Chapter 4: Reducing the cost of High Speed 2
110.The Committee’s follow-up work focused on two ideas which the 2015 report had recommended the Government should consider further: designing the railway to run at a lower speed and a London terminus at Old Oak Common rather than Euston.
111.The Government’s response to the 2015 report did not address either recommendation. The then Chairman of the Committee wrote to the Secretary of State for Transport in July 2015 to pursue these recommendations.84 In his reply, the Secretary of State said that the Government’s position was “well established … our analysis has shown that the reduction in benefits from changes to scheme design such as terminating at Old Oak Common or lowering speed would outweigh any cost savings.”85 We examine the two ideas again below.
Lower speed
112.High Speed 2 is being built to accommodate trains travelling at a maximum speed of 400 kilometres per hour, with trains expected initially to run at a maximum of 360 kilometres per hour. This compares to a maximum speed of 300 kilometres per hour on High Speed 1, and 320 kilometres per hour on the Train à Grande Vitesse (TGV) high speed train in France.86
113.Our 2015 report recommended:
“The Government should review opportunities to reduce the cost of constructing HS2 through a change in the design of the scheme to one with a lower maximum speed—such as that used on continental railways—and publish the results of this exercise. This should include an assessment of the effect a lower speed would have on journey times, which is likely to be small.”87
114.Nusrat Ghani MP, the Minister for HS2, told the Committee that “Government requirements remain that HS2 should remain designed to a maximum speed of 360km/h, with its route alignment enabling speeds up to 400km/h in the future.”88
Questioning of the design speed
115.Sir Terry Morgan said the HS2 team “have the challenge of what I would describe as cost, time and, not least, scope.”89 But that “inside the project team, the determination is that the scope, as specified by government, is still being worked to.”90 When asked whether HS2 Ltd could say a lower speed was necessary to build the project to budget, he replied:
“This is always dangerous territory. Something has to give in the triangle of scope, cost and time … I think people will have to flex on the whole question of the value for money statement about whether we need the speed and frequency.”91
116.He thought that “most people regret calling it High Speed 2. It is about creating capacity … Connectivity is a more important case for HS2.”92
117.Chris Stokes said that “with its relatively short distances, building something in this country that asserts to be the fastest high speed railway in the world is, frankly, close to ludicrous.” He described the present design as “an engineer’s pipe dream” and said “I see no reason to go faster than French TGVs. I think it is silly.”93 Bridget Rosewell said that although speed was not irrelevant, “I said at the beginning, back in 2008–09, that I did not see why we were privileging 400 kilometres an hour for the cost that it would imply.”94
Cost savings from reduced speed on Phase 1
118.We asked HS2 Ltd what cost saving could be achieved by reducing the speed. Mark Thurston said that they had reviewed reducing operating speeds to 300 kilometres per hour and 200 kilometres per hour for Phase 1:
“HS2 Ltd was remitted … to explore the optimal trade-off between journey time, maximum speed, and demand for the railway’s services. Part of this work reviewed operating speeds down to 300 km/h. This work concluded that the net present value of the capital expenditure for the project would be reduced by £600m, with greater savings being in the longer term operational costs (£1.25bn) largely due to reduction in energy costs.
However, the reduction in operating speed led to a greater reduction in revenue and benefits of £6 billion and hence a deterioration in the Benefit Cost Ratio (BCR) for the project.
HS2 Ltd also reviewed the Phase One consulted route at 200km/h (The same speed that Pendolinos travel at on the West Coast Main Line currently). The cost would be 9% lower than the cost of the route designed for 360km/h, but the increase in journey time would reduce passenger usage by 19%, leading to a reduction in benefits of 33% and revenue by 24%.”95
119.Mr Thurston said that as a result of the assessments, HS2 Ltd had recommended to the department that “the optimum maximum operating speed remained at 360km/h as the practical limit of deliverable technology at the time, noting that with future improvements in technology there is likely to be a case for higher speed.”96
120.Table 14 compares the effect of a lower speed on journey times on High Speed 2 between London and Birmingham, and London and Manchester.
