High Speed Rail - Transport Committee Contents

Written evidence from Dr Paul Hoad (HSR 198)


1.  This paper has been written by Dr Paul Hoad who has 16 years' experience in Transport Modelling and Planning. Dr Hoad has worked on a wide range of transport projects, in the UK, East Asia and the Gulf, including the economic assessment of transport schemes.

2.  This note considers a number of issues relating to the transport modelling work undertaken for the HS2 study and calculation of economic benefits. Documents provided at the public exhibitions plus further documents and Spreadsheets available from the HS2 website have been the basis for this review.

3.  The general approach to the assessing the scheme has a number of problems including the following:

—  The choice of Euston as a London Terminus is poor as the connections to other rail services will be irrelevant.

—  The costs do not include improvements to London Underground even though HS2 recognise the need for such work.

—  The choice of Curzon Street as the Birmingham Terminus is poor owing to the poor connectivity and was abandoned as a passenger terminal 150 years ago as it was located too far from the city centre.

—  The HS2 model has only been used to produce forecasts for 2021 and 2043, despite the fact that the opening year is 2026 with subsequent improvement in 2033. The ability to understand the requirement of the system and design accordingly is therefore in question.

4.  From the available reports it is evident that the model used HS2 to determine the transport benefits has serious weaknesses. This evidence includes warnings from HS2's consultants about the limitations in the model which do not appear to have been addressed.

5.  Weaknesses in the model include the following:

—  The benefits claimed may merely be due to random noise in the model.

—  There has been lack of observed data upon which to build the model.

—  The increase in overall rail patronage forecast is likely to build up much more slowly than anticipated.

6.  Furthermore, due to the availability of Spreadsheets used by HS2 to derive the economic benefits of the proposals, it has been possible to carry out a detailed review of the calculations involved. From this it has not only been possible to identify a number of errors in the methodology but also to correct and repeat the calculations used by HS2 and produce revised Benefit Cost Ratios. These errors include:

—  An over-estimation of the number of working days in a year.

—  The cost of paying for tickets has not been included when calculating the transport benefits even though the resulting Revenue is recognised as being of significant size.

—  Artificial time penalties applied to replicate travel behaviour have been included in the economic benefits as if they were real times.

—  The Value of Time for Rail Business Passengers is too high.

—  The average occupancy of cars has been overestimated thereby over-estimating the Value of Time for cars.

7.  In each case the resultant Benefit/Cost Ratios show a decrease, demonstrating that the benefits have been over-estimated. In particular correcting the failure to include the cost of ticket purchase seriously weakens the economic argument for HS2. Taken together it is demonstrated that there is no net economic benefit from the system.

8.  This paper therefore questions the validity of the model used to support the proposed High Speed Rail, and demonstrates that the Benefits derived from its construction will be outweighed by its Cost, at best giving only 70p back for every £1 spent.


1.1.1  This document has been written by Dr Paul Hoad, who has 16 years' experience in Transport Modelling and Planning. Dr Hoad has worked on a wide range of transport projects, in the UK, East Asia and the Gulf, including the economic assessment of transport schemes. The evidence set out in this report is based upon the scrutiny of documents provided by the High Speed Rail Public Consultation, some of which were available at the public exhibitions and some of which were available via the HS2/DfT webpages, with particular reference to modelling issues. Particular scrutiny has been paid to Microsoft Excel Spreadsheets which detail the Cost Benefit analysis undertaken by the High Speed Rail consultants and which are available on the internet.

1.1.2  This work has been undertaken solely by Dr Hoad, with the purpose of checking that the proposals meet the necessary requirements to ensure value for money, and has not been funded by any third party. This note has been written for submission to the House of Commons Transport Select Committee, and formatted in accordance with the committee's requirements, including the need to confine the report to six pages.

1.1.3  This note comprises two main sections; firstly there are comments on the general methodology of the investigation into the viability of High Speed Rail; and secondly a more detailed examination of the calculations used to determine the economic benefit, making use of the Spreadsheets actually used by HS2 in their analysis.


2.1.1  The following issues have been identified in HS2's methodology to determine the value for money of their proposals, and which undermine the validity of the conclusions.

