commons vote saw 37 MPs voting for a wrecking amendment on the paving bill, but I suspect there is much more dissent on both sides of the House. It is time for more MPs to speak out.

  • Mr O

    DfT never really expected the new govt to give this the green light. If they had they wpould have chosen the company’s leadership more carefully. I was always of the view that spending money on conventional rail was a better investment. DfT could never produce reliable cost figures for high speed rail in this country and their estimates were always significantly higher than other comparable European countries.

  • Rich

    ” This is pretty catastrophic for the project”

    Nope.

    “Supporters of the scheme must be starting to have doubts.”

    Nope. I’m afraid it’s the nay-sayers who are getting desperate, which is why you’ve penned yet another article about this and have noticeably decided to up the rhetoric somewhat.

    “There would be so many better things to do with £50bn, like ensuring all our towns and cities had good public transport systems, with lots of trams – all of which would be much better value than the Edinburgh scheme I saw yesterday – modern frequent bus services, good cycle infrastructure and so on”.

    All of which happen irrespective of whether HS2 goes ahead or not, and none of which address any of the problems that HS2 is aimed at.

    “As I have said before, the fact that there is all party support means that there is no proper debate on the project.”

    No, it just means they don’t agree with you. Deal with it.

    “…and the top two ideas were a nationwide fast broadband network and a series of tram and guided busway schemes in towns and cities across the country.”

    And you agree with this presumably. Go on, I’ll bite. The usual 2 questions which no-one seems able to answer.

    1 – Video conferencing, company email, access to company databases, and everything else an office worker typically needs to do their job, work fine over a basic ADSL link and has done for years, so what’s this computer program that can be run with a faster internet speed that doesn’t work now? What does it do exactly?

    2 – Why does this broadband argument apply only to HS2? What is it about one 2-track railway line that means broadband makes it redundant, yet airport expansions, new roads, new office developments, new business parks, retail parks, etc etc are immune from it, and the topic is never brought up? What’s the point of your “tram schemes” if everyone is at home gawping at a monitor?

    The NEF report the other week came out with this broadband guff, so I asked the “expert” who wrote it these questions on his blog, and it turns out he doesn’t know either.

    And when everyone gets super-duper fast internet, what happens? Presumably they just march up to their boss and say “I’ve now got really fast internet access so I don’t have to come into the office any more.” Yes, that’ll work I’m sure. I honestly don’t think I’ve heard a more fatuous argument that this “broadband not tech” nonsense. It’s absolutely ridiculous, but I’m afraid it just shows the level of desperation amongst the anti-progress, middle-class placard wavers. Shame.

  • Rich

    “broadband not HS2”, sorry.

  • Mr S

    If the benefit – cost ratio is now close to 1-1 there will be massive financial cost to the taxpayer even if the ticket sales meet the projections and it doesn’t get even more expensive. With Network Rail already holding £30bn of debt and other schemes like IEP set to bleed the finances dry, it isn’t difficult to see this all ending in tears. Once it is too late, our democratically elected sheep who mostly seem incapable of critical or independent thought, will be playing the same fatuous blame game they are with the bankers today.

  • Mattster

    HS2 is all about politics, not about a business case.

    It’s worth thinking about HS2, with its lack of a business case, and the 3rd runway, with its very stong business case. Its not the business case that determines what happens, but politics.

    Labour and the Conservatives are becoming ever more entrenched in their regional homelands (http://www.economist.com/news/briefing/21576418-diverging-politics-labour-north-and-conservative-south-make-england-look-ever-more), and in coming years will find it ever harder to win an absolute majority.

    The Tories need to win swing consituencies off Labour to have any chance of winning an absolute majority – the very constituencies that would benefit from HS2. If they were to go against HS2, they could write off any chance of winning an absolute majority. And Labour (whose idea this was) have to support this scheme to head off any chance of a Tory victory in these swing constituencies.

    (The Chiltern seats are solid Tory, and it is inconceivable they would lose them)

    The cost of HS2 could reach £100bn, even £150bn.

    The NAO could write many more reports.

    The PAC could condemn the scheme.

    The BCR might go under 1:.5……

    …. but it would make no difference, so long as the electoral calculation remains the same.

    Christian, you talk much sense on the business case, and the possible alternative use of the cash. But politics is about winning elections, and there is more electoral advantage in supporting HS2 than opposing it.

    It’s almost like Heathrow’s third runway in reverse. There is an exceptionally strong business case, but any MP in the South West London swing (Con- Lib Dem) constituencies would lose their seat if they supported it. And because of that, the scheme is snookered, however strong the business case.

  • Mattster

    Rich – HS2 doesn’t have a business case. Does that not worry you?

