HS2 business plan fatally flawed

HS2 Action Alliance calls for ‘white elephant’ to be scrapped

27 October 2010HS2 Action Alliance finds it inexplicable that HS2, a project with a fatally flawed business case, could possibly be thought value for money by the Government, particularly when the country is facing unprecedented public spending cuts across the board.

Those facing steep train fare rises to get to work, or years of poor public transport and road bottlenecks will take little comfort that £33bn of public funds are earmarked for such an inappropriate scheme.

The HS2Action Alliance has analysed the HS2 business case in detail and identified six fatal flaws:

1: HS2 is not a sound investment – commercially HS2 is planned to lose money

2: HS2 will not deliver major wider economic regional benefits or transform the North

3: A new railway is not needed to solve the rail capacity problem – there are better and cheaper solutions including an alternative DfT developed.

4: The UK does not need to catch up with Europe – it is actually ahead in terms of rail journey times

5: HS2 is not ‘green’ – it doesn’t fit as part of the low carbon economy, as it doesn’t reduce carbon emissions.

6: HS2 will not greatly reduce domestic air travel – this market is already declining

More detail on the flaws in the HS2 business plan is below. The full 27 page analysis is available on the HS2 Action Website here.

 

Commenting on the HS2 business case; Hilary Wharf, director, HS2 Action Alliance, says;

“To call HS2 a white elephant is being kind. We can prove that realistic demand for extra capacity can be met through the existing network – without material disruption – and even the huge demand forecast by Government can be met by a scheme that DfT came up with for just £2bn. I make my living consulting to the rail industry and I know this project is not green, not value for money and not required.

The Secretary of State now describes HS2 as “transformational”. The only transformation involved is to change public funds into a white elephant that will give rides to an affluent minority.”

If you would like to talk to HS2 Action Alliance’s spokesperson Hilary Wharf please contact:

Richard Houghton

07803 178 037 or richardwhoughton@gmail.com

 

1: HS2 is not a sound investment

Commercially HS2 will lose money. HS2 Ltd say it will cost £25.5bn for the first phase of development, but only generate £15bn of extra fares.

The claim that HS2 is value for money with a Net Benefit Ratio (NBR) – 2.7 – depends on a number of unrealistic assumptions:

· That all business time spent on trains currently is unproductive

· That there will be a huge increase in demand for travel, some 267% – that’s over 3½ times more than now – despite clear evidence of demand saturation for domestic travel generally

· HS2 says that if demand falls short by just over 20% (still a 190% increase) then the NBR will not reach 1.5, an unacceptable ratio

· The cost of damaging the environment and property blight on the route is excluded from these calculations

· HS2 Ltd projections and business case takes no account of new technology or indeed the government’s own initiative to reduce travel

 

2: HS2 will not deliver major wider economic regional benefits or transform the North

DfT/HS2 Ltd say there are benefits (worth £3.6bn) but this is mainly from additional local transport using freed-up existing capacity not faster connectivity.

HS2 Ltd employed experts (at Imperial College) to assess whether high speed connections would lead to additional economic growth and they found that the potential for this was very small (£8-10m/a)

The redistributive effects will benefit London – not the regions. London is the UK’s dominant city. It is seven times bigger than the next biggest city, unlike other major West European capitals that are only twice as big.

DfT’s assumptions imply that trips to London will grow at three times the rate ofthose from London to the regions – taking money from the regions and spending it in London.

The current emphasis on additional transformational benefits to redress the North/South divide is neither based on theory nor empirical evidence. It is a smokescreen to hide the weaknesses in the business case and the absence of an environmental case.

Professor Overman (of LSE) in his recent evidence to the Transport Select Committee said:“….Claims about the “transformational” nature of transport investments for particularly areas should be generally discounted in assessing these benefits because they have no convincing evidence base to support them.”

3: A new railway is not needed to solve the rail capacity problem

We can generate 65% more capacity with just extra rolling stock on West Coast Main Line (WCML) and there is massive capacity potential on Chiltern Railways. 65% more capacity satisfies the requirement forecasts made by leading authorities. This capacity growth could be generated without material disruption.

DfT’s own alternative to HS2 (Rail Package 2) de-bottlenecks WCML, delivering required capacity by running more and longer trains (for a net cost of just £2billion) and gives a better (3.63) NBR than HS2 (2.7). Extra capacity can be developed incrementally against actual need – not relying on long-term forecasts.

Why this option was discarded by Government merits serious investigation. Why spend over £0.75bn this parliament on developing plans for HS2 when a complete solution is available for £2bn?

DfT’s explanation that it did not provide sufficient extra capacity – on top of meeting all the demand forecast – suggests replacing the doubtful policy of ‘predict and provide’ with the economically squanderous one of ‘predict and over-provide’.

4: The UK does not need to catch up with Europe – it is still ahead

The UK – unlike Europe – has had a fast national railway system for a long time. As Sir Rod Eddington said in 2006, the UK has extensive fast inter-city services.

We also have routes capable of 200km/h (125mph) – with quicker rail journey times between the capital and the five largest cities than in other major West European countries:

· Averaging 145 minutes in UK

o 151 minutes in Spain

o 184 minutes in Italy

o 221minutes in France

o 244 minutes in Germany

5: HS2 is not ‘green’ – it doesn’t fit as part of the low carbon economy

Even DfT say it will not reduce CO2 emissions, but it will be ‘broadly neutral’ (and HS2 Ltd’s sums flatter HS2). Trains capable of 360km/h use more than twice the power of 200km/h trains. 84% of journeys on HS2 will indisputably create more emissions – all the new journeys (27%) and those switching from conventional rail (57%).

A showcase transport investment such as HS2 should contribute to the UK’s target of reducing emissions by 80% by 2050.

6: HS2 will not greatly reduce domestic air travel

To generate sufficient shift from air (8% of HS2 journeys) HS2 Ltd assume a 178%increase in domestic air travel by 2033 and a third runway at Heathrow.

In reality demand for domestic air travel in the UK has been declining since before the recession, so opportunities for HS2 to displace air travel are reducing, not increasing. With no third runway for Heathrow the chances of major increases in domestic air are even slighter. Were reductions in domestic air services to arise from HS2 they would be replaced by long haul services that are more polluting.

ends

 

If you would like to talk to HS2 Action Alliance’s spokesperson Hilary Wharf please contact: Richard Houghton 07803 178 037 richardwhoughton@gmail.com

About HS2 Action Alliance

HS2 Action Alliance is a not for profit organisation working with over 50 local community groups, which is challenging the case for HS2 and working to get Government to take the right decisions.

Aims

· Communicate the facts about HS2 clearly and accurately.

· Provide a channel for local groups to share information and analysis, and pool resources to maximise effectiveness.

· Question, evaluate and where appropriate challenge the economic & environmental case for HS2.

· Identify and promote alternatives to HS2 that are in the national interest.

· Seek to minimise the adverse impacts of HS2 on individuals, communities and the environment.

· Work with local action and community groups, other interested organisations and businesses, to improve Government decision making on HS2