House of Lords - The Economics of High Speed 2

The Economics of High Speed 2 - Economic Affairs Committee Contents

CHAPTER 5: ALTERNATIVES TO PROVIDE CAPACITY

194. This Chapter considers the Government's assessment in the Strategic Case of alternative ways to deliver new capacity on the rail network. In the light of our conclusions on the nature of the capacity problem in the previous chapter, we consider whether the Government has undertaken a comprehensive assessment of the other options to increase capacity.

The Government's assessment of other ways to increase capacity

195. The Strategic Case explained that since 2009, the Department for Transport, "with assistance from Atkins and Network Rail has considered a wide range of incremental investment alternatives to HS2."[237] Several alternatives to both Phase One of HS2 and the full network were identified and considered, primarily by Atkins in a series of reports between 2009 and 2013. (Atkins were also commissioned by the Strategic Rail Authority[238] in 2001 to carry out a feasibility study for a high speed line from London to the north, including assessing alternatives such as a new non high-speed railway and upgrades to the existing network; the 2004 report concluded that a high speed line had a stronger business case).[239]

196. The alternatives were compared against HS2 in the Strategic Case in terms of how they performed against the two objectives for HS2:

· "To provide sufficient capacity to meet long term demand, and to improve resilience and reliability across the network;

· To improve connectivity by delivering better journey times and making travel easier."[240]

197. The alternatives were considered in two contexts: "one looking just at Phase One alternatives and the other at alternatives to the full Y network. In each case, we selected the best performing option available from the analysis."[241] The two alternatives are set out in Box 5.

Box 5: Alternatives to HS2 considered in Strategic Case

Phase One alternative

The Phase One alternative set out in the Strategic Case would provide additional capacity through changes to services and infrastructure improvements on the West Coast Main Line. This package would cost £2.5 billion. Changes to services would include:

· Lengthening intercity trains to 11 carriages and converting one first class coach to standard class, and lengthening commuter services to 12 carriages.

· Increasing frequency of trains.

· Infrastructure improvements including tackling bottlenecks, modernising junction design (at Leighton Buzzard and at Colwich Junction in Staffordshire) and providing additional track in some locations (including passing loops for freight trains).

Phase One and Two alternative

The alternative to Phases One and Two set out in the Strategic Case would require extensive infrastructure works and has a capital cost of £19.2bn. The option would include the changes to the West Coast Main Line described above and work on other lines. These other changes would provide:

· An increased number of trains per hour, including additional services, for long-distance East Coast Main Line services and an increase in the maximum speed of services from 125 mph to 140mph.

· Increased long-distance services on the Midland Main Line.

· Journey time and frequency improvements from Birmingham to Manchester, Derby, Nottingham, Sheffield, Leeds, York and Newcastle.

· Enhancements to commuter services.

Infrastructure work required to implement these changes would include:

· On East Coast Main Line: extension of platforms, upgrades to line speeds, new lines north of London and near Durham, electrification of lines to allow more cities to be served, increase in the number of tracks and a new tunnel near Wakefield and provision of parallel routes for freight alongside parts of the Line.

· On Midland Main Line: turn-backs for suburban services, station work to provide additional platforms, upgrades of some parts of the line to allow faster speeds, electrification of certain lines and a new tunnel and four track approach at Sheffield.

· Cross Country: four-tracking schemes and junction remodelling, upgrades of some parts of the line to allow faster speeds and station and platform works in particular at Manchester and Newcastle.

Source: Strategic Case, Chapter 6

COMPARISON OF THE BEST IDENTIFIED ALTERNATIVES WITH HS2

198. The Strategic Case compared the best identified alternatives against HS2. It concluded that their assessment "shows that only a new railway can fully meet the objectives of the HS2 programme" as the alternatives "do not deliver satisfactorily against the objectives set for HS2." The two main reasons identified were that the alternatives do not provide enough new seats or train paths and would cause too much disruption.[242] The Strategic Case also noted that the "under the upgrade options service reliability is unlikely to be better and may well be worse in comparison to the situation today" because the usage of the West Coast Main Line will increase rather than decrease as with HS2.[243]

199. The Strategic Case provides the following assessment of the capital costs and benefits, capacity provided and the disruption caused for the alternatives and each phase of HS2:

Table 16: Assessment of the alternatives to HS2 Phases One and Two

	HS2 Phase One	Phase One Alternative	HS2 both phases	Phase One and Two Alternative
Capital costs and benefits
Capital costs (£bn)	19.4	2.5	38.4	19.2
Benefits (£bn)	28.1	8.5	71.0	30.7
Benefit-cost ratio	1.7	2.0	2.3	3.1
Capacity provided
Additional peak hour seats—west coast corridor only (London Euston)	+10,800	+3,000	+13,100	+3,000
Potential Freight Capacity Release (additional daily paths southern section of West Coast Main Line)	+20	0	+20	0
Network resilience: Fast line path utilisation (West Coast Main Line South—trains paths per hour released)	+1	-3	+1	-3
Disruption caused
Disruption (indicative number of weekend closures)	223	410	386	2790[244]
Local Impacts: additional mileage of double-track railway (route length rather than track length)	136	~20	350	~155