2.1.2  There has been a failure to include the significant costs associated with improving Euston Underground Station even though HS2 have recognised that the service would add 5,500 extra passengers to the Tube in the three hour morning peak (Para 5.4 of the HS2 Consultation document) equivalent to six completely full Tube trains and that the Tube services would already be heavily crowded.

2.1.3  There is a lack of information on where the "Wider Economic Impacts" would occur and how the forecasts have taken into account constraints such as Green Belt designation, or whether this would result in unwanted urbanisation of rural areas. Similarly, the HS2 model forecasts a significant increase in trip making, but no information is given about where these extra trips would come from, again meaning that the model results could be based upon increased development in unreasonable areas.

2.1.4  The transport model used by HS2 has been used to produce forecasts for only 2021 and 2043, yet the proposed opening date is 2026. Therefore the ability to design for the opening years of the new system is weak and the approach is contrary to DfT Guidance on the need to provide forecasts for the opening year (WebTAG Unit 3.5.4 Para 4.2.3).

2.1.5  There is a lack of information on the viability of the West Coast Mainline once passengers switch to HS2, which even with reduced services to reduce costs may no longer be economic to run (particularly in the years immediately following the opening of HS2.

2.1.6  The documentation for the HS2 model indicates that there is poor convergence between the supply (the available network and services) and the demand (ie the trips) contrary to DfT Guidance (WebTAG Unit 3.10.4, Section 1.5), meaning in real terms that the model is subject to a high degree of randomness and therefore any benefits may simply be random noise rather than real impacts.

2.1.7  The documentation for the HS2 model indicates that it is recognised that there is a lack of observed data upon which to base it, making its reliability as a forecast tool open to question.

2.1.8  The Highway component of the HS2 model is unreliable due to its inclusion of fixed traffic flow values, making it unsuitable for forecasting future flows and the subsequent derivation of economic benefits.

2.1.9  The HS2 model does not include the representation of local road congestion, which can be a key factor in choosing between road and rail travel.

2.1.10  There is no evidence of First and Standard Class Passengers being dealt with separately in the model, and hence its ability to properly deal with capacity issues is seriously in question as it will not be able to reflect how Standard Class can be full yet First Class can be almost empty.

2.1.11  Although HS2 should be commended for identifying that the increase in trip numbers forecast by the model will not appear instantaneously from opening, the assumption of 80%, 90% and 95% of this extra demand for the first, second and third years respectively is still likely to be optimistic, over estimating both the travel benefits and the additional revenue gained.

2.1.12  In a report dated February 2010, Atkins advised HS2 "When the project proceeds to a detailed design and public scrutiny stage, it is expected that additional independent validation data would be collected to allow further and more detailed scrutiny of the model and inform detailed design decisions." However this advice does not appear to be followed as the development of the HS2 model is detailed in a report also dated February 2010. Despite this, the public consultation exercise was still carried out.

2.1.13  The justification for High Speed Rail set out in the consultation is based strongly on the argument that the UK should have HSR2 simply because other countries have invested in it. However there is no evidence presented to demonstrate the economic case of these systems, indicating that this is simply a matter of jealousy of other countries rather than rational argument, and that therefore the study carried out is a matter of attempting to prove a decision that has already been taken.

2.1.14  The choice of Curzon Street as the site for the Birmingham terminus is poor due to its lack of interchange with conventional rail and bus services, and was abandoned 150 years ago as a passenger station owing to its distance from the city centre.

2.1.15  The choice of Euston as the site for the London terminus is poor as it connects to the Underground via a station that is already overcrowded. There will be little valid connections with conventional rail services as few people are likely to use the HS2 line from Birmingham to Euston then travel back northwards on the West Coast Main Line.


3.1  Overview of the HS2 Appraisal Spreadsheets

3.1.1  Twenty four Microsoft Excel Spreadsheets used to assess the economic benefits of the High Speed Rail are available on the internet via "http://www.hs2.org.uk/supporting-documents-temp". These Spreadsheets are for scenarios examined. The files of primary interest are listed below.
File NameScenario Modelled
Central Case MM67b Day 1 (revised 060711).xls The initial London-Birmingham network
Central Case MM88 Y Network (revised 060711).xls The London-Birmingham network plus extensions to Manchester and Leeds

3.1.2  The final figures in these Spreadsheets are very close to, but not exactly the same as, the economic figures provided in the DfT/HS2 document "Economic Case for HS2, The Y Network and London-West Midlands", February 2011 provided at the HS2 exhibitions. The minor differences would presumably be due to the implied revisions made on 6th July. (NB The identities of the files are also confirmed in document "http://hs2.org.uk/assets/x/78218" from HS2, in a Freedom of Information response, which makes reference to these file names, although without the revised date suffix.)

