High Speed Rail - Transport Committee Contents

Written evidence from Neil Coulson (HSR 21)

I wish to submit my views on the proposed construction of HS2. I will confine myself to addressing the Business Case (Question 3) and in particular the robustness of the model employed.

I note first that even the Department's own paper declares the model employed not to be robust. It has the following failings:

1.  The model seeks to attach a monetary value to the time saved by different classes of rail traveller. That value is then equated to the increase in national economic benefits derived where a saving in time travelled is achieved. It is notoriously difficult to calculate economic benefits enjoyed by a range of unidentified businesses by changing a factor such as travelling time. Indeed, a very strong Benefit Cost Ratio would need to be obtained to justify such a huge investment of the nation's wealth.

2.  It is my experience when travelling by train on business that nearly all those also travelling on business use the time to work on papers or laptops. Your paper on the economic case acknowledges this phenomenon, but ignores it in the calculations. If this very observable factor were taken into account in the figures, it would remove nearly half of the benefits assessed. (The Department has suggested that it is often hard to work on a train where the traveller has to stand. I understand that the high-speed trains will have a smaller capacity than conventional trains and to that extent this argument falls away.)

3.  The model employed is out of date and suited to relatively short term projections. In this case the appraisal period is 60 years and a difference in growth assumptions makes a substantial difference to the BCR. This was recently demonstrated when the Department had to change its assumptions. One factor which needs to be taken into account is the trend towards working from home as technology makes this possible and more efficient. This trend could totally invalidate the projections. Like economic benefits, long-term growth rates are equally difficult to predict and it is likely that the hitherto automatic assumption of continuous long-term growth in the UK and other economies is no longer valid.

4.  In the revision of the BCR on 31 March 2010 the BCR stood at 3.24. On 28 February 2011 that had already been revised to 1.6. Without the extension in the growth cap from 2033 to 2043 it would have been 1.0. This is before the so-called Wider Economic Impacts are taken into account; and rightly so, because these impacts are far more difficult to assess, if indeed they exist. No search seems to have been made to wider economic "disbenefits". These figures demonstrate the fragility of modelling and therefore of the economic case for HS2.

5.  The Government is considering a project of colossal magnitude at a time of heavy economic restraint, when a high range of important services to the nation are being cut. The case for expenditure on this scale would need to be strong indeed even in a favourable economic climate. However, the economic case presented is very weak with a high sensitivity to changes in assumptions it cannot control. It would be far more inexpensive and effective, without damaging the environment, progressively to enhance existing travel corridors to give travellers the service they need and can afford.

In short, there is no economic case.

May 2011

previous page contents next page

© Parliamentary copyright 2011
Prepared 8 November 2011