Written evidence from Prof Chris Nash,
Institute for Transport Studies, University of Leeds (HSR 27)
1. I have been a professor at the Institute for
Transport Studies at the University of Leeds for 22 years, and
have specialised in rail policy and appraisal. In recent years
I have advised Network Rail, OECD and the Australian Department
of Infrastructure and Transport on the appraisal of high speed
rail, and this evidence draws heavily on a review commissioned
for a conference by the University of California.
2. The main argument for building a new high
speed line between London and Northern England, as shown by the
HS2 appraisal and earlier appraisals (for instance in the Network
Rail "new lines" study) is that it simultaneously provides
a major increase in capacity and substantial savings in journey
time (other ways of increasing capacity do not have this advantage,
and the best evidence from the HS2 study and the earlier Network
Rail study is that the additional cost of a new high speed line
over other ways of providing equivalent capacity is easily outweighed
by the value of the time savings). By relieving existing networks
of faster trains, a new high speed line will free up a large amount
of capacity on the main lines into London, and relieve bottlenecks
at key stations outside London, such as Birmingham New St and
Leeds, permitting expansion of commuter services into London,
Birmingham and Leeds, as well as long distance freight. A new
line from London to Birmingham and Leeds would relieve not just
the West Coast Main Line but the Midland and East Coast main lines
as well. On the other hand, it will be impossible to find such
profitable traffic to replace the lost inter city traffic on the
classic network; it is the increased subsidy necessary for the
classic network rather than the difference between revenue and
costs on the high speed line itself which make up a large part
of the requirement for government finance.
3. By contrast to the issues of capacity and
time savings, any CO2 savings are likely to be relatively marginal
(as shown by the HS2 report on the subject), and the evidence
for a major wider economic impact beyond what is measured in a
standard appraisal as cost reductions for businesses is uncertain.
Whilst there is evidence from other schemes that high speed rail
tends to raised property values in the vicinity of stations, and
some evidence of local impacts on employment and GDP, the difficulty
is always in distinguishing what is a net impact from a transfer
of benefits from elsewhere (Nash, 2010).
4. It has become generally accepted that transport
improvements may provide additional economic benefits to those
measured in a conventional transport appraisal through the medium
of agglomeration externalities, which are benefits to the firm
from improved access to suppliers, workforce, competitors and
customers over and above simple time and cost savings. These effects
are generally thought to be largely found from improvements within
conurbations, although to the extent that rail provides for a
large share of long distance commuting and inter urban business
travel for those sections of the population which one might speculate
were more important for agglomeration effects, namely professional
and managerial employees, this could be an issue for high speed
rail as well. The work undertaken on this for HS2 is not totally
convincing since it simply took the rail share of the total market
for passenger travel in estimating the potential impact, although
the result would have to be orders of magnitude greater than that
study showed to have a major impact on the appraisal. The HS2
appraisal does not depend on such wider economic effects; they
form less than 10% of the total benefits and are estimated to
arise because of improvements to transport within the major conurbations
and particularly London. It is certainly possible that these effects
are underestimated.
5. Other benefits of high speed rail are reduced
crowding and increased reliability compared with existing services,
and reduction of congestion and pollution (and in the case of
cars accidents) from diversion of traffic from cars and aircraft.
Again most appraisals show these effects to be small relative
to time savings and increased capacity.
6. The business case for HS2 is generally built
on strong evidence, and demand forecasts are consistent with past
trends, although obviously when projecting so far ahead there
is a considerable degree of uncertainty. This makes the question
of phasing construction in order to learn from how circumstances,
and particularly demand, develop important. The estimated costs
per kilometre of this line are well in excess of the costs of
building any other line elsewhere in the world, reflecting both
the difficult terrain and high population density in England and
the relative high unit costs of British construction (Nash, 2010).
This provides some assurance that costs should not have been underestimated.