Source: Strategic Case, Figures 6.1, 6.5, 6.6 (Data from HS2 Ltd and Steer Davis Gleave)

Capacity

200. The Strategic Case concluded that the two alternatives "do not provide sufficient additional capacity to meet the long term needs for the north-south railways" and "do not provide significant additional released capacity for commuters and freight on the West Coast Main Line."[245]

201. The Strategic Case illustrated when today's level of overcrowding would be reached on commuter trains under the Phase One alternative:

Figure 11: Commuter demand and route capacity achievable through upgrading the existing West Coast Main Line

Source: Strategic Case, Figure 3.2 (Steer Davis Gleave)

202. In terms of long-distance trains, the Strategic Case said that assuming 5 per cent annual growth in peak demand, by 2028 there would be as many passengers as seats across the evening peak hour, "which in practice means serious levels of overcrowding."[246]

203. The Strategic Case also considered further upgrade measures that could be carried out:

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204. As the Department does not provide an estimate of the cost of building further tracks over the London-West Midlands section, it is not clear that HS2 offers better value for money than carrying out that work after the Phase One and Phase Two Alternatives (estimated cost £19.4 billion).

Disruption

205. The Strategic Case consideration the disruption that would be caused by the alternatives, concluding that the alternatives:

248

Reliability

206. The Strategic Case says that the two alternatives "fail to offer a robust solution to the problem of resilience and performance, particularly on the West Coast Main Line which suffers from unacceptably high levels of unreliability."[249] Mr Prout of the Department for Transport said that to improve reliability "you can only get that kind of huge step change by building a new railway."[250] The Secretary of State observed that "If you think back to just last winter, every railway line had disruptions save one, and that was HS1 because it was built to a modern engineering standard."[251] Professor Vickerman agreed that a dedicated high speed network would increase reliability. He commented that "reliability is something that people will pay a price for."[252]

207. HS2 Action Alliance did not agree that HS2 would deliver reliability improvements. They suggested that the high number of trains running on the line (18 compared to 12 in France) and not being a closed network meant that it was "hard to see how such improvements are deliverable."[253]

208. Figures 12 and 13 below show the punctuality performance[254] of Virgin Services and the West Coast Main Line average against the long-distance sector average. Figure 15 shows that Virgin's Anglo-Scottish services have a lower average punctuality than its North West or West Midlands services, which are close to the long-distance sector average.

Figure 12: West Coast train operating companies' relative punctuality performance

Source: Strategic Case, Figure 4 (Office of Rail Regulation data)

Figure 13: Punctuality performance of Virgin West Coast Main Line services against long-distance average

Source: Office of Rail Regulation, Disaggregated PPM at sub operator level for Virgin Trains—Table 3.28 and Public Performance Measure by sector—Table 3.43 [accessed March 2015]

IS THE GOVERNMENT'S ANALYSIS OF THE ALTERNATIVES CONVINCING—CAPACITY

209. We heard evidence from Councillor Martin Tett, representing the 51m Alliance, a group who have proposed an alternative to HS2 (referred to as '51m') which is similar to the Phase One Alternative discussed above. He believed that their proposal was "never properly compared against HS2."[255]

Box 6: 51M proposals

The 51M Alliance of Councils have proposed what they describe as a £2 billion package of measures to increase capacity on the West Coast Main Line. The main proposals are similar to those which make up the Phase One alternative:

· On long-distance trains, change one first class carriage to standard and lengthen trains from the present 9 or 11 cars to 12 where possible.

· Increase commuter capacity by introducing faster rolling stock, increasing all shorter distance commuter trains to 12 cars and changing stopping patterns to allow more commuter services.

· Modernising junction design at three junctions (Leighton Buzzard, Nuneaton and Colwich Junction).

