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….
The facts for HS2 are most certainly not proven Nick.
they may just be believing the anti hs2 hype. as usual many of the so called facts against hs2 are not really proven. the expected economic benefits of hs1 to the economy have been estimated at £20 billion for example.
one lord suggests that not much tunnelling will be done yet practically the whole route through the chilterns will be covered. another lord uses the totally disproved “few rich people saving a few minutes” argument which we all know by now is totally untrue. many people will save many minutes (35 from birmingham and an hour from manchester) and hs2 provides for huge railway capacity on its own tracks as well as that released on existing lines. capacity remains the main reason for hs2 beyond mere time savings.
just because these people are lords (who we dont vote for) doesnt mean that they are correct.
What are the expected,estimated benefits amounting to £20 billion for hs1 and why do we need even more capacity when the wcml is little more than half full according to latest dft report
Only 8% of journeys are by rail
here is a link http://www.scribd.com/doc/25315668/Economic-Impact-of-HS1
the dft network rail and train operators and business and council leaders from birmingham manchester leeds etc are advising that by the time hs2 is built the wcml will be at maximum capacity.
and is is precisely because the existing railway only has 8% of total journeys that means a huge increase in the size of the network is needed to take even a small amount from the roads. 8% of domestic journeys on hs1 were formerly taken by car.
if demand for travel continues (as the airlines and airline lobby and roads lobby also believe by the way) the we will need the infrastructure. rail is the least polluting form of short to medium haul travel but if capacity is insufficient and we dont build hs2 make no mistake that the alternatives is more roads and runways.
Rather than reading Nick’s 2009 prediction, you could look at the Public Accounts Committee report, published this month, about what actually happened.
As Margaret Hodge says “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….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.”
Does this mean that you believe that HS1 / the Channel Tunnel Rail Link should never have been built?
Or perhaps that the Tunnel itself should never have been constructed, perhaps…
Could you please clarify, as HS1 crops up so often in these comments ?
The Channel Tunnel was a genuinely new rail link: this is unlike HS2 which will be one of several routes between London and Birmingham.
If we accept your analysis we may as well start building hs3 and 4 now and abandon any attempt at business and economic cases and let the bailiffs in.
In my experience forecasters struggle to see further than next week but one things for sure and that is for us to compete in a global word we have to stop following and start leading
Nick , you have stated several times that the expected economic benefits of HS1 are £ 20 billion. This is nonsense when you look at the overall picture.
Were you aware that a round sum £ 10 billion comes from a category called “Regeneration”. That is the Present Value of the household incomes of people who have moved / will move into 16,000 new homes built / to be built ( mainly ) at Stratford , Ebbsfleet and Eastern Quarry over the next 30 years +.
But the point is that these people haven’t suddenly appeared out of thin air , they have moved from somewhere else where they then won’t be sepnding their household incomes. It’s pure “smoke and mirrors” my friend.
The same point could be put to Go HS2 whose website claims that Birmingham and Solihull would see a big increase in employment as a a result of HS2 but admits WITH JOBS MOVING FROM ELSEWHERE IN THE UK.
A small part of the balance of your ” £ 20 bn ” is Transport User Benefits with a larger part being so called “Wider Economic Benefits” and we all know how iffy they can be.
At last those in high places are beginning to see the light.I also hope that with the electrification of the line to sheffield may be a sign that
lines need upgrading across the country before a new one like HS2.