3.1.3  These two Spreadsheets have been reviewed and a number of items have been identified for which there has probably been an error made in the calculations. Corrections have therefore been applied to the Spreadsheets providing updated results for the economic analysis. These issues are set out below in the form of tests carried out by the author, examining the effect of each correction individually, including the effect on the Benefit Cost Ratio (BCR) of each as derived from the corrected Spreadsheet. In addition a final test is detailed where the corrections were applied together to assess their combined impact.

3.1.4  In accordance with the data presented in the economic report, two BCR values are given, both with and without the Wider Economic Impacts (WEIs).

3.2  Test 1: Too High Annualisation Factors

3.2.1  Annualisation factors are values used to convert the forecast Daily values taken from the model into total Yearly values (and ultimately the 60 year assessment period). The values used in the Spreadsheets are set out below, although it should be noted that values under "HSL" do not appear to have been used, with Rail covering both High Speed Rail and conventional rail.

Journey PurposeRail HSLAir Highway
Business273273 291365
Commute279279 n/a365
Other353385 395365

3.2.2  The factors used for Business and Commute are too high. These trips are weekday trips, and not likely to occur during the weekend. As set out in the guidance for DfT's TUBA (Transport Users Benefit Appraisal) Software, which would normally be used to undertake the economic assessment and which the Spreadsheet should replicate, there are 253 working days in the year (365 days, minus 52 weekend days and eight Public Holidays).

3.2.3  Business and Commute Annualisation factors were therefore corrected by setting them to a value of 253. The factors for Other trips were kept the same. Although they appear very high, these are not unreasonable if the need to consider time saving during the unmodelled weekend is to be included. However, there is an additional question of whether time savings during the weekend can be considered as valid for inclusion in the economic benefits (it is not unusual for economic assessments to exclude the weekend period completely). Therefore a further test was carried out setting all factors to 253 to derive the transport benefits, but setting the total revenue to equal that calculated when only the Business and Commute factors were corrected. This latter element is important as the Annualisation factors are used to derive the total annual revenue, and even if Weekend time savings are assumed not to contribute to the economic benefit, the passengers are still paying the fares. The results of the testing can be seen below:

TestNetwork with/without WEIsUncorrected
Change in
Business and
Commute Factors
set to 252
London—BirminghamBCR without WEIs 1.611.45-10.1%
BCR with WEIs 2.011.82-9.4%
Y NetworkBCR without WEIs 2.201.96-11.0%
BCR with WEIs 2.592.35-9.2%
and Other
Factors set to 252
London—BirminghamBCR without WEIs 1.611.34-16.9%
BCR with WEIs 2.011.71-14.8%
Y NetworkBCR without WEIs 2.201.83-17.0%
BCR with WEIs 2.592.20-15.1%

3.2.4  From the results it is clearly evident that the correction of the Annualisation factors does have a significant effect upon the BCR values. This impact is in greater proportion than the actual change in the factors, owing to the fact that not only are the forecast annual transport benefits reduced but also the forecast annual revenue decreases thereby increasing the net cost to government.

3.3  Test 2: Absence of User Charges

3.3.1  Examination of the HS2 Spreadsheets has found that the User Charges included in the analysis are in likelihood incorrect which has resulted in the Transport Benefits being seriously overestimated. User Charges cover financial payments paid by travellers and includes such elements as road tolls and, more importantly for HS2, rail (and air) fares. From Tables 2 and 10 of the "Economic Case for HS2" report it is clear that significant additional revenue is expected to be raised. Yet despite this there are no corresponding values in the User Charges to show travellers having to make these payments. Such charges effectively offset part of the benefits gained and can have a material effect on the economic assessment.

