HS2 Phase One Hybrid Bill underpinned by fatally flawed business case: still assumes people don’t work on trains

25th November 2013 Detailed analysis by HS2 Action Alliance of the fifth HS2 business case that underpins the Phase 1 Hybrid Bill (first reading Monday, 25th November) shows it has eight fatal flaws.

  1. Return on investment – In 2010 the claimed BCR (return for every £1 spent) for Phase 1 was 2.4. In 2011 the BCR was 1.6. Now it’s fallen to 1.4. But to boost the BCR the DfT has now broken its own protocols and included the Wider Economic Impact to concoct a BCR of 1.7. The net cost to the taxpayer for the full “Y” has increased from £25.7bn to £31,5bn.
  2.  People don’t work on trains – Unbelievably the business case has not been adjusted to take account of the fact that people work on trains. As a result half – £12 billion – of HS2’s claimed Phase 1 benefits still rely on this laughable assumption. Stripping this out reduces the BCR to a realistic, but paltry, 0.71.
  3. WCML is not full – the only line into London that is less busy peak time than WCML (60 percent) is St Pancreas at 41 percent (HS1 domestic trains). Paddington’s peak period passenger load factor is 99 percent and Waterloo’s is 91 percent.
  4. Unrealistic passenger forecasts – the business case projects ‘conservative’ WCML annual passenger growth of 2.5% until 2036. Current passenger growth is just 0.9%[1]. ECML passenger growth is even lower at only 0.5%. No allowance is made for existing train companies dropping prices when HS2 launches and the resulting reduction in passenger numbers on HS2.
  5. Artificially low ticket prices – passenger demand projections assume that there will be no premium charged on HS2 tickets. HS1 charges 20 percent premium over normal service.
  6. Environmentally unsound – a tiny one percent of passengers will transfer from air and a just four percent from cars. 26 percent of passengers will be new journeys. 350kph trains use three times more energy than 200kph trains. HS2 sacrifices countryside for speed that is now “almost irrelevant” according to the Patrick McLoughlin.
  7. Alternatives are not all or nothing – 51m’s alternative to HS2 doubles WCML passenger capacity for less than 10 percent of the capital cost of HS2. It can be deliver capacity as required rather than all or nothing as HS2. No benefit with HS2 until 2026.
  8. 50% increase in value of cuts to current services: the business case demands £8.3 billion of cuts to current services. This is a 50 percent increase on the £5.5 billion of cuts included in the fourth business case. The cuts will leave a dozen towns and cities with at least one fewer direct London train per hour. Wilmslow (in Osborne’s constituency) will be left with no direct trains to London at all after Phase 1 of Hs2 opens.

Commenting on the fatal flaws in the fifth business case, Hilary Wharf, Director, HS2 Action Alliance, said;

“The business case for HS2 has always been unacceptably weak. The fifth version is just putting lipstick on the pig.

“Honest analysis shows a return of less than 50p for every £1 spent. Add inflated passenger forecasts and artificially low ticket prices and you are left with a £50 billion political vanity project that generations of taxpayers will be paying for with little or no benefit.”

Ends

Note to editors:

HS2AA is a national not for profit organisation working with over 100 local groups who believe HS2 does not represent an effective answer to the UK’s transport, economic or environmental needs. HS2AA has focussed on an evidence based approach to challenging the business case, the environmental case and compensation arrangements.

For more information please contact:

Richard Houghton

HS2AA

T: +44 (0) 7803 178 037

Email: richardwhoughton@gmail.com

 



[1] Stagecoach Annual Report