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 The model employed is out of date and suited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long-term growth in the UK and other economies is no longer valid.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
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