DfT reduced to making bogus comparisons rather than being up front about the latest figures on HS2

12 April 2012: New business case figures are a whole lot worse Latest DfT figures on value for money of HS2 show it’s now worse than even they previously said. The Benefit to Cost ratio (BCR) is just 1.2 for Phase 1 (DfT having discovered that they increased rail demand in Jan 2012 even more than they did previously (in Feb 2011). This wiped 0.2 off their previous BCR (of 1.4) and 0.3/0.4 for the full Y.

DfT make bogus comparisons In an attempt to find some better figures, DfT now compare the extra costs/benefits of a high speed line (HS2) with a new conventional speed line. This completely ignores their own latest business case that shows HS2 is plainly bad value for money (at just £1.2 of benefits for every £1 cost) and that of the best alternative (ie 51m’s ) which is three times better value for money than HS2 (about £5 benefit for every £1 cost).

3-year old research published DfT finally publish the March 2009/10 Oxera/Arup research that confirms that the rail model they used overestimates their answers for long distance rail travel – which affects every HS2 trip. The impact of this was included in their 2012 analysis and wipes 0.4 off their BCR (so it’s now really just 0.8 for phase 1). This means every £1 spent loses money (and gets back just 80 pence).

New analysis of consultation responses In an attempt to massage reality DfT emphasise new figures on those supporting HS2. But they neglect to mention that the new analysis also says that 73% of supporters were standard campaign responses eg postcards rather than just 5% of all those who opposed HS2.

Hilary Wharf, Director HS2AA said “Every time the business case is reviewed it gets worse. Back in March 2010 there was a BCR of 2.4 and now it’s half that. The reduction for the full Y is even worse. Originally it was 4 and now its 1.3 to 1.5.” “Even this latest admission ignores the fact that there is no justification for assuming even a doubling in rail demand or that the only question is when that point is reached” “It is scandalous to take 3 years to publish important research that DfT themselves commissioned. We now know that even when they undertook their demand modelling for HS2 they knew it was going to exaggerate the demand. And to simply show the impact as a sensitivity test and not to change their base case is dishonest” “When will the treasury insist that HS2 ltd are just throwing good money after bad and call a halt to this huge waste of money – £34bn.”

End

Notes to Editors:

  1. HS2 Action Alliance is the national organisation making the powerful case against HS2. It is a not for profit organisation working with over 70 local groups, who all believe HS2 does not represent an effective answer to the UK’s transport, economic or environmental needs. They have undertaken detailed evaluations of the business case for HS2. Their April 2012 update is available on the website. Since 2010 they have also been pressing for fair compensation. HS2AA Ltd are currently taking two separate Judicial Review actions against Government (on the environment and on compensation).
  2. The latest Benefit Cost Ratio figures released by DfT (see The Economic case for HS2: Next Steps and Future Updates (April 2012) show a further reduction in value for money of HS2. The published figures excluding Wider Economic Benefits (WEI) have reduced as follows: Phase 1 BCR: 2.4 (March 2010); 1.6 (feb 11); 1.4 (Jan 12); 1.2 (April 2012) Full Y BCR: 4.0 (March 2010); 2.2 (Feb 2011); 1.6/1.9 (Jan 2012); 1.3/1.5 (April 2012) Even these figures exclude the effect of the November 2011 economic forecasts (that deduct a further 0.1 off the BCR). Adjusting for other factors (in their sensitivity analyses) takes the BCR numbers below 1 eg latest rail demand model assumptions (as below).
  3. The Oxera/Arup research undertaken in March 2009, with findings dated March 2010, was commissioned by DfT (and Scottish transport and Passenger Demand Forecasting Group). It showed that the ‘distance term’ no longer applies ie this is a multiplier for long journeys that was contained in the rail model (PDFH v4.1) that they used for estimating demand. The latest model (PDFHv5.0) excludes the multiplier, but DfT did not use it. This has a big impact on the BCR but DfT chose to show the effect as a sensitivity test and not a change to their base case.
  4. DfT press statements quote “….. HS2 delivering four pounds of benefit for every additional pound spent compared to a new conventional-speed line.” This is an unwarranted comparison basis. Their own case compares HS2 with a ‘do minimum situation’ and now shows HS2 as giving just over a £1 benefit for every £1 spent. They also show that the best alternative gives £5 benefit (ie 51m optimised alternative of uprating existing line), for every £1 spent.

For more information please contact: Richard Houghton Aspect Consulting Tel: 07803 178 037 Email: richardwhoughton@gmail.com