The House of Lords Economic Affairs Committee, chaired by Lord Hollick has today published their report “The Economics of High Speed 2”. In one of the evidence sessions, Lord May said he wouldn’t trust the people from HS2 Ltd to mow his lawn, and the report echoes that tone. The report has concluded that the Government has failed to make a convincing case on HS2, and like the Transport Select Committee did in 2011, they have provided a shopping list of sixteen questions which they feel more information should be provided on, not only before the bill to approve HS2 is passed, but also before the Government spend any more money on it.
The Committee argues that such large expenditure should be considered against the background of financial restraint and that the cost-benefit analysis of the project relies on “Out-of-date and unconvincing” evidence, some dating back to 1994, and they state that they find it difficult to have any faith in 82% of the total benefits of HS2, as they are based on the value of travelling time. In a similar vein, the committee state they Government should be clear if £50bn is the absolute limit for the cost of HS2, or whether this will increase with inflation. The reason for making this point is of course because the current estimate for the cost of HS2 is based on 2011 prices.
The Committee questioned whether it is fair for the taxpayer to foot the bill for HS2 as many people will never see any benefit from the project and asked whether passengers, who are expected to mainly be business travellers, should have to pay more than is currently proposed for their tickets. They also picked up on another one of the missing bits of information in the HS2, saying that the cost of disruption to road and rail during the construction of HS2 should be added into the business case,
The report notes that whilst Government has set two main objectives for HS2: increasing capacity and rebalancing the economy, a convincing case for either has not been made.
On proving rail capacity, The Committee strongly criticise Government, for failing to both release current passenger numbers on the grounds of commercial sensitivity, and for not properly researching less expensive options to deliver additional capacity. The report says that this, along with the uncertainty about how technological advances will affect the need for travel in the future make it “Difficult to assess the plausibility of forecasts of demand for long-distance travel”. They also say that the passenger forecasts should take into account the effect of competition from other rail operators.
In terms of rebalancing the economy, they agree that HS2 is not the way to achieve it, as evidence from other countries shows that the capital city is the biggest beneficiary when high speed rail networks are built. As a result, the Committee argues there is a ‘strong case’ for improving TransPennine links or building the northern legs of HS2 first. They also make the point that investing in infrastructure does not necessarily equate to economic growth.
The Committee also suggest that the proposed speed of HS2 should be cut and besides learning lessons from France where construction is estimated to cost nine times less per mile, construction costs could be further cut by terminating at Old Oak Common, instead of Euston.
The sixteen questions the committee have posed are:
- In the absence of a co-ordinated transport plan, how can the Government be sure that HS2 is the best way to achieve the project’s objectives?
- What measures will be taken to limit the cost f constructing HS2?
- Is the funding envelope of £50 billion for the cost of construction an absolute limit, or will this increase with inflation?
- How much cheaper would a new railway built for a lower maximum speed (eg 320kph) be?
- How will the Government ensure that HS2 stations are appropriately linked in to local transport networks? How will this be funded?
- Should passengers benefitting from faster journeys on HS2 pay premium fares to reduce the high level of taxpayer subsidy for the project?
- How does the high level of taxpayer subsidy of HS2 fit with the Government’s commitment to reduce the level of subsidy of the UK rail network?
- Will the Government either release the full data on overcrowding, down to the level of individual services, or ensure data is reviewed independently, to provide the public with evidence there will be a growing problem on long-distance services?
- Could incremental improvements to the existing rail network deliver the required capacity improvements?
- Could the use of flexible pricing policies, such as those used by lo cost airlines, assist with managing overcrowding on the busiest trains?
- Is HS2 the best way to address the problems which currently exist?
- Given that evidence from abroad suggests that large cities benefit the most from improving connectivity, how will HS2 rebalance Britain’s economy?
- Is HS2 the best way to spend £50bn to stimulate the UK economy?
- Would local and regional infrastructure investment, as recommended by the Eddington Study of 2006, offer a more realistic proposition of a return on investment than HS2?
- Should improving regional rail links in the north be prioritised ahead of building HS2 Phase One?