Source: 51m Alternative Investment Infrastructure Strategy

210. Mr Weston from HS2 Action Alliance thought the 51m solution was "a sensible way to go about it, because you do not have to take a view now on what demand is going to be in 2036."[256] Professor Glaister thought the 51m solution "could in fact provide quite a bit of capacity at much less cost [than HS2], to at least delay the need for the decision to expand on the scale of high speed rail."[257]

211. Mr Steer of transport consultants Steer Davies Gleave thought the 51m proposals "probably have some merit as an interim kind of measure, but once you take responsibility for the longer term you cannot really contend that they provide the capacity needed."[258] Rupert Walker from Network Rail said that "they are minor benefits that, in the longer run, do not provide the level or the scale of intervention that will be needed."[259] Mr Scott from Virgin Trains said that "you cannot, in practical terms and acceptable terms, upgrade the line and provide the capacity that you need. The only practical solution that would be acceptable to passengers would be a new line."[260]

212. Network Rail assessed the 51M proposals in its report, Review of Strategic Alternatives to HS2. The report concluded that although the proposals "provide additional capacity on the WCML, for a variety of reasons these proposals are not the best long-term strategy for the route." The report said that the proposals would not provide enough capacity to meet predictions of demand to 2026, that some additional infrastructure changes would be required to deliver the proposals, that reliability would not be improved and that it was "unacceptable to undertake a programme of works that would cause this level of disruption on the route to deliver a service that would not solve overcrowding at the southern end of the route."[261]

IS THE GOVERNMENT'S ANALYSIS OF THE ALTERNATIVES CONVINCING—DISRUPTION

213. Mr Scott also thought that improvements to the existing railway would be too disruptive: "a patch-and-mend approach on the West Coast Main Line would just result in an unacceptable level of disruption, which is why we believe that the only solution is a new line."[262] Dr Matthew Niblett, of the Transport Studies Unit, University of Oxford, said that "studies have shown that the disruption to the national rail network of such upgrades would be such that the cost to travellers would be much higher than is commonly imagined."[263]

214. We considered in Chapter 2 whether the cost of disruption had been factored into the overall cost of HS2.

Other alternative solutions to the capacity problem

TICKET PRICING

215. As discussed in Chapter 3, the current capacity problem manifests itself on busy commuter trains in the morning and afternoon peaks and long-distance trains on Friday evenings and weekends. We heard evidence that overcrowding could be addressed by using ticket pricing to encourage people to travel at less busy times. Professor Glaister said that "if you are willing to use a different pricing policy to spread the load to the times when there are empty seats, you could, at least for a number of years, solve this problem without spending £30 billion on a brand new railway."[264]

216. New services have been introduced between London and Kent which run on HS1. These services are faster but more expensive than the slower services which run between the same locations on a different route. Mr Prout told us that the Department would publish an interim report on "the impact of HS1" which would be "largely built around cost-benefit ratios". He was unable to provide a date for the publication of this report.[265] The Government should use the opportunity of this review to consider how the higher prices for faster services from London to Kent on HS1 have affected demand for these services, to apply the lessons to HS2.

Commuter peaks

217. Dr Wellings thought that increasing fares during peak travel could "spread the load and make better use of existing capacity."[266] Mr Plummer of Network Rail said he supported the principle of improved use of pricing to send price signals, "but the scale of shift that you would be looking to achieve, I suggest, would be beyond what is possible in order to change the business case for the interventions that we are talking about."[267]

218. The Strategic Case stated that the Government had "explicitly ruled out any 'super peak' pricing." It explained that to use fares to manage demand would require very large price increases during the busiest times. Evidence was cited that to "produce a 3% switch in travel away from the morning peak hour would need a 40% fare differential. To suppress demand across the network would therefore involve very significant and highly undesirable price rises."[268] Mr Scott agreed:

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219. The Chairman wrote to the Secretary of State to ask whether train operators have the flexibility to implement dynamic pricing on trains as used by airline operators. The Secretary of State confirmed that operators were permitted to use dynamic pricing and Advance tickets offered by train companies used "yield management systems." The sales of Advance tickets has grown from 8% of revenue in 2007/08 to 14% in 2012/13. The Secretary of State explained that the price of certain types of rail fares, including commuter fares, certain season tickets, day singles and returns were regulated by setting "the average maximum amount that the specified 'basket' of regulated fares can increase year-on-year for each franchise."[270]

Friday evenings

220. Professor Glaister said "you may have a few trains at 7 o'clock in the evening that are crowded, and that crowding is exacerbated by the pricing policy that is being used at the moment."[271] The previous Chapter noted how the first off-peak Virgin Trains on the West Coast Main Line are often very overcrowded but afternoon peak services are only 50 per cent full. Professor Nash thought that the Friday evening problem "could be eased to a degree by a more sensible approach to fares regulation."[272] Table 10 (Chapter 4, above) showed peak and off-peak fares on Virgin services from London Euston to Manchester Piccadilly on a weekday evening. A return journey travelling outward on a peak-time train costs substantially more than a return journey travelling outward on an off-peak time train.

