HS2 economic case downgraded but benefits still outweigh costs, says DfT
29 Oct 2013:
Expected benefit-cost ratio for proposed network falls from £2.50 for every pound spent to £2.30, new analysis asserts
Expected benefit-cost ratio for proposed network falls from £2.50 for every pound spent to £2.30, new analysis asserts
According to the new
Strategic Case for HS2 report passenger demand would far outstrip seats
on intercity and commuter trains running north from London by 2026, even
outside peak hours.
Photograph: HS2/PA
The economic case for HS2
has been downgraded on standard calculations, the government has
admitted, as it pressed the wider case for high-speed rail by publishing
new analysis of additional benefits and the cost of the alternatives.
The benefit-cost ratio (BCR) for the Y-shaped network linking London, Manchester, Birmingham and Leeds has dropped slightly from 2.5: 1 to 2.3, meaning it would return £2.30 for every £1 spent. The revised figure was due to increases in projected costs and also to attributing a lower value to time savings.
However, the Department for Transport issued additional figures showing that if passenger demand continued to grow at current rates for a decade and a half after HS2 is completed in 2033, the BCR would rise to 4.9:1.
David Prout, the DfT's director general of HS2, said that the BCR only captured a small amount of the true value of the project, which he said would revitalise the country. "We have consistently underinvested in the north. Everyone knows that London relies on its transport links … The disparities are obvious."
He said that building HS2 would bring similar benefits to the entire country, providing the links to spread economic growth throughout, or "we can be a global city surrounded by rust belt".
According to the new Strategic Case for HS2 report published on Tuesday morning, which highlighted the relationship between transport links and prosperity, passenger demand would far outstrip seats on intercity and commuter trains running north from London by 2026, even outside peak hours.
But the additional capacity from HS2 would mean the total number of seats on trains serving Euston rising from 11,300 today to 34,900 in 2033.
The strategic case spelt out how HS2 would also cut journey times between destinations not directly served by high-speed rail. For example, Bristol to York wold take 2h 45mins instead of the current 3h 59m, and Nottingham to Newcastle drops from 2h 50 mins to 2h 3mins.
It said that the alternatives to building HS2, by trying to provide additional capacity through upgrading existing rail lines, would require at least 14 years of weekend closures across the intercity network.
The government quoted Network Rail estimates that more than 100 cities and towns could have new or improved services on existing tracks once fast services were running on HS2. This would mean extra commuter services into London, Birmingham, Leeds and Manchester as well as new long-distance direct links from places like Shrewsbury to the capital. It would also free up more space for rail freight.
Opponents, however, said that the case for HS2 was "looking increasingly desperate". Stop HS2 campaign manager Joe Rukin said: "As we expected, the government have pulled some random figures out of the air in a desperate attempt to con the public."
The Institute of Directors said it welcomed the government's efforts to deal with the concerns of critics, but its chief economist, Graeme Leach, warned: "As things stand, just 27% per cent of IoD members feel the high-speed rail project represents good value for money. The reduced cost-benefit ratio and the optimistic construction costs will not go far to settle these concerns."
The British Chambers of Commerce said HS2 was the only scheme that could transform capacity on Britain's overstretched railways. Adam Marshall said: "This report bolsters the economic case for HS2. Politicians flirting with an HS2 U-turn must stop being opportunistic for political gain, and get behind this critical long-term infrastructure project."
Philippa Oldham, from the Institution of Mechanical Engineers, said: "This business case offers welcome clarification of the benefits of rolling out HS2. HS2 would be at the heart of an enhanced UK transport system that interfaces with every part of the UK. We need strong government leadership to ensure HS2 happens."
Michael Roberts, director-general of rail industry organisation the Rail Delivery Group, said: "There is a capacity challenge not just on the west coast mainline but on the railway more generally. That is why we must plan for a network which can move more people and freight across the country safely, reliably and efficiently."
The publication of the new strategic case came as the transport secretary, Patrick McLoughlin, warned Labour that it needed to make a proper, unequivocal commitment to HS2 for the scheme to progress.
