High Speed Rail - Transport Committee Contents

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


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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Prepared 8 November 2011