Railways: High Speed 2
Question for Short Debate, 11th July 2012
Asked By Viscount Astor
• To ask Her Majesty’s Government what progress they have made in reviewing the economic viability, value for money and benefit-cost ratio of the High Speed 2 London to Birmingham, and London to Leeds and Manchester, lines.
For the full debate, please see Hansard.
Viscount Astor: My Lords, HS2 is a controversial proposal designed to operate a high-speed rail link between London and Birmingham, and eventually onwards to Leeds and Manchester. It is controversial for a number of reasons.
…However, I want to concentrate on cost. The question is whether the cost of £33 billion is worth the benefits that might accrue. We all want better services from north to south, but I challenge the assumption that HS2 is the answer. The Government’s case rests on the assumption that rail travel is destined to grow at the rate projected by the Department for Transport, but one has to say that the department’s record in projecting future passenger numbers is not good.
In the words of the National Audit Office, the department used “hugely optimistic assumptions” about passenger numbers on HS1. Passenger numbers from 2007 to 2011 were only one-third of the original 1995 forecast and two-thirds of the 1998 forecast. The NAO went on to say that the costs had exceeded the savings from shorter journey times, and the Public Accounts Committee said that costs would eventually rise to £10 billion.
…The department claims to have improved its forecasting, with better computer modelling and more computer power, but of course wrong assumptions in produces wrong statistics out, whatever the rise in computer power. What it has failed to take into account is that the projected benefits are largely dependent on business use, and business use is changing.
Why travel so often when Skype and internet conferencing are becoming the norm? Reductions to already short journey times are largely irrelevant to business efficiency as carriages are now linked to the internet and provide a good working environment. To assume that all time spent on trains is wasted is simply not credible. The department’s own report Productive Use of Rail Travel Time and the Valuation of Travel Time Savings for Rail Business Travellers asserts that a reduction of 10 minutes in journey time increases the amount of working time by only 0.75 of a minute….
By the Government’s own admission, the benefit-cost ratio for phase 1 declined from 2.4 in March 2010 to 1.4 in January 2012, and to just 1.2 in April 2012. However, even this overestimates the true position, as the DfT also admits that its assumptions are based on out-of-date gross domestic product figures….
…Looking ahead to 2032, we know that most cars will be electric and therefore very fuel-efficient. The Government accept that HS2 does not reduce CO2 emissions. There is no evidence that HS2 is going to cut road usage. By 2032, electric cars could easily be driving themselves on the main routes, as has already been tested in America.
…HS2 fails on the four key principles that even HS1 managed to pass: it does not follow existing noisy transport corridors; it does not follow the shortest route through areas of outstanding natural beauty; it is not proposed to be tunnelled through the most sensitive areas; and it does not provide benefits for local communities affected by the route or by access to the service…..
Lord Adonis: My Lords, the international rule of high-speed rail is that everyone wants the stations but no one wants the line….
Lord Bradshaw: The noble Lord, Lord Adonis, will remember when I came over with his noble friend, Lord Berkeley, to contest the use of COBA, the system for cost-benefit analysis which is used. This was invented in 1960-at least it entered transport in 1960-and it was used to create a case for the Treasury about the building of the Victoria line. It is based on the theory that one can add up all the small time savings of everybody, multiply them, and then end up with a big sum of money. However, it is not real money, it is imaginary money. I ask the Minister to go back to the department again and challenge the use of COBA, because it is wrong. It is a great industry among the consultants and the department, but it does not lay a single piece of track and it does not properly justify itself…..
Baroness Seccombe: …. If the fearsome amount of £33 billion has been identified, it should be used for the maximum benefit of us all, not for the few rich northern commuters who would save minutes from a journey at the expense of the long-suffering travelling public and the whole network.
Lord Stevenson of Balmacara: …In his excellent speech, the noble Viscount, Lord Astor, gave a withering assessment of the economic viability, value for money and benefit-to-cost ratio of the High Speed 2 line. I agree completely with his comments and conclusions. To strengthen the point made at the end of his speech, I suggest not only that the Major Projects Authority-the MPA-should be asked to report on the HS2 project and publish its results, but that the OBR should take a look at the overall economic impact of the scheme.
Lord Bates: My Lords, in my short contribution I shall try to agree with my noble friend Lord Astor and the noble Lord, Lord Adonis, about the benefits of HS2. I speak from the perspective of the north-east of England. In doing so, I declare an interest as a weekly traveller on the east coast main line to Newcastle. The journey of three hours and six minutes is the most pleasurable part of my week and probably the most productive. The idea of people cutting it short does not exactly fill me with joy. If they wanted to extend it, I would probably be quite happy and even more productive in that time. However, I accept that I am unusual in that….
… I propose that we solve the problem by starting the high-speed rail network in the north and working south. There are some strategic benefits to so doing. As a northerner, I am also slightly suspicious of 20-year infrastructure contracts. Ten years in, when the first bit has been built as far as Birmingham, will we find that the money has run out? High Speed 2 Ltd will say, “We’re terribly sorry”, and we will not see it completed. If people think that is a bit far fetched, we live with the unmotorised part of the A1 to this day. Starting in the north and moving to Birmingham would allow people time to see how Crossrail is working out, sort out what they will do with Heathrow Airport and assess whether it is needed.
Lord Gardiner of Kimble: … Under this Government, all infrastructure projects are to include the value of natural capital, as set out in the natural environment White Paper. This approach is commendable. It is illogical, therefore, that the current business case for HS2 does not include a proper account of natural capital. The Transport Select Committee’s recommendation that the revised business plan for HS2 should take account of this is entirely in keeping with the Government’s overall approach….
Lord Scott of Foscote: My Lords, I will say a word or two in the gap in support of all those who have criticised this HS2 train proposal. I draw attention to the report produced by Mott MacDonald’s consortium, commissioned by and on behalf of the Department for Transport, investigating the economic consequences of the proposed train. In particular, the consortium’s report deals with the supposed economic benefits of the time to be saved by businessmen travelling on the train from London to Birmingham or, later, from Birmingham onwards. I am sure that the Minister will be familiar with this report. He may not agree with me that the information I have about it-I have been unable so far to obtain a copy; it runs to 170 pages-indicates that the supposed economic benefits of the journey in the new train saving businessmen’s time will be at best trivial and at worst spurious. I suggest that this particular report deserves a bit of attention before the Government decide to commit themselves irrevocably to this scheme.
Earl Attlee: My Lords, I congratulate my noble friend Lord Astor for securing this debate on a very important subject. I also thank noble Lords for their typically well informed contributions. It is certainly not a matter of nimbyism. It is important and right to raise questions about a project as significant as HS2 and I am happy to try to address such questions this evening….