  • Rich

    The “business case” as judged by my criteria is rock solid Matt, so no, it doesn’t.

  • RapidAssistant

    “Why does this broadband argument apply only to HS2? What is it about one
    2-track railway line that means broadband makes it redundant, yet airport
    expansions, new roads, new office developments, new business parks, retail
    parks, etc etc are immune from it, and the topic is never brought up? What’s the
    point of your “tram schemes” if everyone is at home gawping at a monitor?”

    Come on, don’t make me laugh. Far more people make local journeys than they do inter-city ones – that’s where local transport schemes bring more benefit to a much wider cross section of the population. I only do a 100+ mile inter-city journey by train 5 or 6 times a year max. Millions more never actually take a long distance train. Ever. I happen to live where the rail link to the nearest city was ripped up by Beeching 50 years ago, and the local bus service is equally deplorable – result – everyone drives. Will a 100 mile railway line between London and Birmingham take my community, or the thousands of others like it up and down the country off the roads. No.

    Yes there are people that commute long distances to London every day, but knowing a few of them I can tell you that they all hold senior professional jobs meaning they can afford the horrendous annual season ticket cost. Looked at it in that context all HS2 will succeed in doing is encouraging more highly skilled professional employment to be concentrated in London. Is that really what the nation needs?

  • Mattster

    Ah- you’ve got your own methodology. I assume that’s different from the DfT methodology. Well, if that now makes HS2 a good return on investment, surely all the other schemes have also improved their Busines case?
    So, the question still stands, why should money be spent on something that is not the best return on investment?

  • Brimstone52

    Surely it depends on what the criteria are for defining that “best return”?

    The “return” might include a place for the British railway engineering industry to show off its ability. If the UK government isn’t willing to buy from its domestic suppliers (as is all too often the case), why should anyone else?

  • Brimstone52

    There is however one political party opposing HS2, UKIP.

    Their opposition is based on the fact that the money can be better spent on improving the existing railway.

    As I understand it, the TGV has sucked money out of the rest of the French railway system and it is decidedly tatty. (I haven’t been so can’t comment from personal experience.)

  • Rich

    If you want to have a laugh mate by answering completely different questions to the one you’ve actually quoted, that’s fine by me.

    “Far more people make local journeys than they do inter-city ones”

    Indeed they do. But as the question you’ve quoted of mine is about the enduring mystery of why broadband would have an effect on HS2 and nothing else – let’s consider what it’s actually most likely to affect. Presumably when people are pushing this argument they mean that loads of people can now work from home. (Doing something they couldn’t do before – we don’t know what as it’s never explained). So is it long distance services that would be affected, or, errm, local commuter services? You know, the ones that get people to the office and back as opposed to day trips, visiting customers etc. I know which one my money is on. In reality, if broadband were to have this dramatic effect on passenger numbers, it would have an effect on *everything*, hence the question. So why is it that the same people pushing this argument are also the ones clamoring for an upgrade to the WCML as opposed to HS2? Either you think broadband is going to make city to city travel redundant or you don’t.

    “I only do a 100+ mile inter-city journey by train 5 or 6 times a year max. Millions more never actually take a long distance train. Ever.”

    Good for you. But let’s deal with stats from the population as a whole rather than just one person having a guess. Q3 2012-13 : There were 32.6 million journeys on long distance services. Source: http://www.rail-reg.gov.uk/server/show/ConWebDoc.11128

    With a population of about 63 million, that sounds rather a lot to me and certainly not the paltry figure that you are trying to imply.

  • Rich

    “surely all the other schemes have also improved their Busines case? ”

    Eh? Why? Which schemes, and how they trying to achieve what HS2 will achieve?

    “So, the question still stands, why should money be spent on something that is not the best return on investment?”

    Because for a start, judging project ‘A’ against project ‘B’, when the two have have entirely separate aims, and never doing ‘A’ because ‘B’ always generates more money, would be a rather irresponsible and impractical way to run the country, would it not? You’d only ever spend money on one thing. I could probably demonstrate that concreting the entire country in roads generates more revenue by using whatever cost model, and there goes your 3rd runway plan for ever.

  • Rich

    “There is however one political party opposing HS2, UKIP.”.

    And that, in one short sentence, is all you need to know about HS2 opponents. Stuck in the past, like all their other policies.

  • Brimstone52

    “Stuck in the past, like all their other policies.”

    In what way is wanting to get out of a constricting political union so that we can more easily trade with the rest of the world being “stuck in the past”?

    UKIP is not against high speed railways per se. They believe the the money would be better spent on the existing system.

    Not everyone who is a member of UKIP is opposed to HS2 and everyone who is opposed to HS2 is not a member of UKIP.

