Rail 735: HS2 – the fundamental questions

Christian Wolmar


The optimists who thought that publication of the – euh fifth iteration – of the business case for HS2 would settle the matter one way or another will have been deeply disappointed. Far from the thorough reconsideration of the pros and cons of the case for the line, the report tinkers around the edges of the previous efforts and  is not the radical departure from the previous methodology that had been expected.

Far from clearing up some of the anomalies, the ‘new’ analysis merely raises a whole new set of questions as a result of the dubious assumptions underlying it.  The main ‘benefits’ of the scheme are still presented as the time savings made by users of the line, especially business travellers and inevitably there have been some recalculations and even the most fervent supporter of HS2 (Nigel?) would have to agree that some of these are, to say the least, rather odd. The total benefits of the first section (let’s just stick with that for ease, though I accept that the benefit cost ratio for the overall scheme is better but the Bill to be published next year relates only to the Birmingham section.

The Achilles Heel of the promoters is the fact that people work on trains (I am writing this column on a rather crowded East Coast service to Newcastle) and therefore shorter journeys do not necessarily represent the huge benefit that has been suggested. In recognition of that, the latest analysis reduces the value of an hour for business travellers from £47 18 to £31 96. This does not assume they are earning less but rather that their time on the rails is partly valuable, the sort of crazy assumption that probably required spending a six figure sum on a consultants’ report.

However, the table of ‘benefits’ (page 104) of the report shows that the business benefits on the first section have increased from £12.5. 6bn to £16.92bn (out of £23.79bn total benefits, showing just how dependent the case is on these business benefits). so how did that happen? Well, simples really – the analysis now assumes that two thirds of passengers will be business people rather than, as before fewer than half. That helps stack up the benefit side because leisure users only value their time, apparently, at £6 04 per hour (oddly, up from £5 71) and commuters at £6 81 (up, too, from £6 46). As an aside, if we are to play this dotty game seriously, then I reckon that is a ridiculously low figure for commuters but presumably, again, some consultant somewhere must have worked it all out carefully.

The major new aspect is a detailed rebuttal of the alternative to HS2, which is based on a very extreme version of the potential future capacity requirements of the railway and is reckoned to cost £20bn although, surprisingly, these schemes still have a strongly positive benefit cost ratio (high to very high in government parlance). To reach this staggering sum of £20bn, this alternative postulates four trains per hour from London to Leeds, Newcastle, and Sheffield (two from Kings Cross and two from St Pancras) There would also be four fast trains an hour from Kings Cross to Cambridge and two further additional trains from Kings Cross to Royston.

All this drives massive infrastructure expenditure, with new platforms at Grantham, electrifying and improving the Grantham – Nottingham – Sheffield, reopening the Leemside line between Darlington and Newcastle; and building two new tracks between Alexandra Palace and Biggleswade and so on.

In addition, this analysis includes upgrades of both the existing West Coast and East Coast lines north of Preston and York respectively, which of course would be needed for HS2 in any case. Just as a test of common sense, or quite possibly lack of it, the document calculates the total number of seats available each weekday arriving at Euston, Kings Cross and St Pancras together, at 652,600 which suggests there must be a couple of cup finals every day, together with Christmas shopping and lots more.

This analysis of the alternatives was preceded by some very selective and dishonest leaking, suggesting that the disruption of the railway would be greater than ever experienced. Indeed, the civil servant at the briefing for journalists at put up a slide that read ‘The alternative would be to close the railway at weekends for 14 years’. This is quite simply a lie. There is no suggestion that the whole railway would be closed in the consultants’ report and, in any case, HS2 will cause massive disruption to Euston services for many years. It prompted the veteran agency journalist who has covered the story from the beginning to say to me as we left: ‘In all my years of covering projects, I have never seen so much nastiness and vitriol over a scheme’.

Despite all these attempts to shore it up, the benefit cost ratio reduced slightly to 2.3 for the whole scheme and stayed the same at 1.7 for the initial Birmingham leg. All this serves to back my point that the whole benefit cost analysis shenanigans is a very expensive way of reaching whatever conclusion you fancy. Remember the Jubilee Line Extension had a benefit cost ratio of less than one – suggesting it would actually result in a negative economic – although later this was increased by including ‘wider economic benefits’ which are now routinely included in benefit cost analysis.

Trying to persuade either of the very entrenched sides on the issue is rather like attempting to convince a hippopotamus to go to Weight Watchers. Therefore a dispassionate analysis is required and, hey presto, with fantastic timing one has been produced in the academic magazine Built Environment aimed at architects and planners which devoted the whole of its most recent issue (Volume 39, Number 3) to High Speed Rail with the apt subtitle Shrinking Spaces, Shaping Places.

Peter Hall, the doyen of academic planners who is certainly not antagonistic to rail makes the superb point that ‘in judging the claims and counter-claims by advocates and opponents of HS2 is that there are very few disinterested parties.’ Indeed, an obvious point but one rarely made. Promoting the line are a series of consultants, construction companies and glory hunting politicians while opponents are generally those directly affected by the line.

Hall and his colleagues point to some very severe shortcomings in the proposed scheme. In an article looking at the context of the scheme, the authors point to one fundamental issue, which is that HS2 needs to be planned ‘as the strategic backbone of the transport system, an intermediate mode of transport and a network between urban public transport and long-haul air transport’. The failure to do this, it is argued, has led to some bizarre decisions such as giving Birmingham with its population of just over one million, two stations and yet there are none in between the two in London and the two in Birmingham. The failure to bring HS2 next to New Street is also criticised. The authors of this article suggest that HS2 needs to be reconsidered in the light of a series of principles including providing a wider range of services, reducing the emphasis on speed, increasing the number of stations, and better integration with the existing network.

In his piece, Peter Hall looks at the various critical reports into HS2 such as the National Audit Office and Public Accounts Committee, and gives supporters such as Jim Steer, of consultants Steer Davies Gleave the chance to respond. He also examines more favourable findings such as the recent KPMG report which detailed the benefits across the country. Hall concludes that ‘it is impossible to avoid the conclusion that the hard business case for HS2 has progressively and seriously  weakened since the project was first proposed in 2009’. (my itals).

He concludes that ‘the future of HS2 will depend on two critical elements on which there is still considerable uncertainty’. These are the value of time spent on the train and the indirect benefits such as urban development and regeneration ‘which are central to the original strategic vision’. He is, like me, pretty dismissive of the whole attempt to measure the value of these time savings: he quotes a fellow academic, Anthony Wenban Smith who argues that these ‘benefits’ are highly artificial constructs: ‘modelled differences from a do nothing counter-factual, discounted over 60  years’. In plain English that means the model is dependent on comparison with doing nothing  – in itself an unlikely scenario – over a massive period of time (by which time we will all be dead).

He says the second point, the attempt to measure the wider economic benefits, is ‘even more contentious’ and says the central issue is whether the line would bring regeneration benefits to northern cities. He then finds that the academic evidence on this is contradictory. While some research, notably the work of John Tomaney, suggests that the benefits accrue to the capital city while other work by Hall’s colleague, Chia-Lin Chen, found that, on the contrary provincial cities in UK and France have benefitted economically from a connection to a high speed line (in this context the East and West Coasts qualify as high speed as trains reach 125 mph).

Hall ends up by saying that further research is needed and there is no need for urgency ‘either to proceed with the project or to cancel it’ He accepts that ‘HS2 represents a great strategic vision and will almost certainly be needed one day. The key question is what day.’ Therefore, he counsels caution, suggests further avenues of research and ‘there could be no harm, and a great deal of merit, in waiting’. That is a conclusion that neither side of the debate will welcome.