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Challenging the case for HS2 Jerry Marshall. The deeply flawed business case  Key question: is HS2 in the national interest?  2007: White Paper says.

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Presentation on theme: "Challenging the case for HS2 Jerry Marshall. The deeply flawed business case  Key question: is HS2 in the national interest?  2007: White Paper says."— Presentation transcript:

1 Challenging the case for HS2 Jerry Marshall

2 The deeply flawed business case  Key question: is HS2 in the national interest?  2007: White Paper says HSR too expensive and too inflexible  2010: HS2 Ltd gives NBR as 2.7, i.e. £2.70 of benefit for every £1 spent. How did they do that?

3 How to get the right NBR Rule #1: Up the demand  Independent Transport Commission +35% ( )  Network Rail +70% ( )  HS2 +267% ( )

4 How to get the right NBR Rule #2: Add unrealistic benefits  Benefits assumed to 2085  Assume time travelling on trains is wasted and inflate this at 2% pa  Assume impossible ‘Uncrowding’

5 How to get the right NBR Rule #3: Stretch the rules on costs  Use lower optimism bias correction than normal  Ignore finance costs  Ignore operator profits

6 How to get the right NBR Rule #4: Assume no competition  Assume no competitive response, therefore high demand and price

7 How to get the right NBR Rule #5: Ignore disbenefits  Slower less frequent Virgin service will add 25 mins for Coventry travellers (p42 of Technical Appendix)  Ignore CO2 costs

8 How to get the right NBR Rule #6: Don’t learn from mistakes  HS1 running at 1/3 rd forecast demand, sold at 1/3 rd of cost “…at a cost of billions of pounds… passengers in Kent have seen their service transformed into the worst they have ever known” (Andrew Gilligan, Daily Telegraph)

9 So what is the NBR? Approx £1000 cost per household (Birmingham leg only) - Of which the Government will throw away £900…

10 But will there be local benefits?  Study for HS2 Ltd by Imperial College says new economic growth created by HS2 would be ‘very small indeed’ – maybe £8m pa.  HSR will redistribute economic activity between places but London is likely to be the main beneficiary.  It is said that 40,000 jobs will be created across the UK. But 30,000 of these will be in shopping centres so only a REDISTRIBUTION of jobs. Most of the rest are in construction at a net cost to the Government of over £1m per job. Guideline for regeneration projects is £27,500 per job.

11 What’s the visual impact? To avoid conurbations, HS2 passes through tranquil countryside which will be lost forever

12 What’s the visual impact? Security fencing

13 Viaducts What’s the visual impact?

14 Noise barriers What’s the visual impact?

15 What’s the alternative?  65% extra capacity possible with just extra rolling stock on WCML  DfT’s own alternative to HS2 (Rail Package 2) de- bottlenecks WCML, delivering required capacity by running more and longer trains (for just £2bn) and gives a better (3.63) NBR than HS2. Everything can be done incrementally against need – not relying on long- term forecasts. This option was buried by the DfT.  Further potential by bringing forward ERTMS and moving freight off the WCML  Further potential on Chiltern and Midland Mainline NB. In a time of austerity, can we afford the £34bn cost when we can achieve the same for £2bn?

16 Technology will cut business demand

17 Does it work elsewhere?  In 2008 US Amtrak’s Inspector General reported that six European nations’ operations required a subsidy of $42bn p.a.  “…Virtually no HSR lines anywhere in the world have earned enough revenue to cover both their construction and operating costs.” (US Congressional Research Service 2009)  “The high speed train is no longer such a good deal… This cost drift of the TGV also makes its competitors think. Veolia and its partner Trenitalia, which had announced the opening for the end of 2011 of a high speed link Milan - Paris via Lyon, have just changed their mind…” (Le Monde, 12 Jan 2011) NB. The HS2 cost to Birmingham (£160m/mile) is ten times the average cost per mile in France

18 Does it work elsewhere?

19 The Lille Myth Greater Lille unemployment rates (above) have risen in absolutely terms and relative to the national average since the arrival of the TGV in Greater Lille12,4 %14,3 %13,2 % France10,1 %11,7 %10,6 % Sources of data : INSEE Lille… has benefited enormously from the high speed hub… (Philip Hammond, Midlands Today, 24 Feb 2011)

20 Finally…  Can we afford it? Higher government spending as a proportion of GDP and public sector borrowing cuts growth  Security? Soft but high impact target for terrorists

21 In conclusion If it’s ever built, which I doubt, the high-speed rail link between London and Birmingham will be the biggest white elephant since Nellie packed her trunk and trundled off to the circus. (Paul Routledge, Daily Mirror) “The burning need in public transport is not for sexy, pointy nosed high speed supertrains, whose economics (and green credentials) simply don’t stack up. It’s for boring, unglamorous improvements to the quotidian services we actually use” (Andrew Gilligan, Daily Telegraph)


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