Summary of conclusions and recommendations
Priorities for rail investment
1.The conclusions in our 2015 report on capacity problems remain valid: overcrowding is a problem on commuter services rather than long-distance services. This is a problem that High Speed 2 addresses indirectly and in full only for London commuters using Euston, who will be the main beneficiaries of the overcrowding relief provided by the project. (Paragraph 36)
2.The evidence suggests that Northern Powerhouse Rail is required more urgently than High Speed 2. If construction on High Speed 2 had not started already, we would recommend investing in northern rail infrastructure first. Northern Powerhouse Rail will better address overcrowding in the north and improve rail connections between northern cities that are poor at present, in contrast to north-south connections which are already good. (Paragraph 37)
3.Construction on High Speed 2 should have started in the north. The decision to build High Speed 2 from the south upwards means that London, already the city expected to gain most from the project, will also receive the benefits of the new railway long before northern cities will. (Paragraph 38)
4.Representatives from the north were clear they require both High Speed 2 Phase 2b and the Northern Powerhouse Rail Programme. Given the integration of the projects, the Government should consider Phase 2b and Northern Powerhouse Rail as one programme, rather than two separate programmes. A combined programme would allow investment in rail infrastructure in the north to be prioritised where it is needed most. (Paragraph 39)
5.In any case, funding for the Northern Powerhouse Rail needs to be ringfenced and brought forward where possible. Investment in rail infrastructure in the north is required urgently, and we do not see why High Speed 2 and Crossrail 2 are being prioritised over Northern Powerhouse Rail. (Paragraph 40)
Costs and appraisal of High Speed 2
6.We have serious reservations about the cost-benefit analysis used in determining whether High Speed 2 provides value for money. Cost-benefit analysis is an important discipline for comparing the merits of different projects. But it has serious limitations as a technique for examining the transformational benefits that new infrastructure can provide. (Paragraph 62)
7.We do not believe that asking business rail travellers hypothetical questions—about how much they would be willing to pay for quicker journeys—is the most robust evidence base on which to base a calculation of the benefits that a £55.7 billion new railway will bring. (Paragraph 71)
8.We are concerned particularly that the time saved by long-distance rail business travellers has increased in value for the purposes of appraisal since our 2015 report, on the strength seemingly of a few hundred interviews carried out on station platforms. (Paragraph 74)
9.We welcome attempts to update the evidence for travel time savings. But the new values are based on unconvincing data. We note that 60 per cent of the estimated benefits of High Speed 2 (£55 billion) relate to business travel. (Paragraph 80)
10.The Government maintain the demand forecasts for long-distance rail are “conservative”. But for some of the routes which the modelling for High Speed 2 anticipates will provide the most benefits, this is not borne out by the observed demand growth in recent years. (Paragraph 92)
11.The forecast benefits of the project are very sensitive to the levels of demand predicted by HS2 Ltd’s model materialising: a revision to forecasts GDP per head growth in the latest business case caused the estimated benefits of the project to fall by £10 billion. We note HS2 Ltd’s analysis does not factor in the effect on business travel that developments in communications technology may have. (Paragraph 93)
12.The estimated benefits of High Speed 2 are highly dependent on the forecast numbers of business travellers on long-distance rail. The evidence upon which the number of business travellers used in HS2 Ltd’s modelling is based is now around 15 to 20 years old. It does not appear to correspond to the proportion of journeys undertaken for business that the most recent data from the National Travel Survey and the National Passenger Survey show. (Paragraph 107)
13.The sensitivities of the estimated benefits of High Speed 2 to values of time and demand forecasts demonstrate how important it is to the business case that the new railway is designed to be as fast as possible. (Paragraph 108)
14.New analysis of the project is needed which takes account of the transformative effects, including allowing for changes in land use, that new infrastructure can have. The assumptions behind values of travel time and the demand forecasts should be revised ahead of this new analysis. This analysis should be published alongside the full business case by the end of 2019. (Paragraph 109)
Reducing the cost of High Speed 2
15.Our 2015 report recommended that the Government should review the cost saving from lowering the maximum speed of the railway. This work has not been carried out and it is disappointing that the Government’s rejection of the idea remains based on an assessment from 2012. (Paragraph 127)
16.We do not see why High Speed 2 is being built to accommodate trains operating at 400 kilometres per hour when the initial maximum operating speed will be 360 kilometres per hour, which itself is faster than the maximum operating speed of any railway in the world. The differences in journey times between a railway operating at 360 kilometres per hour, and one operating at 300 kilometres per hour, are minimal. (Paragraph 128)
17.We are concerned that the flawed appraisal method, where the vast majority of the project’s benefits are reliant on faster journey times, is behind the Government’s unwillingness to reduce the cost of the project by designing a railway to run at a lower speed. An appraisal method that took more account of the transformative effects of new infrastructure would be less sensitive to small changes in journey times. (Paragraph 129)
18.For Phase 1, the Government should instruct HS2 Ltd to update and publish its analysis of the cost saving that would be made from designing the line to a lower maximum operating speed. (Paragraph 130)
19.For Phase 2b, the 2016 analysis by Atkins suggested substantial cost savings could be achieved by alterations to the route and design of the railway. Further analysis of those options should be carried out and published. (Paragraph 131)
20.It is disappointing that the Government ignored our recommendation to assess the cost saving that could be made by terminating the line at Old Oak Common rather than Euston. The Government and HS2 Ltd cite a 2011 report from Atkins as the evidence base for rejecting the proposal, but that report assessed only the reduction in benefits and made no estimate of the possible cost saving. (Paragraph 151)
21.The Government has argued that High Speed 2 has to finish in ‘central London’, which is taken to mean Euston. But this does not follow. What matters is not the single point of the terminus, but the connections that enable passengers to get to their final destination. Onward journey times to final destinations using the Elizabeth Line from Old Oak Common appear in most cases to be comparable, or better than, continuing from Old Oak Common on High Speed 2 to Euston. (Paragraph 152)
22.We agree with Sir Terry Morgan that the redevelopment of Euston station should be removed from the scope of Phase One of High Speed 2. Old Oak Common should operate as the London terminus for Phase One and Phase 2a. (Paragraph 153)
23.Postponing the redevelopment of Euston station to Phase 2b will allow time for a full assessment of the modifications required to allow Old Oak Common to operate as the London terminus to the full High Speed 2 network, and the cost saving that would achieve relative to a terminus at Euston. (Paragraph 154)
24.The Government should publish its analysis of the cost savings from reducing speed and terminating at Old Oak Common alongside the full business case by the end of 2019. (Paragraph 155)