ALTERNATIVE PROPOSALS FOR A NEW RAILWAY

High Speed UK

221. High Speed UK (HSUK) submitted evidence to us outlining their proposal for a new four-track high-speed railway that would run along the M1 corridor from London to Scotland via Leeds with spurs from the "spine" to Birmingham, Manchester and Glasgow. The proponents of HSUK told us that it would deliver "10 times better" connectivity than HS2, improve 488 out of 528 journeys possible on the UK railway network and "double the capacity of HS2 on the core London 'stem'" for a lower capital cost than HS2.[273]

222. Steven Leigh of the Mid-Yorkshire Chamber of Commerce and Kings Bromley Stop HS2 Action Group both supported HSUK in evidence to us, arguing that it would benefit more towns and cities than HS2 proposals at a lower cost.[274] Lord Adonis, however, suggested that the proposed route up the M1 would be more controversial than HS2: "The idea that building next to existing transport corridors—which would also include having to significantly widen transport routes through major towns and cities—would be less controversial than building HS2 is for the birds." He argued that such a route would be more expensive than HS2.[275]

223. We asked the Government whether they had made an assessment of HSUK's proposals. Mr Prout told us that "The main elements of the central railway proposal were looked at in the 2013 alternative study for the East Coast Main Line." He argued that "the reinstatement of the central railway is by no means as simple as HSUK would have us believe."[276]

A new conventional speed railway

224. In Chapter 2 we considered the suggestion that the maximum speed of 400 kilometres per hour (250 mph) added significantly to the cost of HS2. In addition to cost benefits, some witnesses suggested that building for a lower maximum speed would have enabled different design choices that would have greater benefits than HS2.

225. Chiltern Ridges Action Group said that "If such speed constraints were dropped, alternatives, such as [51M], could provide the required capacity inflicting far less damage on our environment and at far less cost to the taxpayer."[277] Chris Belk, a private individual, said that "speed priority dominance has been replaced by the need for increased capacity and the generally accepted need to shrink the 'N/S Divide'—but the opportunity to reroute Phase One to remove the cost and damage legacy of speed optimisation at all costs has so far been ignored."[278]

226. Mr Prout told us that the maximum speed of HS2 had not been the reason for the route chosen: "the alignment that we have chosen is to minimise the environmental impact of the railway … I do not accept the premise that you would necessarily have a different alignment."[279]

227. The Strategic Case stated that there is a choice when building a new railway between classic rail, or high speed rail:

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228. The benefits referred to were calculated using assigned values of time for each type of traveller. We consider this in detail in Chapter 8.

Have the Government considered all the options?

GOVERNMENT'S CONSIDERATION OF THE ALTERNATIVES

229. We asked witnesses whether the Government had properly considered all of the alternatives proposed to meet the objective of providing more capacity on the UK rail network. Professor Overman criticised what he perceived as the Government's failure to provide a full assessment of the different options which could achieve the objective of providing additional capacity:

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230. Mr Prout responded to this criticism and told us that the Department had "done a huge amount of work on alternatives." He cited four reports produced by Atkins and Network Rail between 2010 and 2013 which were "really substantial, thick reports on alternatives, dealing with road and rail alternatives". He said that these reports:

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Has the Government properly considered the alternatives to provide additional capacity?

231. The alternatives in the Strategic Case were rejected for two main reasons: they only provide a third of the number of extra seats that HS2 does and the work required would be too disruptive to the existing network. The Government has not made a convincing case that the number of seats provided by HS2 is required and has not put a price on the disruption caused by the alternatives or by HS2. So on both grounds, the comparison is unproven.

Chapter 5: Conclusions and recommendations

232. The Government should use the opportunity of this review to consider how the higher prices for faster services from London to Kent on HS1 have affected demand for these services, to apply the lessons to HS2. (Paragraph 216)

233. The alternatives in the Strategic Case were rejected for two main reasons: they only provide a third of the number of extra seats that HS2 does and the work required would be too disruptive to the existing network. The Government has not made a convincing case that the number of seats provided by HS2 is required and has not put a price on the disruption caused by the alternatives or by HS2. So on both grounds, the comparison is unproven. (Paragraph 231)

237 Strategic Case, p 120 Back

238 A non-departmental public body set up in 2001 to provide 'strategic direction' for the railway industry. It was abolished in 2006. Back

239 Atkins, High Speed Line Study: Summary Report, 2005: http://issuu.com/greengauge21/docs/ hsl_study_atkins?e=2156550/2981921 [accessed March 2015] Back

240 Strategic Case, p 126 Back

241 Strategic Case, p 122 Back

242 Strategic Case, p 135 Back

243 Strategic Case,p 127 Back

244 The Strategic Case estimates that the scale of work required to implement this alternative would require 14 years of weekend closures across four lines to complete the work. Back

245 Strategic Case, p 135 Back

246 Strategic Case, p 70 Back

247 Strategic Case, p 134 Back

248 Strategic Case, p 135 Back