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19/12/2013
HS2 and the diatribe of the daft


beleben

HS2 and the diatribe of the daft


gggIf you listen to HS2’s objectors, you hear eight bad arguments against the project (wrote George Muir for ‘Passenger Transport’, 18 Dec 2013).

Objection 1: That rail demand won’t grow fast enough and the trains will be empty

The factors causing car use to plateau do not apply to rail. Long distance rail travel continues to grow and has done so through the recession (see Figure 4). It is growing at about 4.8% per annum. GDP will grow, hopefully at 2.5%, but who knows exactly. The population is growing at 0.6% pa. We are not building any more roads. Put all this together and the 2.2% pa growth in rail demand assumed in the HS2 business case seems pretty reasonable.
It is very hard to see it being less.

As of 2013, Virgin Trains are, on average, well over half empty (average loading is below 170 passengers). In capacity terms, HS2 captive trains would be much bigger than Virgin’s, but the number of population centres served by them would be much lower.

The Y network configuration works against high load factors; having principal East Midlands and Leeds rail demand served by the same London train is bound to lead to plenty of empty seats north of Toton.

As for national rail growth, that has been driven by increased

  1. motoring costs (e.g. car fuel), and
  2. rail subsidies.

If rail subsidies fall, rail demand will fall. The government seems set to increase subsidies, however.

Whether rail demand grows at 2.2%, or 4.8%, or 6.2%, does not alter the fact that the vast majority of rail passenger journeys are

(i) short distance, and

(ii) in and around London.

Population growth exacerbates the problem of accommodating the volume of short distance journeys, and the resource misallocation of HS2.

In themselves, percentage growth rail rates are not instructive. A growth rate of 2.2% in London rail commuting, is an immensely harder task to manage, than a growth in long distance rail of, say, 5%.


Objection 2: That we don’t need HS2’s capacity because Virgin WCML trains are running with plenty empty seats in the peak

Yes, the Virgin WCML load factor at Euston in the peak is not too high and there are spare seats for future growth. London Midland trains, also running on the WCML, though now full and standing will shortly get 13% mores seats with their new trains. The Chiltern line to Birmingham has spare capacity.

It sounds like a good argument, and I want to come back to it in detail in a later article, but it only takes you so far.

Why?

It is extremely unlikely that the spare capacity, plus any extra which can be added, would not be fully used up by growth well before the Y of HS2 is finished.

The WCML track is in a fragile state: it is heavily used; it is the most congested mixed use, four-track line in the world; maintaining it is difficult and its punctuality is suffering. These problems are not easily solved, even with money. I would not think you would want to be relying it alone in 25 years’ time.

Finally, loading the WCML to the gunnels and cancelling HS2 does not give you the other benefits of HS2: use of the released capacity and travel time savings on the high speed line.

If the WCML Fast Lines are in a fragile state, what state is the HS2 trunk going to be in, with "18 trains” an hour in each direction, running up to eighteen hours a day?

Although large capacity uplifts can be achieved on the WCML, there is no reason to be over-reliant on one line in 25 years’ time. The Chiltern Main Line has plenty of spare capacity, and moving West Midlands intercity trains to the Bicester route is a low-disruption, cost-effective way of freeing up capacity on West Coast. South of Leicester, the Great Central corridor is also available to increase intercity and freight movements.

Upgrades dispersed around the legacy network, provide more capacity and resilience than HS2, for less money.


Objection 3: That the environmental damage to the Chilterns and the disruption to residents around Euston are so bad that we should abandon this project.

Yes, there is damage and disruption and, yes, the project has to be properly justified. But remember, if a third runway is built at Heathrow and aircraft numbers rise, a lot of people, including me, will suffer worse. These things happen.

The issue is whether HS2′s damage and disruption — in and outside London — is necessary, or worth the costs. On the evidence available, the answers are: no, and no.



Objection 4: HS2 won’t release much useful rail service capacity around Birmingham, Manchester or Leeds

Yes, many of the long distance trains now running will continue to run – as the literature fully recognises – but HS2 will allow a change to their stopping pattern. They can become new Fast Regional or Regional Stoppers and many places will see an improved train service. Calculations in the KPMG report show substantial increases in regional connectivity arising from these new services.

The details are important so, again, to be addressed in a later article.

The details are important, so by now, one might have expected an official detailed explanation of (i) what capacity would be released on existing lines, (ii) how that would be used. There hasn’t been one.

In the Birmingham conurbation, capacity release provided by HS2 would be minimal, and in essence confined to the Birmingham to Coventry line.

