HS2 Ltd sit on Phase 2 route but fiddle a new, already outdated business case

Published 31st August 2012

An article by Joe Rukin

HS2 Ltd, the wholly owned subsidiary of the Department for Transport tasked with developing and promoting the new high-speed rail link has produced a new business case for the project, which unsurprisingly has seen the benefit-cost ratio go up, by selectively ignoring criticisms and new data which would see the case fall even further. The new business case is also based around a design for Stage 2 of the project which will see links to Leeds, Manchester and Heathrow, but they have refused to publish this route as yet, claiming it would ‘spread blight’. HS2 Ltd have claimed that their ‘base option’ for routes to Heathrow, Leeds and Manchester will be published in ‘Autumn’, but we are still waiting for the third consultation on compensation which was due in ‘Spring’.

HS2 Ltd needed to produce a new business case after the BCR (benefit cost ratio) dropped in April to 1.2 for Phase 1 and 1.3 to 1.5 for Phases 1 & 2 combined. On the projects announcement in March 2010, those BCRs were 2.4 and 4.1 respectively. In their latest analysis the official figures are 1.4 and 1.9. In preparing this new business case for the much maligned project, HS2 Ltd have ‘refined’ their modelling approach, cut projected costs for Phase 2 and found extra cuts to implement on the existing rail network.

However, HS2 Ltd have ignored all the criticisms of their modelling which would have taken the BCR back down, as well as ignoring the fact the baseline comparison has changed following the improved services which First Group have promised to implement on the West Coast Mainline, as well as the recently announced HLOS improvements, including the electrification of the Midland Mainline.

The Department for Transport were heavily criticised by the Public Accounts Committee for many of the fundamentals underpinning the HS2 business case in their report in July and have seemingly ignored all of the concerns of the PAC. In the evidence session in April, PAC chair Margaret Hodge described the case put by the DfT as “Potty, Bonkers, Shocking and Not Good Enough”, citing over optimistic passenger numbers, claiming that all time on trains is unproductive and there will not be premium fares as big holes in the business case, as well as the assumption that business passengers are worth £54, opposed to commuters who are only worth £7.

Stop HS2 Campaign Coordinator Joe Rukin said: “It is not great surprise that HS2 have concocted a new set of figures which ignore not only all the well founded criticisms of their previous analyses, but also recent real world changes to prop up this gargantuan white elephant, whilst hiding new cuts to existing services. The list of things which HS2 have missed out of their new analysis to make sure they have had a positive result is laughable. As a wholly owned subsidiary of the DfT, ignoring the fact the baseline which they have to compare with has changed, due both to First Group saying they will provide more capacity and faster trains on the WCML, and the HLOS improvements which include the electrification of the Midland Mainline is absolutely inexcusable. Also inexcusable is their failure to listen to the Public Accounts Committee. The entire business case is based on the supposed fact that every moment spent on a train is wasted and that all business passengers are worth £54/hour and there will be no price competition on the railways. You then take that and like with HS1 which is carrying a third of the forecast passengers, multiply it with a grossly inflated passenger forecast which takes no account of sustainability and how IT will reduce the need for business travel and hey presto, you’ve got a benefit cost ratio which says you should build HS2.”

“There are so many other factors they have ignored besides this. HS2 Ltd admit that the project causes widespread blight wherever it goes, so when is that going to appear in the economic analysis? Many people rely on the value of their homes, especially in retirement, so why have they consistently ignored this from their figures? The economic effects of this, the loss of agricultural production and countryside tourism, the businesses which will be destroyed or impacted and even how all the roadworks will impact on the economy all have to be factored in for a true picture, but all have been ignored. Realism is not in their remit.”

“What people have to realise is that HS2 Ltd are not interested in producing a thorough, accurate or even justifiable case for HS2, they are tasked with promoting the project without objectivity and as such will do whatever it takes to make it seem like a good idea and a good investment, not matter how much of a disaster they really know it will be. The reality is that the BCR for Phase 1 is more like 0.4 and for Phases 1 & 2, you are looking at 0.9, meaning you spend a pound and get 90p back.”

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