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Public Accounts Committee vindicates Stop HS2 position on HS2 business case.

Today the Public Accounts Committee has published its report into the completion and sales of HS1, in which they raise several issues about HS2, vindicating many of the arguments made by Stop HS2.

In response to the report Stop HS2 Campaign Coordinator Joe Rukin said;

“It is great news that the Public Accounts Committee have agreed with so many of our concerns about the shoddy way the Department for Transport have cooked the books to try and justify this completely unnecessary megaproject. We have always known that the plans haven’t been robust, that the DfT have been making over-optimistic assumptions, that much of the case is untenable, unrealistic and exaggerated and the DfT have failed to investigate the alternatives. Now that the Public Accounts Committee have agreed, we can only hope that Government give them the respect they deserve and take their scrutiny seriously. There is only one solution, go back to the drawing board, make rational assessments of what is the best interest of the UK as a whole and cancel HS2 before it is too late.”

“Back on 18th April when the DfT gave evidence, Margaret Hodge was using words like ‘shocking, potty, biased, bonkers and not good enough’, so we knew that the PAC was taking things seriously and had done their homework, because that’s what anyone who has looked into the figures properly would think. We were that impressed, we made her comments into a rap video!

Penny Gaines, chair of Stop HS2 said

“The parts of the Department for Transport which are developing the HS2 proposal are ignoring the work done by other parts of the Department for Transport in using videoconferencing and other technology to reduce the overall demand for long distance travel. As more young people, who have grown up interacting with other people over the internet, enter the work force, there will be a profound shift to the way business people do business. This is already affecting overall demand for long distance travel, and the changes will be even more apparent by the time the London to Euston stretch of HS2 is due to open in fifteen years.”

“The PAC report says that alternatives have not been adequately looked at. Our challenge to the Department for Transport is to develop the most robust set of alternatives that they can. This includes sets of incremental improvements to the railway system, which will bring more benefits to more people more quickly and can be implemented in varying orders, depending on other relevant factors.”
“As the PAC points out, the reason the ongoing subsidy for HS1 is so large, is because the developers made over-optimistic assumptions about passenger growth. HS2 Ltd appear to be repeating their mistakes and have assumed the maximum possible growth in railway travel, and then added an extra 24% of passengers who will travel simply because the train line has been built. But this assumes that there are no premium fares – as the PAC points out this is highly unlikely. HS2 Ltd’s idea that a fast train will not attract premium fares seems as fanciful as their passenger demand figures.”

In their press release; The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said;

“Whilst HS1 provides an efficient service, contributing in an important way to British transport infrastructure, there were costly mistakes in the history of the project. These must not be repeated with HS2. HS1 was supposed to pay for itself but instead the taxpayer has had to pay out £4.8 billion so far to cover the debt on the project.

“The root of the problem is the inaccurate and wildly optimistic forecasts for passenger numbers both when the line was being planned and when the Department restructured its deal with the contractor, London & Continental Railways Limited. International passenger numbers have only been a third of LCR’s original forecast and two thirds of the Department’s forecast. The Department failed to take into account the growth of low cost airlines or the competitive response of the ferry companies.”

“This isn’t the first time that over-optimistic planning and insufficiently robust testing of planning assumptions has got the Department into trouble. My Committee’s report on the East Coast Mainline raised similar concerns. HS1 will continue to cost the taxpayer money–£10.2 billion over the next 60 years, so before going ahead with HS2 we need a robust cost benefit analysis.”

“Some of the Department’s assumptions about the benefits of faster travel are simply untenable. For example, the time business travellers save by using high speed rail is valued at £54 per hour yet the time commuters save getting to and from work is only valued at £7 per hour. It is difficult to see how this can be justified. The Department also assumes that all time spent on a train is unproductive. And unrealistic assumptions about ticket prices act to exaggerate passenger demand forecasts. The Department also told us that it had not considered the benefits and costs of alternatives to HS2 such as investment in broadband videoconferencing or investment in alternative, more local train routes.”

“It is nonsense that the Department does not have a full understanding of the wider economic impact and regeneration benefits of transport infrastructure, including HS1, to inform future investment decisions. All these things are crucial for proving the case for investment in long distance travel and demonstrating value for money. The Department must revisit its assumptions on HS2 and develop a full understanding of the benefits and costs of high speed travel compared to the alternatives.”

 

6 comments to “Public Accounts Committee vindicates Stop HS2 position on HS2 business case.”
  1. Pingback: Public Accounts Committee raise similar concerns to us | HillingdonAgainstHS2

  2. Ms Hodge ‘s report has been poorly reported by the various news organisations. For a start HS1 has not been sold, it still belongs to the UK taxpayer, it has been leased by an operator and the lease payments of just over £2.05bn go to the UK Treasury. When HS1 was assessed low cost airlines did not even exist. In terms of construction HS1 was on time and well within budget. It’s one of the most successful construction projects ever in the UK and is widely recognised as being superior in quality to French TGV lines while costing roughly 15% less per km to maintain. Those lessons are being applied to HS2 which uses more up to date financial modelling methods.
    Nothing new in todays report, all anticipated.

    • You miss the points. It’s CBR was up the creek, passenger figures were fiction and we are still having to pay through the teeth for it. The Channel connection to Europe may have been a good idea, but with HS2 there are are already 2 good routes to B’ham. The north could have much better services if government sorted out the relatively quicker and cheaper minor problems on the WCML and East Coast Mainline. Relative that is to 25ish years of HS2 at a huge cost.

    • Much of what you say about HS2 is correct Graham, but the main criticism levelled by the PAC is the one that you chose to ignore; it’s a great success except that it has failed to attract significant numbers of passengers to pay its way (as originally promised) and the taxpayer has been required to pick up the tab. In the words of the PAC “Over-optimistic and unrealised forecasts for passenger demand on High Speed 1 left the taxpayer saddled with £4.8 billion of debt” (paragraph 4 on page 5). The report also advises that “The NAO estimated that the total cost to taxpayers of supporting High Speed 1 could be £10.2 billion and the value of journey time saving benefits for passengers will be £7 billion”; this is a BCR (without WEI) of 0.69.

      The PAC also criticise HS1 for not fully delivering on its promises of bringing regeneration.

      Your assertion that the lessons from HS1 “are being applied to HS2 which uses more up to date financial modelling methods” seems to fly in the face of what the PAC says in its report. Mrs Hodge’s own summary of what the report says, given in an interview to BBC News on 6th July (at http://www.youtube.com/watch?v=I7L4eJjfAjE), is that she is “sceptical about [DfT’s] ability to be realistic” in assessing HS2 benefits and that the PAC has “got evidence of that …”. She gives examples of this evidence as not recognising that fares on the classic services are likely to be lower than HS2, due to competition, and valuing long-distance business traveller’s time at more than seven times the value assumed for a commuter. More examples are cited in the report and even more issues have been raised elsewhere.

  3. Surely Ms Greening should be required to explain to Parliament why she is continuing to spend our money on HS2

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