7. The most suspect part of current appraisal
methods as applied to HSR is the valuation of business travel
time. The point is not simply that business travellers can and
do spend part of the time on board train working (though not necessarily
at the same level of productivity as in the office), but also
that many intercity business journeys start or finish at unsocial
hours. Also, faster journeys may enable more to be accomplished
in a single day, saving the need to stay overnight or to make
a second journey. These various factors do not all point in the
same direction in terms of any bias in the existing valuation
method, and it has been pointed out that current procedures probably
understate the value of diverting business travellers from other
modes where it is less easy to work en route, and of relieving
them of the impact of overcrowding which will disrupt the ability
to work. Nevertheless they do indicate that valuing business travel
time at the wage rate plus overheads is a crude approach. Given
that business travel time savings form such a large part (around
a half) of the benefits of high speed rail, a more accurate approach
to valuing them based on studies of what employers are actually
willing to pay for their staff to save time needs to be developed.
What evidence there is suggests that this value is typically high,
again shedding doubt on the argument that existing practice overstates
the importance of these time savings (Nash, 2010).
8. From the published appraisals, it appears
that a route from London to Leeds via Birmingham gives the best
value for money, with the Birmingham-Manchester section also desirable
but of lesser importance than the line to Leeds. The latest appraisal
does not separately consider the value of the links to Heathrow
and to HS1; an assessment of the incremental costs and benefits
of these links should be published in order to see how strong
the case for them is. Earlier work found the case for these links
very doubtful. Concentration on providing easy connections between
HS2 and Crossrail at Old Oak Common and providing a good quality
shuttle between Euston and St Pancras may be a more cost effective
way of providing for these flows of traffic.
9. The new line will have a very large capacity,
so the best way of reconciling the need to get good utilisation
and for users to make a contribution towards its costs is the
use of yield management systems, as for instance on Eurostar and
the French TGV network. This means that, whilst peak travellers
who desire flexibility will pay a very high fare, low fares will
be available for those able to book ahead and travel off peak.
This should enable some sharing of the benefits of the line across
income groups, whilst as noted above users of local and commuter
services will also benefit. Inevitably though the poorest in the
community, who travel little and that little not generally by
rail, will benefit the least.
10. Appraisals have been undertaken of the impact
of high speed rail on carbon emissions both for HS2 and for the
earlier Network Rail study of new lines. To the extent that traffic
is diverted from air or car, there is some benefit; to the extent
construction and maintenance of the new line involves the release
of carbon, that higher speeds raise energy consumption and additional
traffic is generated, there is a cost (although if the materials
used in production and the electricity used for traction are part
of the emissions trading scheme, increases in these areas have
to be offset by the purchase of permits, resulting in equivalent
reductions in emissions elsewhere. Also, because of the use of
yield management systems and compulsory reservations, high speed
trains tend to run at higher load factors than ordinary trains:
eurostar and the French TGV network both claim load factors of
the order of 70%). As noted above, the conclusion of most studies
is that the net effect will be small. Obviously the net outcome
is more favourable if the incremental electricity required is
generated from low carbon sources. But in any event, at the sort
of shadow prices of carbon generally regarded as reasonable in
appraisals, carbon savings will not contribute a lot to justifying
the cost of a high speed line.
11. In conclusion, then, there does seem to be
a strong case for the construction of HS2. Given the enormous
volume of traffic (an estimated 40 million trips per annum on
the line from when it opens, making it one of the busiest high
speed lines in Europe ) this is in line with experience abroad,
and is to be expected despite the high cost of construction in
Britain. France has undertaken ex post appraisals of its high
speed rail investment and found that, with 15 million or more
trips per day on each line from when it opened, its major high
speed rail projects to date have been well worthwhile (by contrast,
the Spanish schemes, with three to five million trips per annum,
look very much less worthwhile). It might be mentioned also that
there is strong evidence of diversion from air whenever rail journey
times fall below four hours, and rail dominates the rail-air market
when journey times are below three hours (Nash, 2010).
12. As is inevitable with such a long term project,
the business case is surrounded by considerable uncertainty, with
the future growth in demand the key issue. It is therefore desirable
to look for optimal phasing of the project, starting on the most
valuable section, so that the entire project need not be completed
if trends change, and ensuring that low value incremental investments
are considered separately and not hidden in the overall appraisal.
May 2011
REFERENCE
Nash, Chris (2010). Enhancing the Cost Benefit Analysis
of high speed rail. Paper given at the symposium on the environmental
and other co-benefits of developing a high speed rail network
in Berkeley California, 3 December 2010.
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