3.3.2  An example of this is the two existing alternative rail services between Birmingham and London: the New Street - Euston service and the Snow Hill - Marylebone service. The latter is the slower of the two but is cheaper. For someone currently travelling on the Snow Hill - line, it would be possible to transfer to New Street and gain a time saving but will suffer the loss of the increased fare, and so the choice is a trade-off between the time saved (and the Value Of Time of the traveller) and the additional financial cost.

3.3.3  Reviewing the Spreadsheets has shown that there are calculations of User Charges for Rail passengers but the values being dealt with are so small as to be zero when rounded to the nearest million pounds in accordance with the other larger values considered. For example, for the "Day 1" Birmingham - London scenario, the total Revenue over 60 years (in 2002 prices and discounted to 2002) is £7,753,695,520 but the corresponding total User Charge is a mere £1,657. For the "Y" network the values are £15,444,335,550 and £859 respectively. The User Charges are therefore more than a million times smaller than the revenues despite the fact that the Revenues must derive from the User Charges. In addition to this, reviewing all the available Spreadsheets shows Revenue values varying quite widely but the User Charges staying relatively fixed. For example, the forecast 2021 annual revenues vary between £107 million and £451 million, whilst the User charges vary between £33 and £97.

3.3.4  The cause of this error is suggested by Item 8 of the minutes of the HS2 Analytical Challenge Panel for Thursday 23 April 2009. (NB On the HS2 website this is incorrectly identified as 2011.) In this item it is stated that the revenue modelling should be included in the benefits modelling. It is therefore probable that the calculations were updated to add the Revenue into the calculations but the corresponding need to include the User Charges was overlooked.

3.3.5  In order to correct this, a simple assumption has been made to correct the Spreadsheets, setting the User Charges equal in size to the Revenues although they are set as negative values as they are a cost to travellers. In the original Spreadsheets the User Charges were added to the Transport Benefits, implying the money was being paid out by HS2 to passengers, not being paid by passengers. Having applied this change to the Spreadsheet a further correction was found to be necessary in the "Y Network" calculations as the cost of the User Charge was being applied twice.

3.3.6  It should be noted though that the User Charges should be higher than the Revenue. Travellers accessing the stations by taxi will be paying out taxi fares which will not be recouped as Revenue. Car parking costs will also be incurred which may not be recouped by the government. Even if HS2 operates its own car parks in order to capture these payments, this will still miss out those users of the conventional rail system who use car parks not controlled by Network Rail, and consideration would also need to be given to the additional costs of operating such car parks. It can therefore be seen that the setting the User Charges to equal the Revenue is a conservative assumption.

3.3.7  The results of the testing can be seen below:
Networkwith/without WEIs Uncorrected
Change in
London—BirminghamBCR without WEIs 1.610.56-64.9%
BCR with WEIs2.01 0.91-54.6%
Y NetworkBCR without WEIs 2.200.95-57.1%
BCR with WEIs2.59 1.36-47.4%

3.3.8  As can be seen, there are very significant decreases in the BCR owing to the considerable size of the Revenues and consequently also the User Charges. Although the magnitude of the Revenues provides a major benefit of paying for roughly half the cost of Capital and Operating Costs, they also have the disadvantage of decreasing the net transport benefits. Although many people will have the benefit of shorter journey times at the same fare level, new travellers and those transferring from road (who are the ones providing the additional revenue) will be gaining less than was originally calculated.

3.3.9  For the initial London-Birmingham network the total benefits are less than the actual cost, even with the WEIs. As result it is not a case of considering the relative value for money but a case of not being value for money at all. For the enlarged "Y Network" the scheme appears more marginal, with the WEIs providing sufficient additional benefits to push the scheme over the 1.00 level. However the original testing this scenario by HS2 assumes that the full network opens all together, rather than having only the initial (loss making) London-Birmingham for the first seven years. In addition, as was reported in the "Economic Case for HS2", delaying implementing the scheme actually increases the BCR, by roughly 5% a year. By ignoring the first seven years (2026 to 2033) when only the London-Birmingham section is in operation the BCR of the "Y Network" would have therefore been increased by 40%. Correcting for this is therefore likely to reduce the BCR with WEIs from 1.36 to below 1.00 and hence in all scenarios the scheme would be an economic loss.

