The chairman doth protest too much, methinks

In an article in the Daily Telegraph, assistant editor Jeremy Warner makes a fairly blunt assessment of the HS2 BCR calculation:

“As is becoming apparent, the Department of Transport (sic) had to engage in something close to deceit to come up with a positive cost/benefit analysis.”

Those of us who have taken an interest in the five versions of the HS2 business case that have been published over the period March 2010 to August 2012, may well feel some sympathy with this accusation. The recent questioning (transcript) of Department for Transport (DfT) and HS2 Ltd representatives by the House of Commons Committee of Public Accounts (PAC) indicates that there is some scepticism amongst PAC members that they were receiving totally straight answers from their witnesses. On the specific point of the treatment of the benefits that accrue from savings in travel time by business travellers, Margaret Hodge MP (PAC Chairman) had this to say (Q135):

“Not to have regard to that simply to create an outcome that justifies a project that you are committed to for totally other reasons, is, we find – unanimously in this Committee, actually – not a good way for you as an accounting officer [to] do business.”

This indicates that perhaps all members of the PAC might also feel that Mr Warner has a point. At one moment (Q70), exasperation appeared to get the better of Lady Hodge; her outburst “I wish you guys were honest” clearly demonstrating that she was not happy with the way that her witnesses were answering the questions.

Even, as I reported in part 2 of my blog Rechecking the sums (posted 27 Jul 2013), the Comptroller and Auditor General, Amyas Morse, finds it “hard to understand” the stance that DfT/HS2 Ltd is taking on calculating these benefits.

I’m afraid that I also have to declare for Mr Warner, having accused HS2 Ltd of sophistry in my blog People like us (posted 20 Sep 2012).

There is even an academic term for what might be happening with the HS2 business case; “strategic misrepresentation”. This term was explained by Professor Bent Flyvbjerg of the Saïd Business School of the University of Oxford in an interview that he gave recently to the BBC TV Newsnight programme. He said that budgeting for large projects was something that they had “studied in detail here at Oxford” and that:

“We find actually that in some instances decision makers, politicians and policy makers will deliberately under-estimate the costs and over-estimate the benefits and the revenues in order to get their projects started. So if a project looks good on paper, it’s easier to get approval for the project in Parliament, or whoever is approving the project. You know the old saying that it’s easier to get forgiveness than it is to get permission – that seems to be sometimes the heuristic that is used to get projects started.”

However, Mr Warner’s “home truth” appears to have spurred the Chairman of HS2 Ltd, Douglas Oakervee, to write to the Daily Telegraph to complain about the allegation in the article, which he rejects as “entirely untrue”. He adds that the “Department for Transport and HS2 Ltd have been entirely transparent, publishing and updating information as we come to know more about the project”.

I would suggest that for Mr Oakervee to have us believe him there is a simple course of action open to DfT/HS2 Ltd. When the time comes to publish the revised BCR calculation, promised for the autumn of this year, he and his associates should produce an honest evaluation that the PAC members, and the rest of us, will not feel has been massaged “to create an outcome that justifies” HS2.

As I reported in part 1 of my blog Rechecking the sums (posted 23 Jul 2013) two factors, the increased budget for the project and the move to adopt version 5.0 of the Passenger Demand Forecasting Handbook, will drive the BCR values down, possibly to be in the range 0.6 to 1.5. Part 2 of Rechecking the sums reveals that moving towards the approach that the PAC members wish to see adopted for valuing the benefits of business traveller time savings could erode these BCRs by up to a further 0.45, possibly.

Now I’m very much afraid that I expect to see a document published in the autumn that will not concede that any of the BCRs have dipped below the crucial value of 1.0; you may recall that in my blog … and round the bend … (posted 15 Aug 2012) I reported that Philip Hammond, when Transport Secretary, had stated that he had “a general principle” that he would not allow his department “to consider projects with a benefit-cost ratio that is negative [meaning less than unity] … however attractive they may be for other reasons”.

