House of Commons - High Speed Rail

High Speed Rail - Transport Committee Contents

3 Meeting future transport needs

Demand for travel between major British conurbations is expected to increase significantly over the next twenty to thirty years. High speed rail appears best placed to provide significant and sustainable additional capacity to meet that demand, whilst also improving journey times.[68]

It [HS2] would address Britain's future transport capacity challenge-providing a huge uplift in long-distance capacity and relieving pressure on overstretched conventional lines.[69]

Passenger demand

RECENT TRENDS

28. The growth in rail passenger demand since the mid 1990s is one of the successes of UK transport policy,[70] reversing the previous long-term trend of decline.[71] The number of long-distance journeys made by rail passengers more than doubled in the 15 years to 2009.[72] Despite the economic downturn since 2008, passenger numbers have continued to grow strongly, partly fuelled by a switch from car use due to the increase in petrol prices. This growth seems to have been widespread and not restricted to certain parts of the country or to specific journey types.[73] Some of the highest recent growth has been on the WCML where journeys have increased by around 10% per annum for the past three years, partly as a result of the completion of the WCML upgrade with its new "very high frequency" timetable and reliable weekend services. The downside to this growth, on WCML and elsewhere, is that many services are overcrowded, particularly some peak-hour services into major cities such as London, Leeds, Birmingham and Manchester, where improvements, such as more frequent or longer trains, cannot be made cheaply or easily.

FORECASTS

29. Growth in rail passenger demand is forecast to continue, based on projections for growth in the UK population, economy and personal incomes. The industry's view is that by 2035 the railway will be carrying twice as many passengers as today.[74]) Improvements in communications technology (high-speed broadband, video-conferencing etc) are not expected to reduce demand for travel and may even increase it.[75] In addition, demand for rail freight is expected to double by 2030.[76]

30. For the WCML, HS2 Ltd has forecast that "background" growth for rail trips over 100 miles will be 95% between 2008 and 2043, an average of 2% per annum.[77] HS2 Ltd also estimates that HS2 will generate 37% additional passenger demand (above the background growth forecast) due to the attractiveness of faster journey times.[78] For modelling purposes only, HS2 Ltd has "capped" demand at 2043 but it does not anticipate that demand growth will cease after this point. The Mr Hammond described these forecasts as "conservative" and was confident that it HS2 Ltd had not overstated them.[79]

Due to the scale of the High Speed Two proposal it is imperative that the economic case is built on robust forecasts of future rail patronage and revenue and we are comfortable that this is the case.[80]

31. Opponents of HS2 challenge these demand forecasts. HS2 Action Alliance argues that, amongst other things, the link between wealth and travel demand has weakened and that it is unsound to forecast 35 years ahead.[81] 51m criticises not only the forecasts but also the way in which the Government has presented them:

Both the Secretary of State and HS2 Ltd argued that the project assumed forecast growth in demand of 2% a year, and that this was conservative. However, the HS2 Business Case in fact assumes c209% growth by 2043, an average demand growth of 3.3% a year, reflecting significant forecast generated demand as a result of journey time improvements. This is a tripling of demand on the route - we don't believe this can be considered "conservative", particularly bearing in mind the massive over-estimation of demand for HS1.[82]

The original passenger demand forecast for HS1 did indeed prove much higher than actual demand.[83] However, HS2 Ltd says that that a more appropriate forecasting model has been used for HS2. Oxera concluded that HS2 Ltd's passenger demand forecasts are, except for the length of period forecast, based on industry standard guidance[84] which has tended to underestimate demand over the past seven years.[85] Others, including those in the rail industry, have supported HS2 Ltd's passenger forecasts and also pointed out that the recent high growth rates are not reflected in the forecasts.[86] Indeed, the WCML passenger demand levels forecast by HS2 Ltd for 2021 have already been overtaken. This suggests that growth is not following previous demand patterns and may have entered a new, higher trajectory, though it is uncertain for how long this might last.

Capacity

32. The view of the DfT is that some of the country's key rail routes are forecast to be "completely full in peak hours in the next 20 years"[87] and the necessary capacity increases cannot be achieved through enhancements to the existing lines or services. The rail industry has endorsed the view that a major increase in capacity is desirable and should be provided through a new high-speed network.[88] Network Rail was unequivocal in its evidence to us:

On the West Coast Main Line in particular, strong growth on intercity services and continued growth on commuter and regional services to towns including Milton Keynes and Northampton, will soon mean that capacity on the line will be effectively exhausted and it will be impossible to do anything to further increase capacity on the existing line. Our New Lines Study (published in August 2009) and West Coast Main Line Route Utilisation Strategy (RUS: published in December 2010) predict that this point will be reached around the end of this decade.[89]

Network Rail clarified that its reference to the line being "full" meant that, at certain times of the day, it would not be possible to provide train paths for additional services—passenger or freight—which train operators wanted.[90]