3.3.10  The calculation of economic benefits includes the effect upon tax revenues. Additional money that is paid out by travellers would have otherwise been spent elsewhere and would have been taxed to some degree (whereas rail fares are not). The calculations in the Spreadsheets do include this aspect but this is linked to the Revenue input whereas it should be linked to the User Charge. Although this means that the error of having too low a value has been avoided, given that User Charges are likely to be higher than the Revenue, this would still need to be corrected for. DfT's TUBA software uses the User Charge as an input from which the Revenues (public and private) are then derived, rather than assuming separate inputs and calculations to derive User Charges and Revenue, and the Spreadsheets should follow the same processes.

3.4  Test 3: Boarding and Crowding Penalties

3.4.1  In order to determine route and mode (ie road, rail, air) choice, the HS2 model not only includes actual travel time but also additional time penalties that affect travel behaviour. These include Boarding Penalties and Crowding Penalties for Rail travellers. The former would be a perceived penalty of using transport service and would be applied for each service is boarded. This reflects the inevitable preference travellers have for private car as opposed to public transport and also militates against a series of connecting services. As the actual travel time, the time taken waiting for a service and the time taken to access and exit the public transport system are covered under separate items, the Boarding Penalty would not be a real time delay merely a perceived penalty required to replicate passenger behaviour. However these values have been included in the economic assessment, meaning that incorrect additional benefits have been claimed for the proposals.

3.4.2  It is also notable that the analysis claims that there is an actual overall positive benefit from the Boarding Penalties. Given that there is an overall increase in Rail usage, and the HS2 will not reduce the need for intermediate interchanges, it would be expected for there to be an increase in the number of Boardings. This in turn should give a negative rather than positive benefit (if these were to be included) yet a positive benefit is claimed.

3.4.3  Similarly, Crowding Penalties are applied to reflect the physical constraints of rail capacity and reflect the decreasing attraction of rail travel as the level of usage increases and carriages become more crowded. This should be seen as a perceived penalty not an actual time penalty and hence it should have been excluded from the economic assessment. Whilst it might be argued that the effect of crowding will be to degrade the opportunity to carry out productive work on a train, this would be to ignore the fact that the Value of Time for Business users on rail is already much higher than for car users, so to add further penalties would be double counting. The level of Crowding has however been included in the economic assessment, meaning that incorrect additional benefits have been claimed for the proposals.

3.4.4  The Spreadsheets have therefore been corrected by applying zero values to both the Boarding and Crowding time penalties. The results of this test are shown below.
Networkwith/without WEIs Uncorrected
Change in
London—BirminghamBCR without WEIs 1.611.37-15.1%
BCR with WEIs2.01 1.70-12.4%
Y NetworkBCR without WEIs 2.201.91-13.2%
BCR with WEIs2.59 2.30-11.2%

3.4.5  As can be seen, there are significant decreases in the BCR values of between 10% and 15%. The bulk of this reduction is in fact due to the removal of the Crowding Penalties, although both elements contribute to the lower values.

3.5  Test 4: High Value of Time for Rail and Air Business Passengers

3.5.1  As has been argued by other parties, the Value of Time (VOT) for Rail and Air Business passengers is much higher than for car Business users. The VOT is effectively the penalty paid for being unproductive during travel, and it can be seen that someone travelling by train or air is likely to be more productive than someone in a car. For Business trips the existing car occupancy is 1.2 (from DfT's WebTAG Guidance), or in other words for every six cars, five have only the driver and only one has an extra passenger. Even with high levels of crowding, rail and air passengers will still be able to get more work done than a driver.

3.5.2  In order to test the impact of the high VOT for rail/air business users, the values have been adjusted downwards. Two alternatives are reported below, firstly setting the air/rail VOT to the same value as for road (a reduction of 31%) then applying a 50% reduction to reflect an overall lower VOT. A reduction of 50% is to some extent speculative but such a decrease was discussed in the Analytical Challenge Panel of 30 June 2009. (N.B. Minutes of these meetings are available at http://www.hs2.org.uk/acp although there are some errors in these links, including mislabelling the year of some meetings.)