I am not sure how DfT/HS2 Ltd might be able to massage the figures “to produce a more congenial result”; using the words from Parade’s End that I quoted in my blog A work of fiction (posted 8 Sep 2012). In his evidence to the PAC, Philip Rutnam, Permanent Secretary of the DfT, did stress that working on trains was possible “only if there is the space in which to do so” (Q135), so perhaps we can expect a new benefit to be introduced for reduced crowding. Mr Rutnam also reeled off a number of “simplifying assumptions” that the DfT makes (Q133), so perhaps we will see some changes made in this area that benefit the BCR figure.

The Chief Executive of HS2 Ltd, Alison Munro, also dropped a strong hint that an approach has been found that will preserve the BCRs at tolerable levels in an interview that was broadcast in the same Newsnight programme as the Bent Flyvbjerg interview.

“I don’t think that you should necessary assume that the business case – the quantified benefit-cost ratio – will go down.”

Now I could just be wrong about this, because in his letter Mr Oakervee may be setting out his stall for dealing with bad news on the BCRs:

“We have continually said that HS2 is about far more than a cost/benefit ratio – as is the case for any scheme, from a small roundabout upwards. A purely bureaucratic approach to planning would have left us without the M1, M25 or Jubilee Line extension.”

So perhaps we are being prepared for the DfT to dump the “Hammond Principle”.

Whatever the new BCR calculation shows, Margaret Hodge appears to know, in her own mind, what the outcome should be (Q134):

“If you did that – if you have regard to your research that you have done so far, and if you have regard to international best practice – you would bring that value down, and immediately what you would find is that this is not a value-for-money project based on cost-benefit analysis.

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3 comments to “The chairman doth protest too much, methinks”
  1. If HS2 has done one thing for me, it’s opened my eyes to how legislation is formed.

    It’s genuinely fantastic that you can see our MPs and ministers at work, for real, via parliament.tv through pretty much every stage of the process – not just the headline stuff and soundbytes that get replayed on the news from the Commons, but the Committee Stage, evidence & amendment debates, spin-off activities in side chambers like the Ancient Woodlands debate, Public Accounts Committees, the lot.

    It’s a good, sensible, sound process, and it’s made transparent to us. The system works, Britain blazing a trail for global democracy. What could possibly go wrong?

    Well, in the case of the Paving Bill, it goes wrong when it comes to the vote. At that point, the process becomes open to abuse. So, of course, abused it is. Whipped votes in line with the respective party’s position in government or opposition, even when Committees are specifically directed not to. At that point, all of the evidence, the debate, the rights and wrongs, the pros and cons are ignored and rendered useless. A complete waste of everyone’s time. Box Ticked, though.

    Unfortunately, the same thing is going to continue to happen, even if the BCR is 0.5 and no matter how damning the report of the Public Accounts Committee. The PAC can’t cancel the project, the only vote that matters is the Hybrid Bill. MPs have the power to ignore the whole lot and vote it through anyway.

    All we’ll be left with is a comforting memory of a fleeting sense of justice as Margaret Hodge ripped into the civil servants and self-serving HS2 board members and consultants with their self-appointed 6 figure salaries we provided them with. They don’t care, they’re made to look foolish for an hour and go back to exactly what they were doing, comfortable in the knowledge that their jobs are safe, at least until the Hybrid Bill vote. Even a change of government will still see them in the same job on the same salary and the same pension. We’ll be able to say “at least we tried”.

    We place our faith in our MPs to make the right decisions for us and our tax. 20% of everything we earn, 17½% of everything we buy, 18% of the profit of everything we sell and 40% of the rest when we die, in the hope that they’ll do the right thing with it. Times are tight. More than ever we need them to guard every penny. In the case of HS2, they’re custodians for 5,000,000,000,000 of our pennies.

    If they abuse that trust it’s time they did something else for a living – MPs need to get the message that if they abuse their own rules and guidance, they lose their jobs. We need the general public away from the route to be aware of what’s going on, they need to tell their MPs that it’s not acceptable, and we’ve got the time between now and the Hybrid Bill in which to get the message to them. Six to nine months? Youtube / Twitter / Facebook / leaflets / Press / stand on a street corner and scream.