Responding to the publication of a new HS2 cost-benefit analysis, Mary Creagh, the shadow transport secretary, said: "Labour has always supported HS2 because we must address the capacity problems that mean thousands of commuters face cramped, miserable journeys into cities like Birmingham, Manchester, Leeds and London.
"However, we cannot give a government that is mismanaging this, or any project, a blank cheque. Our message to David Cameron is clear: get a grip on this project, get control of the budget and get it back on track." COPY http://www.theguardian.com
The benefit-cost ratio (BCR) for the Y-shaped network linking London, Manchester, Birmingham and Leeds has dropped slightly from 2.5: 1 to 2.3, meaning it would return £2.30 for every £1 spent. The revised figure was due to increases in projected costs and also to attributing a lower value to time savings.
However, the Department for Transport issued additional figures showing that if passenger demand continued to grow at current rates for a decade and a half after HS2 is completed in 2033, the BCR would rise to 4.9:1.
David Prout, the DfT's director general of HS2, said that the BCR only captured a small amount of the true value of the project, which he said would revitalise the country. "We have consistently underinvested in the north. Everyone knows that London relies on its transport links … The disparities are obvious."
He said that building HS2 would bring similar benefits to the entire country, providing the links to spread economic growth throughout, or "we can be a global city surrounded by rust belt".
According to the new Strategic Case for HS2 report published on Tuesday morning, which highlighted the relationship between transport links and prosperity, passenger demand would far outstrip seats on intercity and commuter trains running north from London by 2026, even outside peak hours.
But the additional capacity from HS2 would mean the total number of seats on trains serving Euston rising from 11,300 today to 34,900 in 2033.
The strategic case spelt out how HS2 would also cut journey times between destinations not directly served by high-speed rail. For example, Bristol to York wold take 2h 45mins instead of the current 3h 59m, and Nottingham to Newcastle drops from 2h 50 mins to 2h 3mins.
It said that the alternatives to building HS2, by trying to provide additional capacity through upgrading existing rail lines, would require at least 14 years of weekend closures across the intercity network.
The government quoted Network Rail estimates that more than 100 cities and towns could have new or improved services on existing tracks once fast services were running on HS2. This would mean extra commuter services into London, Birmingham, Leeds and Manchester as well as new long-distance direct links from places like Shrewsbury to the capital. It would also free up more space for rail freight.
Opponents, however, said that the case for HS2 was "looking increasingly desperate". Stop HS2 campaign manager Joe Rukin said: "As we expected, the government have pulled some random figures out of the air in a desperate attempt to con the public."
The Institute of Directors said it welcomed the government's efforts to deal with the concerns of critics, but its chief economist, Graeme Leach, warned: "As things stand, just 27% per cent of IoD members feel the high-speed rail project represents good value for money. The reduced cost-benefit ratio and the optimistic construction costs will not go far to settle these concerns."
The British Chambers of Commerce said HS2 was the only scheme that could transform capacity on Britain's overstretched railways. Adam Marshall said: "This report bolsters the economic case for HS2. Politicians flirting with an HS2 U-turn must stop being opportunistic for political gain, and get behind this critical long-term infrastructure project."
Philippa Oldham, from the Institution of Mechanical Engineers, said: "This business case offers welcome clarification of the benefits of rolling out HS2. HS2 would be at the heart of an enhanced UK transport system that interfaces with every part of the UK. We need strong government leadership to ensure HS2 happens."
Michael Roberts, director-general of rail industry organisation the Rail Delivery Group, said: "There is a capacity challenge not just on the west coast mainline but on the railway more generally. That is why we must plan for a network which can move more people and freight across the country safely, reliably and efficiently."
The publication of the new strategic case came as the transport secretary, Patrick McLoughlin, warned Labour that it needed to make a proper, unequivocal commitment to HS2 for the scheme to progress.
Responding to the publication of a new HS2 cost-benefit analysis, Mary Creagh, the shadow transport secretary, said: "Labour has always supported HS2 because we must address the capacity problems that mean thousands of commuters face cramped, miserable journeys into cities like Birmingham, Manchester, Leeds and London.
"However, we cannot give a government that is mismanaging this, or any project, a blank cheque. Our message to David Cameron is clear: get a grip on this project, get control of the budget and get it back on track." COPY http://www.theguardian.com
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