3.5.3  The results of these tests are shown below:
Rail/Air Business
Network with/without WEIsUncorrected
Change in
= Road Business
London—Birmingham BCR without WEIs1.61 1.35-16.0%
BCR with WEIs 2.011.73-14.1%
Y NetworkBCR without WEIs 2.201.85-16.1%
BCR with WEIs 2.592.23-13.8%
reduced by 50%London—Birmingham BCR without WEIs1.61 1.19-25.7%
BCR with WEIs 2.011.55-22.7%
Y NetworkBCR without WEIs 2.201.63-25.9%
BCR with WEIs 2.592.01-22.3%

3.5.4  As can be seen, this test produced significant decreases in the BCR values, reducing them by about 15% where there is equality between Rail/Air and Road VOT and by 25% when the Rail/Air VOT is decreased by just under another 20%.

3.5.5  It is recognised that changing the VOT would require the model to be updated accordingly and rerun, rather than simply revising the Spreadsheets. A lower rail VOT would be expected to mean a greater attraction for rail services but this is potentially misleading. Changing the VOT would require the base year model to be revised not simply the forecasts. The process whereby the model splits trips between road and rail travel would therefore be recalibrated to the new values but to the same observed values as used before, damping out the impact in the future. Therefore rerunning the model is unlikely to gain any further benefits to offset the decrease in benefits shown above.

3.6  Test 5: Too High Car Occupancy

3.6.1  Car occupancy is important to the economic assessment as it is necessary to convert between person trips used in a Rail/Air model and vehicle trips use in a Road (or Highway) model. In the Spreadsheet it is stated an average occupancy of 1.6 has been assumed with a comment stating "Ideally update HW [Highway] to vary by year/time period as occupancy varies - but impact relatively small". There is a calculation of vehicle occupancy for the years up to 2031, but these are incorrect and show too low a decline, and anyway have not been used in the final calculations.

3.6.2  The level of car occupancy is declining slowly but steadily and DfT guidance is for this to continue up until 2036. The guidance gives a decrease in occupancy of about half a per cent per annum, but over 36 years (the baseline data being from 2000) compounded year on year this does have an effect. Indeed the fact that it is included on DfT Guidance (WebTAG Unit 3.5.6) shows that it should be taken account of.

3.6.3  The economic benefits of the proposals are derived for a sixty year period, starting in 2026 for the "Day 1" network and 2033 for the "Y Network". All but a very small proportion of period will therefore have the 2036 level of car occupancy. It was therefore possible to derive a correction factor, comparing the calculated car occupancies for 2036 against the assumed average of 1.6. The correction factors were as set out below:

Journey PurposeCalculated 2036 Occupancy Correction Factor

3.7  The results of these tests are shown below:
Networkwith/without WEIs Uncorrected
Change in
London—BirminghamBCR without WEIs 1.611.58-1.8%
BCR with WEIs2.01 1.98-1.6%
Y NetworkBCR without WEIs 2.202.16-1.9%
BCR with WEIs2.59 2.57-0.8%

3.7.1  As can be seen, although the correction factors are significant, the overall effect is fairly small, at less than a 2% reduction. This is because the Highway benefits are a relatively small component of the total travel benefits (and a smaller proportion when the WEIs are included). However, as the Highway model has issues which may need correcting, it is important that the occupancies are included as it could have a greater impact with a revised model.

3.7.2   It should be noted that a change in occupancy would affect the VOTs assumed in the Highway mode, and hence would require the network model to be rerun for a definitive test to be applied, although as with changing Rail VOTs the effect is likely to be small. However such an update would be necessary in order to ensure the accuracy of the model.

3.8  Test 6: Combined Test

3.8.1  This test combines the individual tests as follows:

As Test 1: Annualisation Factors for Business and Commute travellers set to 253.

As Test 2: User Charges added equal to the Revenue, but as negative benefits.

As Test 3:.Boarding and Crowding Penalties removed from Economic Benefits.

As Test 4:.Business Value of Time for Rail/Air Business travellers set to equal Car travellers'.

As Test 5: Future Year Car Values of Time corrected for Occupancy.

The results of this test are as below:
Networkwith/without WEIs Uncorrected
Change in
London—BirminghamBCR without WEIs 1.610.00-99.7%
BCR with WEIs2.01 0.30-85.0%
Y NetworkBCR without WEIs 2.200.20-91.0%
BCR with WEIs2.59 0.72-72.2%

3.8.2  As might be expected from the individual tests the BCR values are significantly lower than the 1.00 break-even point, the worst case producing no net benefit and the best case giving only a 72% return on the investment. Therefore the proposals would not provide any real value for money.