    • Well said.
      The problem with social media is that it is easily offset by spin and HS2 ltd have a substantial SM team who manipulate.
      Ordinary rational discussion has been offset by propaganda such as the disgusting Westbourne Media campaign Lawns for Jobs. This should have been reported to advertising standards ( I did but too late as it was by then an archive campaign). I do advise monitoring of HS2 propaganda/adds so that further campaigns do not breach the guidelines.

      The public voice although seemingly promoted is actually hushed by most of the so called democratic reforms.
      The new buzz words are ‘consultation’ which is now a dialogue followed by unilateral action and ‘capacity’ which is being used in wider ministerial
      statements in what must be a new usage (service provision and indeed capacity as in competence) to argue for growth of ‘pet’ projects.
      The legal redress may also be reduced for the government is committed to reducing “time-wasting” or “obstructive” opposition by changing Judicial Review process. Law Lords have criticized their approach with good reason.

      Public demonstration also appears useless (remember anti- Iraq deomnstrations)?

      Essentially the ‘elected’ members do not represent their constituency but their party at the expense of their constituency.
      Democracy suffers and becomes a ‘pseudo democracy”

      The first stage must be the balancing of democracy with an English Parliament to match those of the other countries in the UK.
      MPs should be deselected if they refuse to represent their electorate. There is apparently a process in place already.
      Independents should be fielded in constituencies that will be effected unless the established parties are truly on board.

      The press must be encouraged to report the truth on the Coalition in terms of their planing and greenbelt changes which run contrary to their manifesto pledges. The risk and cynical DES for the Chilterns AONB which is exemplified by HS2 shows a sea-change of attitude; a developers charter. AONB and National Parks can only be at risk from ‘infrastructure’ and ‘new town development’ beloved by the Coalition and doubtless Labour.

      Lobbying has been a major feature of the HS2 campaign. A pro HS2 lobby group was in parliament early on and has indeed been influential.
      The Govt has committed to transparency on Lobbyists. It would be interesting to see how much influence has been exerted.
      New appointments to the Lords also include pro-HS2 and indeed an HS2 lobbyist.

      The first thing needed is honesty about the noise and damage of the scheme. If you read the Chilterns AONB board minutes some very telling facts come forth. ( cuttings are to be shallower…..tunnels are actually 3 miles shorter than HS2 ltd publicized, spoil is to be distributed over the landscape…..etc,etc)

      It needs a creative, media friendly or telekinetic approach to counter so much highly professional spin and propaganda.
      The inflatable white elephant although a mascot is not enough ( and effectively the Govt accepts it may be a white elephant and they dont care they want to proceed as they did with Concorde, Fighters and mad IT projects)

      I totally agree the next six months are make or break .Perhaps we sympathetic artists to work on the project, paint ins of threatened landscapes, mass picnics on the Chilterns and route, some proper in depth TV coverage of the issues (and their poltiics) a march along the route especially around areas of beauty, SS1 or where the public will be subject to adverse impact such as the Aylesbury Vale and similar areas north of Birmingham. Whatever process must be lawful and elegant and reflect the concern about environment, quality of life and financial wastefulness of the scheme.

      I wonder what 50-100 billion looks like in fake money or real money come to that.

      Perhaps Stop HS2 can form a think tank.

  2. We are certainly being conditioned for further spin to justify hs2 and you only have to look at part of the response to the epetition—

    ”Moreover we have committed to reviewing our business case on a regular basis and are planning to update our economic analysis and publish an updated economic case later this year. The economic case forms part of the full business case for HS2. Other documents of the business case consist of the strategic case, the financial case, the commercial case, and the management case.

    But the business case is just one part of the equation. HS2 will significantly increase capacity on our north-south rail lines, simultaneously bringing the North and South closer together and allowing for significant investment and regeneration in areas outside of London”

    We must insist that the revised business case is audited by the NAO BEFORE IT IS PUBLISHED and that all the recommendations of the TSC/PAC and NAO have been incorporated or if not a full explanation of why not.

    Once it is published we are always playing catch up

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