33. AGAHST challenged Network Rail's conclusion, saying that Network Rail had made a number of recent statements on the capacity of the WCML which were inconsistent and failed to account for realistic possible increases in capacity on WCML.[91] They also argue that Evergreen 3, the recent upgrade to the Chiltern Line between London and Birmingham, has been wrongly excluded from the Government's assessment of future capacity.[92] Christian Wolmar accused Network Rail of having vested interests in this matter in that a major expansion of the rail network presented Network Rail with more business opportunities than enhancements to existing trains and services.[93] HS2 Action Alliance says that Network Rail's WCML RUS has started from the position that HS2 will go ahead and therefore had not investigated possible alternative capacity enhancements.[94] The analysis by Network Rail is clearly important in this matter and we would expect them to advise us and the Government impartially. Ultimately, of course, the Government, as prospective promoter of HS2, must satisfy itself on these issues through independent analysis rather than taking the word, however authoritative, of a third party.

Alternatives to HS2

34. Opponents of HS2—notably 51m and HS2 Action Alliance—have proposed that the capacity of the existing WCML be enhanced through a combination of lengthening the existing Pendolino fleet from 9 to 11 or 12 cars, converting some cars from first to standard class, introducing smart ticketing and demand management to "spread" peak demand and selective infrastructure enhancements. They further propose that services between Milton Keynes and London be improved with a new fleet of Javelin-type trains. 51m has claimed that these enhancements, an "optimised alternative", would treble existing capacity, providing an additional 211% standard-class seating capacity, more than meeting the Government's background growth forecast. They argue that these changes could be introduced incrementally, more quickly, with less risk and at considerably less cost (around £2bn) than HS2.

35. The Government's general response to suggestions that the existing line should be upgraded is to refer to its consultants' report which concluded that such alternatives would either fail to provide adequate capacity or would be poor value for money.[95] 51m and others claim that the best alternatives to HS2 were not assessed[96] and that those options that were assessed were inferior to their proposal which the Government has not discussed with them or tested:

Neither DfT nor HS2 Ltd has made any attempt to engage with us directly on our proposed approach or the Optimised Alternative.[97]

The DfT acknowledges this situation:

The Government has not at this stage carried out a full analysis of the 51m Group's proposals, but at the strategic level, its current view is that no package of upgrades to existing lines could offer the same level or range of benefits as a new high speed line.[98]

In relation to Evergreen 3, HS2 Ltd says it has not modelled its impact but will be "exploring this further."[99]

DISRUPTION DURING CONSTRUCTION

36. Many witnesses were concerned that capacity improvements to the existing WCML would involve significant disruption to services which had only recently recovered from the previous major upgrade programme.[100] The Government also took the view that a further upgrade to the WCML would involve unacceptable disruption to passengers.[101] Other witnesses, however, pointed to the disruption to services which, in their view, would be likely to arise from the proposed demolition and reconstruction of Euston station.[102] HS2 Ltd has not assessed the relative degree of planned disruption between HS2 and strategic alternative options.[103]

LOAD FACTORS AND PEAK DEMAND

37. The standard measure of crowding on passenger rail services is the load factor—the number of passengers relative to the capacity of the train. For commuter and regional services, the capacity includes an acceptable allowance of standing passengers, whereas for long distance services, the capacity is the number of seats. HS2 Ltd provided forecast load factors for the long-distance WCML services (all-day), in the absence of HS2 or a strategic alternative. On the services currently operated by Virgin West Coast, these show averages at the southern end of the line of 56% in 2008 growing to 75% in 2043. Such levels are not unusually high on the inter-urban rail network.[104] HS2 Ltd says, however, that on busier sections and at peak times, "very significant levels of crowding" would occur.[105]

38. The crucial aspect is not all-day capacity but capacity in relation to demand during peak periods. 51m has argued that standard-class capacity is the critical factor as there is no shortage of first-class seating. However, HS2 Ltd's forecasting has not looked separately at how peak and off-peak demand would grow; it has forecast only the overall growth.[106] This seems inadequate. We therefore asked our specialist advisers to examine some of the capacity calculations; their analysis can be found in Annex 2.

39. Annex 2 shows that alternatives to HS2, such as 51m's proposal, might meet the background passenger growth forecast to 2043 at peak times, depending on assumptions about peak demand and future rates of passenger growth. The recent dramatic growth in WCML passenger demand, which does not feature in HS2 Ltd's modelling, makes it less likely that the alternatives would be viable. Annex 2 shows the dramatically higher capacity that would be provided by HS2 relative to the existing situation or the alternative proposed by 51m. HS2 would provide a step-change in capacity, not only on the new high-speed line but also on the existing classic lines where additional services could be provided as a result of improved efficiency from a greater separation of local, intercity and freight services.[107] For example, faster journeys could be provided to and from larger regional centres such as Lichfield Trent Valley, Tamworth, Nuneaton, Rugby and Milton Keynes.[108] ATOC, Passenger Focus and other bodies have also pointed to the enhanced reliability that such an increase in track capacity could bring, whereas squeezing more services onto existing lines would have the opposite effect.