3.8.3  It should be noted that the less stringent of the two options for Test 1 was applied, as was the case for Test 4 hence there is the potential for the BCR values to be further diminished.


4.1  It is evident that the model used by HS2/DfT has significant weaknesses and would need to be improved before it can be considered reliable. Therefore if the project is to continue in any way, the focus should first be on improving the model, after which retesting of the proposals can be undertaken. This would not in itself be likely to identify any additional benefits but should provide real confidence in the results. As it has been stated that delaying the implementation of the scheme would lead to a higher Benefit Cost Ratio (about 5% extra per year of delay) it would not be unreasonable to take the time needed to build a robust model, costing a small fraction of the overall benefit claimed for the delay. Even if the High Speed Rail proposals are still found to be impractical, this would lead to the creation of a more reliable national rail model which could be used to make better use of conventional rail.

4.2  investigation of the method of calculating the benefits of the proposed scheme has shown a number of errors, which when corrected demonstrates that the Benefit to Cost Ratio is much lower than presented to the public, and that this shows not just that the scheme is of lower value for money than other potential investments but that it does not even provide value for money, having a greater cost than it benefits.

4.3  In conclusion therefore is can be said that based on the evidence there is no justification to proceed with the High Speed Rail proposals as the scheme will cost the country more than the benefits it will produce.

11 August 2011

Annualisation FactorsFactors to convert Daily Values derived from the HS2 network into yearly values. The values should reflect what proportion of the total yearly journeys is represented in the actual model. Annualisation factors will vary by Journey Purpose due to the different proportions of travel in periods that are not modelled.
Benefit Cost Ratio/BCRThe sum of the benefits (comprising elements such as changes in travel time, vehicle operating costs) divided by the sum of the costs (comprising elements such as the capital cost of construction and yearly operating costs). A value of 1.00 therefore indicates that the Benefits equal the Costs and the higher the value is the greater the overall return on investment.
ConvergenceMost transport models follow an iterative approach in deriving forecasts in order to take account of the interaction between travel demand (ie the number of people travelling) and the transport supply (ie the capacity and connectivity of the network). For Highway trips, increased usage causes congestion imposing additional time penalties; for Public Transport increased usage leads to Crowding which penalises travellers. In a model such as HS2 have used, the supply element is fixed by the user and it is a case of the model deriving the level of demand (ie the number of trips between each origin and destination) as well as the routeing once that demand is set. This is a complex process, where an averaging method or other algorithm is required to allow each iteration to make smaller and smaller changes than the previous one, so that the result converges to a final answer. Poor convergence implies that there are large differences between iterations and it can be difficult to achieve a good level of convergence, particularly in deriving the overall demand. Poor convergence can lead to large differences being observed between scenarios which are solely caused by the fluctuations between iterations but can be mistaken for actual scheme benefits. Achieving convergence within a model can be time consuming and there is the risk of sacrificing convergence in order to produce model results within a short time-frame.
Journey PurposeThe subdivision of travellers into different categories, to reflect different behaviour. In the context of the HS2 model the Journey Purposes are: Business (otherwise referred to as Work) trips which are trips taken during work time and funded by the employer and have a high Value of Time when compared with; Commute trips which are the movements between home and work during the travellers own time; and Other (otherwise referred to as Other Non-work) trips which are the remaining trips made by travellers in their own time.
Mode of TravelThe means of travel, such as Air Rail or Car (or Road).
TUBAThe DfT's Transport Users Benefit Appraisal software, developed to provide a standardised method of calculating economic benefits from transport improvements.
User ChargesFinancial costs paid by travellers in the course of their journey, such as rail fares, and tolls. This does not include the cost of fuel etc. for cars which are considered under the category of Vehicle Operating Costs.
Value of Time (VOT)The opportunity cost of the time that a traveller spends on his/her journey, in effect the value to be gained by the economy for each unit of time saved.
WebTAGThe DfT's website for guidance on the conduct of Transport Studies (http://www.dft.gov.uk/webtag/index.php)
Wider Economic Impacts (WEIs)Benefits indirectly caused by changes in transport and travel costs, and not included in the Transport Benefit calculations

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Prepared 8 November 2011