- What effect will the findings of the research commissioned on values of time have on the cost-benefit analysis of HS2?
Committee Chair Lord Hollick said:
“At £50 billion HS2 will be one of the most expensive infrastructure projects ever undertaken in the UK but the Government have not yet made a convincing case for why it is necessary. The committee are supportive of investment in rail infrastructure, but are not convinced that HS2 as currently proposed is the best way to deliver that investment. The Government are basing the justification for HS2 on two factors – increased rail capacity and rebalancing the UK economy; we have not seen the evidence that it is the best way to deliver either.”
“Overcrowding on the West Coast Mainline is largely a problem on commuter trains and on long-distance trains immediately after peak time on Friday evenings and at some weekends. The Government have not carried out a proper assessment on whether alternative ways of increasing capacity are more cost effective than HS2. Full information on railway usage has not been made publically available by the Government on grounds of commercial sensitivity.”
“The plausibility of the Government’s claim that there are current long-distance capacity constraints and also its forecast of future passenger demand are difficult to assess without full access to current railway usage. The investment of #50 billion investment of public money demands nothing less than full transparency.”
“In terms of rebalancing the economy, London is likely to be the main beneficiary from HS2. Investment in improving rail links in the North of England might deliver much greater economic benefit at a fraction of the cost of HS2.”
“We have set out a number of important questions on HS2 that the Government must now provide detailed answers to. Parliament should not approve the enabling legislation that will allow HS2 work to begin until we have satisfactory answers to these key questions.”
Stop HS2 Campaign Manager Joe Rukin responded:
“We very much welcome the findings of this report, as the Lords have paid attention to what so many of us have been saying for five years about the case for HS2, and have concluded that there isn’t a case for HS2. On every single issue to do with the economics of HS2: whether it be the fact it would need a massive subsidy, that it will only be for the rich, that there are better cheaper ways of upgrading rail infrastructure, that HS2 will benefit London at the expense of the North, that the modelling is out of date and has been used to manufacture the right result whilst supressing the real data, they have agreed with everything we have been saying for five years. This is surely another nail in the coffin of HS2, which is going to be a massively toxic issue at the upcoming election, as by continuing to support HS2, politicians only demonstrate how out of touch they are.”
“This report follows on from highly critical findings on HS2 from the National Audit Office, the Environmental Affairs Committee, the Treasury Select Committee, and the Public Accounts Committee. Like the Lords today, in 2011 even the Transport Select Committee who are supportive of HS2, said it should not progress until a shopping list of issues were resolved, but they haven’t been and HS2 goes on unabated. How many times does HS2 need to be torn apart by independent bodies before dogmatic politicians realise it must be stopped?”
“Now we have yet another set of independent people who have no beef besides wanting to make sure the country does not make expensive mistakes, who have looked at HS2 and concluded that there simply is no case, but like all the warnings which have come before, we expect the proponents of HS2 and those with vested interests to stick their fingers in their ears and tell The Lords they are wrong on everything to protect their vanity project. Surely it must come to a point where so many groups have looked at HS2 independently and come to the conclusion that it is a bad idea, that the project becomes untenable and is cancelled. That is what we hope, as having the case for HS2 ripped apart again so thoroughly, cancelling white elephant is surely now the only option.”
“It has always been the case that HS2 would suck more economic activity to London at the detriment of the North, and if the aim is to rebalance the economy, the money should be spent in those areas which desperately need the investment, not on accelerating the brain-drain to London. We have always said that there are better, cheaper, quicker ways to deal with capacity issues, but even those in the House of Lords have not been allowed to see what the actual passenger figures are, because the Government know that once they are published, the case for HS2 will fall apart even more.”
Penny Gaines, chair of Stop HS2 added:
“The Lords report repeats what we have been saying for the last five years. HS2 is a high cost option to get a fast railway line, which isn’t going to bring the benefits the Government claims for it. HS2 is based on outdated ideas, and doesn’t solve the real transport problems faced by ordinary people. We call on the incoming government to look sceptically at HS2 and cancel it. They need to look at all the reports and information not made public, such as WCML usage figures and the MPA reports, and cancel HS2 as soon as possible.”