Today, the Adam Smith Institute published their latest report “Network Fail: Getting UK Rail Back on Track”.
While much of the report covered their analysis of Network Rail, they also looked at HS2, concluding
“The controversial £50+ billion High-Speed 2 project should be scrapped on
grounds of excessive cost compared with the questionable benefits that may accrue. The numbers, including the projected Benefit/Cost Ratio, simply do not
They covered the the costs of HS2, the “far from compelling” capacity case for HS2, the “unacceptably low” BCR and high speed rail in other countries.
The report pointed out that the cost of HS2 is already significantly higher than other high speed projects, being 9 times the costs of similar projects in France – and that the costs are based on 2011 process, when the construction sector was in recession and prices were inevitably depressed. They say that a case could be made for HS2 costing £80 billion.
The report looks at capacity on the WCML, pointing out that Patrick McLoughlin’s figures were that most of the time the passenger load was 50% or lower, especially outside commuting times and that its only between 8.00 – 8.59am towards Euston that load figures are above 60% (at 61%). Capacity concerns “present a far from compelling case for HS2 on capacity grounds” says the report.
The Adam Smith report also looks at the benefit cost ratio, pointing out that
For many road projects, a BCR of c5x is generally accepted as being a viable return. As Table 7 shows, the BCR on Phase 1 of HS2 is just 1.4x, although it does rise to 1.7x once the somewhat questionable WEIs are taken into account. Nonetheless, given the considerable risks, these ratios are unacceptably low to justify HS2 on economic grounds.
Whilst many of the claimed HS2 benefits are spurious, any substantial shortfall in revenues would reduce the projected BCRs: such a shortfall could be expected to push the BCR to nearer 1.0x. Back in the 1990s, grossly optimistic projections were presented by the then Department for Transport for Eurostar’s future revenues – the eventual out-turn proved to be well short.
The WEI thesis has also been dented by the relative lack of economic recovery in North Kent, where HS1 has been in operation since 2009. Many Medway towns are still facing severe economic challenges.
In addition, the report noted the concerns of FEDEA, a Spanish “think tank”, who looked at Spanish high speed rail and concluded that “none of the highspeed lines should have been built and that none has a chance of being proftable over a 50 year lifespan”.