Table 14: Comparison of journey times between London and Birmingham, and London and Manchester, on High Speed 2 under different maximum speed designs
Maximum operating speed of High Speed 2 |
Journey time between London and Birmingham |
Journey time between London and Manchester |
|
360 kilometres per hour (present configuration) |
49 minutes |
67 minutes |
|
300 kilometres per hour |
52 minutes |
77 minutes |
|
200 kilometres per hour |
64 minutes |
(no available estimate) |
|
Current journey time (West Coast Main Line) |
81 minutes |
127 minutes |
Source: Letter from Nusrat Ghani MP to the Chairman, 19 February 2019
121.The assessments referred to by Mr Thurston were published by HS2 Ltd in a January 2012 report.97 In Phase One, trains will operate at 360 kilometres per hour only on a 68 mile section between Amersham and the interchange station near the National Exhibition Centre in Birmingham. The assessment identified six areas on this part of the route where speed reductions could reduce cost. The conclusion was that cost savings would be minimal compared to route refinements which maintain the design speed:
“[cost] reductions are possible, but the small increases in flexibility of route alignment from a lower speed are not are not always sufficient to have a significant reduction in impacts …
… Any gains that can be achieved through a lower speed are, for the most part, not significantly greater than can be achieved through the changes we have identified … which maintain the design speed and so maintain benefits whilst allowing for future improvements in journey times.”98
122.On a 200 kilometre per hour route, the 2012 report said it “re-examined” earlier work on a conventional speed railway and had carried out a further noise assessment. The earlier work was published in a 2011 economic case for the project which said HS2 Ltd had appraised the case for a conventional speed railway “at a high level: we applied cost and journey time assumptions reflecting conventional speeds to our preferred route for the high speed line.”99 The 2011 economic case concluded that “upgrading the line to high speed would have a relatively small net cost to Government, but would generate significant benefits (time savings) to passengers on HS2.”100
Cost savings from reduced speed on Phase 2
123.In 2016 the Department for Transport commissioned Atkins to design and assess “potential strategic, alternative, rail based options to building Phase 2b of High Speed 2.”101 These alternative schemes “consist of packages of infrastructure upgrades and other interventions.” The alternatives were not designed with the express intention of lowering the maximum design speed and some include parts of Phase 2b as planned.
124.The 2016 Strategic Outline Business Case for Phase 2b rejected all the alternatives on the basis they produce lower benefits than Phase 2b, “this is driven mainly by the smaller reductions in journey times that the alternatives achieve to key northern destinations when compared to using Phase 2b.”
125.Table 15 compares the total cost and journey times provided by Phase 2b against the best alternative as assessed by Atkins.102
Table 15: Comparison of costs and journey times of Phase 2b and best alternative as assessed by Atkins
Phase 2b |
Best alternative |
|
|
Total costs (includes capital and operating costs) |
£39.9 billion |
£26.6 billion |
|
London to Leeds journey time |
75 minutes |
95 minutes |
|
London to Manchester journey time |
68 minutes |
80 minutes |
|
London to Sheffield journey time |
69 minutes |
83 minutes |
Source: Department for Transport, ‘High Speed Two Phase 2b Strategic Outline Business Case: Economic Case’, November 2016: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/570845/hs2-phase-2b-sobc-economic-case.pdf [accessed 1 May 2019]
126.The analysis indicates that the Government could save £13 billion of the cost of Phase 2b if it was willing to contemplate an extra 10 to 20 minutes additional journey time between northern cities and London.
127.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.
128.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.
129.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.
130.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.
131.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.
London terminus at Old Oak Common
132.The present plans for Phase One of High Speed 2 include a station at Old Oak Common in west London, with the London terminus of the line at a redeveloped Euston station. Old Oak Common is a planned station on the Elizabeth Line, the new west-east line across London (the line is being built under the Crossrail programme and an opening date has yet to be announced).103 The station at Old Oak Common, due to open in 2026, will be in between the Elizabeth Line stations at Acton and Paddington and provide an interchange to High Speed 2.104
133.At the time of our 2015 inquiry, there were reports that the estimated cost of the redevelopment of Euston had risen to £7 billion from an initial estimate of £2 billion. The Committee said that a terminus at Old Oak Common would avoid the cost of redeveloping Euston station and of building a tunnel from Old Oak Common to Euston105. In light of this we recommended:
“The Government should estimate the overall reduction of cost to HS2 of terminating the line at Old Oak Common… including any necessary redesign of the station at Old Oak Common to make this possible, and calculate the effect on the cost benefit analysis.”106
134.Our follow-up work looked again at terminating at Old Oak Common rather than Euston and also considered whether Old Oak Common could operate as the London terminus for Phase 1 and Phase 2a, allowing more time for the redevelopment of Euston station.
Figure 2: Integration of HS2 with the Elizabeth Line
Source: Mayor of London, Mayor’s Transport Strategy, March 2018: https://www.london.gov.uk/sites/default/files/mayors-transport-strategy-2018.pdf [accessed on 10 May 2019]
Onward journey times from Old Oak Common
135.The onward journey times from Old Oak Common using the Elizabeth Line and High Speed 2 into Euston are compared to selected destinations in Table 16.
