For the fourth time since initial plans published in March 2010, the benefit-cost ratio (BCR) for HS2 has been revised downwards, the nearest official figures have come to admitting that the project will never make money. When the plans for the London to Birmingham section were first announced two years ago, the official BCR was 2.4, meaning that for every pound spent there would be £2.40 worth of benefits. When Transport Secretary Justine Greening announced the plans to go ahead with HS2 on January 10th 2012, this figure had dropped to 1.6, but she still said the project represented ‘good value for money’. Within a month, the figure had dropped to 1.4 and now thanks to the discovery of a ‘modelling error’, this figure dropped to 1.2.
However, following the National Audit Office report into HS1 shows that the actual benefit cost ratio is likely to be much lower than this, as lessons from HS1 have not been learned. HS1 is only operating at one-third of the original passenger forecasts, which prompted the NAO to say that in future the DfT “should ensure that demand forecasts are subject to rigorous scrutiny and scepticism”, which was clearly not the case. This revelation prompted the Institute for Engineering and Technology to say “The original HS1 business case was based on journey time-saving benefits and increased rail capacity. The total value of these benefits is not known; the DfT has not yet developed a method to evaluate HS1 project costs against benefits, despite this forming part of the HS2 justification.”
“The value for money measure for HS2 has kept dropping and dropping since the outset and the fact it has come down twice in just two months is no surprise. We have said since the outset that there is no business case for HS2 and to hear the DfT dismiss wasting at least £36.4bn of our money as simply just ‘narrow transport economics’ is disgusting. There is simply no sense in this project, but the Government are pig headed and do not care.”
“You would really hope that in these times of global financial doom that the Government would be responsible enough to listen to the likes of the National Audit Office. Their report last week showed that HS1 has only managed one-third of the original passenger forecast and the supposed benefits of HS1, and therefore HS2, have never been quantified. If the passenger forecasts for HS2, which have not been subject to the ‘rigorous scrutiny and scepticism’ the NAO suggest are out, the value for money figure of HS2 will drop further, and the whole idea of benefits relying on putting a figure on ‘time is money’ is totally spurious. The economic case is founded on the fact that everyone on HS2 will earn £70,000 p.a., that no-one at all works on trains and that people faced with a shorter journey time won’t simply spend longer in bed. All that is then multiplied by a grossly inflated passenger forecast and even then you only now get a BCR of 1.2. It is clear the whole thing is a work of fantasy and that the figures can only get worse. It is simply irresponsible for the Government to proceed with HS2.”