Managing demand

40. Sir Roy McNulty's report on rail value for money[109] calls for a move away from "predict and provide" (i.e. calculating future passenger demand and attempting to provide for it in full) to "predict, manage and provide", whereby the high cost of meeting peak demand is reduced by fare structures and other methods that shift demand from the peak to the off-peak. 51m and others have argued that increased demand management should be part of a package of alternatives to HS2. They point out that, currently, some of the worst crowding on WCML occurs in off-peak periods, particularly at Euston at 7pm on Friday evenings, when off-peak tickets become valid. 51m and others say that this is an anomaly of the fare structure and could be addressed by more sophisticated pricing.

41. The DfT seems to reject attempts to manage demand over the long term:

Whilst there may be a case for employing demand management as a tactical response to managing demand on the railways, it is unlikely to significantly alter the case over the medium-to-long term for the provision of additional capacity.[110]

It argues that demand management is already employed to a substantial extent and that, commuters and others travelling at peak times, currently paying higher fares, find it hard to switch to off-peak periods.[111] Mr Hammond, citing the above case at Euston station has, however, accepted the need to adjust the fares structure in order to address overcrowding and avoid "perverse incentives".[112]

42. In response to the suggestion, made by opponents of HS2, that fares would be so high that it would be used exclusively by the rich, Mr Hammond said:

Uncomfortable fact perhaps No. 1 is that the railway is already relatively a rich man's toy—the whole railway. People who use the railway, on average, have significantly higher incomes than the population as a whole. [...] the assumption is that the socioeconomic mix of passengers [on HS2] will be broadly similar to those currently using the West Coast Main Line.[113]

The fares strategy for HS2 has not been decided (the modelling has simply assumed current fares levels). It would have been helpful if the DfT had provided a more comprehensive account of the options and implications.[114] It seems likely, however, that, should HS2 go ahead, the current yield-management system of high peak-time fares and low off-peak and advanced fares would apply. In our view, the significant expansion in capacity that HS2 would bring, on both HS2 services and the classic lines, would make it highly likely that cheaper fares would be offered in order to maximise passenger numbers and revenues. This would, potentially, make rail travel more equitable.

43. Demand management, such as peak and off peak pricing, is already an integral element in the way that train services are planned and operated. It is, however, in our view, largely a tactical approach and not a long-term solution to serious mismatches of supply and demand. If capacity is seriously constrained, growing demand can be managed only by means of ever higher ticket prices or increasing restrictions such as compulsory seat reservations, neither of which are acceptable as a long-term approach to rail service provision.

Planning for the long term

44. The debate on capacity seems to us to reveal two contrasting views. On one view, rising demand on the West Coast corridor is essentially a problem, to be tackled by least-cost incremental improvements coupled with measures to suppress demand. On the other view, rising demand is, for strategic reasons, to be welcomed and indeed fostered. As noted in Chapter 2, we consider that the Government needs to explain more clearly this strategic case and in particular why such arguments do not apply to road and air transport. Provided this is done, we support the step change that a high-speed rail link between London, the Midlands, the North and Scotland could bring to the capacity, quality, reliability and frequency of rail services between our major cities, and to those served by the existing WCML. Whilst the alternatives proposed by groups such as 51m offer substantial additional passenger capacity, they are not of the same scale as HS2. The rapid growth in passenger numbers over the past 15 years shows the need to plan on a larger scale and for the long term. We do not wish our successors to be faced with a situation in ten years' time where demand has continued to grow but insufficient time remains to provide the necessary capacity. We call on the Government to set out a clear and comprehensive long-term strategy for transport and the place of high-speed rail within it.

68 Number 10 Downing Street website, http://www.number10.gov.uk/news/queens-speech-high-speed-rail/ Back

69 Rt Hon Philip Hammond MP, HC Deb, 28 February 2011, c15WS Back

70 Transport 2010, The 10 Year plan (DETR, July 2000) set a target of 50% increase in rail use, measured in passenger kilometres, by 2010. Back

71 TSO, Transport Statistics Great Britain 2010, Table 6.1, p 115, September 2011 Back

72 Ev 249 Back

73 Office of Rail Regulation, National Rail Trends 2010-11 Yearbook, 2011, Table 1.1.b Back

74 ATOC/Network Rail/Rail Freight Operators' Association/Railway Industry Association, Initial Industry Plan England and Wales Proposals for Control Period 5 and beyond, September 2011 Back

75 Q 358. Improved telecommunications seem to stimulate additional travel mileage but may reduce the number of trips. Back

76 Q 27 Lord Berkeley. The ATOC/Network Rail Planning Ahead document shows rail freight going from 23bn tonne-kms in 2006 to 45bn in 2030. Back

77 Ev 267. HS2 Action Alliance says this is closer to 102% and 2.4% per annum. Ev 220 Back

78 HS2 Ltd, A Summary of Changes to the HS2 Economic Case, April 2011, para 6.2 http://www.HS2.org.uk/assets/x/77820 Back

79 Q 522 Back