    Before dismissing various groups of people you really should understand their objections. You would appear less reactionary.

  • Peter

    Is HS2 worth building?

    We can have these debates until the cows come home and not really get anywhere. The only way this can really resolved would be in a privatised industry where projects must gain financial backing in the markets.

    And forget about the current faux-privatisation, where politicians still take all the important decisions (and get them wrong of course).

    I mean +real+ privatisation, of the sort that was last seen pre-1923. And before anyone says that would leave rail at a disadvantage compared to motorways and air transport, how about the state getting out of transport altogether?

    Well, how about it?

  • Dan

    Fine by me – assuming you are talking totally – ie council does not repair pot holes on your road – or even remove the fly tipped sofa dumped blocking the cycle path because that is the job of the company you pay your toll to to allow you to walk, cycle or drive out of your own front gate (is that what you mean by the state getting out of transport altogether?

    I would say this is simply unrealistic in a western economy – but it IS possible. How many votes you’d get after you did it the public realised the consequences.

    Poss also means no border controls too – because border controls are run by the state and to restrict entry at airports would of course interfere with the right of the private airport / port operators to get money by bringing passengers through them.

    Not sure how far you want to go with this but maybe you can set out where the boundaries would be?

  • dan

    I’ve been on the non TGV part of SNCF (all the way from St Malo to the south last summer using local trains) and it’s decidedly better quality than mots UK local services – in terms of ride of trains, track quality condition and quality of rolling stock.

    The only negative angle is service frequency – but SNCF has always been like that on local routes – before TGV and after

  • dan

    By the way – when M1 being planned did anyone cost up the m-way network developed over the next 15 or 20 years and say in the run up to the 1955 election what that would cost – and do we know what it is on today’s money?

    Does any one know – it would be interesting to know.

    I bet if they did plenty of people would have said ‘can’t afford that’ / don’t need that. But did it happen?

  • Rich

    People don’t look at infrastructure projects like that. HS2 will be around for 150 years plus and will provide countless benefits during that time that can’t possibly be quantified in some “business case”, which is all the nay-sayers see and want to see. Here’s a far better article on it if anyone’s tired of the blinkered, head-in-the-sand claptrap on blogs like this one.

    http://theconversation.com/consider-hs2-within-wider-networks-to-gauge-true-value-15494

  • RapidAssistant

    Well I will give you another statistic which is definitely not “one person having a guess” as you put it.

    70% of all rail journeys begin or end in London. Fact. And that is across all eight or so main lines that go into London from ALL directions, not just the northwesterly one that the WCML/HS2 services. So again I reiterate my point, how can something which serves such a narrow slither of the country be of benefit to so many, which is the line we keep getting sold on this one. We are talking basically (I am taking a rough guess here, but you get the gist of it) 15-20% of the 70% which is only at best 10 million people out of a country of 60-odd million. National benefit eh? – yes in the sense that it will only centralise the economy in a small pocket of the nation.

    And whilst I’m on the subject I think it is related to a much wider national issue in that London and the Home Counties is a monster which will keep on consuming infrastructure, not matter how much of it you build – not just railways. Heathrow will keep on filling up with planes no matter how many runways you build. The M25 will keep on filling up with cars the more lanes you build. The tube and the railways will keep on filling up with people no matter how many lines you add.

    But alas I digress. You clearly have your opinion on this and you won’t be swayed no matter what argument is put to you. I am saying no more on the matter.

  • Rich

    1st paragraph – I know anti-HS2 people like to ignore this, but billions *are* being pumped into rest of the network, and were HS2 to get cancelled, not one penny more would go into rail elsewhere. This has been explained countless times.

    2nd paragraph – Exactly. Which is why we need schemes to move people out of it. How about a fast railway to the provinces, to encourage businesses to relocate and setup there in the first place rather than the south-east, and encourage people to move further out whilst still being commutable? So businesses futher north have better transport links for business instead of yet another cross-London railway line? There’s an idea.

  • Nick113

    Christian is at heart a journalist, and (quite reasonably) prefers to survey the scene rather than express his own opinion, though he seems to be mainly “anti”. But that is always the case with journos, because being “anti” an issue generates more interesting copy than being “pro”.
    Likewise, UKIP is generally anti, because UKIP supporters tend to prefer the world the way it was rather than as it is, or might become. They are small “c” conservatives.
    My view is more pragmatic. High Speed Rail seems to work in Germany, France, Italy, Spain, China, etc. Why wouldn’t it work in Britain?

  • Dan

    Abandoned NHS IT system has cost £10bn so far
    Bill for abortive plan, described as ‘the biggest IT failure ever seen’, was originally estimated to be £6.4bn
    Well that would have been a quarter of an HS Line built with this

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