In Manchester, HS2 prospects for capacity release are limited to the Stockport corridor. If the legacy Manchester intercity service were cut from three trains per hour to one, there would a capacity saving (if the two trains were not resurrected under a different name). In path release terms, much the same results are achievable by low-cost local reconfigurations (e.g. extending Metrolink as tram-train beyond Altrincham, thereby removing the need for trains to run into Stockport).

Between Sheffield, Wakefield, and Leeds, duplicate rail routes are available, and there is no real evidence of capacity shortage. Most of the West Yorkshire conurbation is west of Leeds. HS2 provides no capacity uplift to and from big towns like Bradford, Halifax, and Huddersfield.


Objection 5: That HS2 won’t benefit the North

[...]

HS2 will not be painless for the north. There will be change and some disruption. Some high value activities will move to London, but London things will move north. Birmingham, Manchester and Leeds in competing with each other will drop some activities and focus on others. It will not benefit everyone: people without skills will lose out. But, as the Centre for the Cities spokesman said this morning, "Birmingham is not competing with London, it is competing with Barcelona”. Rapid access to the specialisations available in London must be an advantage. Anyway, Birmingham, being effectively the hub of the new network, is going to be a very big winner.

HS2 would be certain to provide some benefits for ‘the North’. However, at the national level, the true monetised economic benefits are likely to be lower than the costs (as happened with the Spanish high speed network). For the North and the entire country, the opportunity costs of sinking £50 billion into a prestige rail project designed to link three provincial cities with London are immense.


Objection 6: That there are better ways to improve transport in the North than HS2

OK, this is possibly true in the short term, but no one has come up with anything concrete and plausible that addresses long term growth and delivers the same connectivity improvement.

Perhaps there could be another way to relieve crowding on the London ends of the major rail routes (eg Crossrail 2, 3 and 4) but if we did just that, we would further cement in the position of London.

HS2 would not relieve much crowding on the London ends of the major rail routes. The relief would be largely confined to the London Midland commuter service (even in stage two). Most rail demand is to, and from, the east and south of London.

Surely the best way to improve rail connectivity in the North, is to invest in rail connectivity in the North; HS2 is really only designed to connect Birmingham, Manchester and Leeds to London.


Objection 7: The Business Case is weak

You can chip away at the edges if you want, but a benefit cost ratio of 2.3 (with wider economic benefits, which will happen) for a large project is good.

Obviously small projects – road by-passes and suchlike – can have higher BCRs but such projects are always on the margin. You can’t build a network out of by-passes: something has to join them up. By their nature, very large projects don’t have high BCRs, but they sometimes have to be done.

Some argue that the value put on time saved – a large part of the total benefits – is bogus. People work on trains. Yes of course they do, but I cannot believe that the average business would not, if it could, spend £32 to have its staff spend an hour less on the train.

The HS2 business case is poor, and its benefit cost ratio is below that of lower risk alternatives based on the classic network.  Subject to a given funding constraint, projects should be progressed in order of benefit – cost performance, and absolute size is irrelevant. If an investment of, say, £100 produced a return of £7, that would not be ‘better’ than three smaller investments with individually lesser returns (e.g. £25 yielding £2.50, £30 yielding £2.80, and £45 yielding £3.90).


Objection 8: That, in the words of the HS2 Action Alliance, there is a "desperate attempt by the government to spin the report by KPMG which claimed HS2 would generate £15bn a year of wider economic benefits. Its conclusions were widely mocked by academics and commentators as lacking credibility with it being pointed out that if the report’s figures were correct there would be £1,000 worth of benefit to the economy for every extra journey created by HS2.”

The £15bn a year figure is entirely plausible and the HS2 Action Alliance is talking tosh and is deliberately misunderstanding the KPMG work, or they are very dim. Indeed, that so many economists object or sit painfully on the fence, given their record on other things, is a source of great encouragement.

This, however, is for another article.

Prior to the release of its Economic Impacts report, KPMG’s Richard Threlfall had tweeted a figure of up to £29 billion for the annual benefits of HS2. HS2AA’s "12 tests” press release stated, "[The report's] conclusions were widely mocked by academics and commentators as lacking credibility with it being pointed out that if KPMG’s figures were correct there would be £1,000 worth of benefit to the economy for every extra journey created by HS2.”

If there were 60 million HS2 round-trip journeys (i.e. 120 million one-way) and the annual benefits were £15 billion as claimed by KPMG, the average economic benefit per return trip (including journeys by children and pensioners) would be £250 at current prices (with 120 million round trips: £125).

Are those sums plausible?

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