Table 16: Onward journey times to selected destinations from Old Oak Common via the Elizabeth Line and High Speed 2107
Destination |
Journeys from Old Oak Common via HS2108 |
Journeys from Old Oak Common via Elizabeth Line109 |
||
Time (min) |
Additional interchanges110 |
Time (min) |
Additional interchanges111 |
|
|
Bond Street / Oxford Street |
9 |
0 |
7 |
0 |
|
Canary Wharf |
35 |
1 |
21 |
0 |
|
City of London (Moorgate / Liverpool Street) |
15 |
0 |
14 |
0 |
|
Kings Cross St Pancras |
8 |
0 |
20 |
1 |
|
London Bridge |
19 |
0 |
20 |
1 |
|
Stratford |
36 |
1 |
23 |
0 |
|
Victoria |
13 |
0 |
23 |
1 |
|
Waterloo |
16 |
0 |
19 |
1 |
|
Westminster |
24 |
1 |
15 |
1 |
Source: Crossrail, ‘Journey Time Calculator’: http://www.crossrail.co.uk/route/ [accessed 1 May 2019], Transport for London, ‘Plan a journey’: https://tfl.gov.uk/plan-a-journey/ [accessed 1 May 2019] & WhatDoTheyKnow, ‘Gate-to-platform and interchange walking times’, 25 January 2012: https://www.whatdotheyknow.com/request/gate_to_platform_and_interchange [accessed 1 May 2019]
136.This a rough comparison: the interchange time in between alighting at Old Oak Common or Euston, and proceeding via the Elizabeth Line or the London Underground, is not included. HS2 Ltd have said that there will be a walk “of less than 100m” between High Speed 2 and the Elizabeth Line at Old Oak Common.112
137.Of these selected destinations, only Kings Cross St Pancras and Victoria have a substantial time saving from continuing on High Speed 2 to Euston rather than using the Elizabeth Line from Old Oak Common (with London Bridge and Waterloo a similar journey time although with one fewer interchange via Euston).
Old Oak Common as London terminus for full High Speed 2 network
138.The Minister said that HS2 Ltd had assessed the merits of terminating at Old Oak Common rather than Euston, which “showed that terminating services at OOC would reduce benefits by over 15% and a revenue reduction of 10%.” Her “strong view is that permanently terminating at OOC would not offer the step change in connectivity that the nation needs, even if there is a cost saving.”113
139.These estimates of the reduced benefits are taken from a 2011 report by Atkins.114 That report estimated that a terminus at Old Oak Common would reduce daily passenger numbers on HS2 from 157,500 to 142,500 which would reduce the net present value of the benefits by £3.8 billion and reduce revenue by £1.1 billion (2009 prices) relative to a terminus at Euston.
140.The Atkins report however did not consider what the corresponding reduction in cost would be: “these changes would need to be considered in association with cost implications of the change to identify the overall impact on the business case for HS2.”115
Estimates of cost saving
141.Michael Byng, a rail consultant, has estimated the cost saving of terminating at Old Oak Common rather than Euston to be £8 billion.116
142.Nusrat Ghani MP, Minister for HS2, said that the Department for Transport was aware of Mr Byng’s estimates:
“Neither HS2 Ltd nor my Department recognise the methodology behind Mr Byng’s cost estimate, and contest the underlying assumptions and the top line calculations which were developed without access to HS2 designs, specifications or standards. My officials have asked repeatedly for more detail behind these cost estimates and a number of assumptions remain unclear to us.”117
143.The Minister said that notwithstanding these issues, “£8bn is not an accurate representation of the cost saving from terminating at OOC.” She listed some costs by way of comparison, which Mark Thurston also provided to the Committee:
“HS2 Ltd has recently announced the Construction Partner Contract for Euston station which has a value of £1.65bn. This contract includes the provision of enabling works for Over Site Development above the HS2 station. The design and construction of the civils work required for the Euston tunnels and approaches is £0.6-0.9bn. We are not able to provide more granular details of other costs due to commercial sensitivity, but these are associated with acquiring land and property to enable the development of Euston station.”118
Capacity of Old Oak Common to be London terminus for full HS2 network
144.Mark Thurston reiterated what the Committee had been told during its previous inquiry: “the demand forecasting undertaken by HS2 Ltd indicated that around two thirds of HS2 passengers would choose Euston station over OOC.” He said Old Oak Common did not have the capacity to cope with passenger demand once the full High Speed 2 network opened:
“Permanently terminating all 18 trains per hour from Phase 2b services at OOC would require additional turnback facilities and/or platforms which would require additional land and therefore cost. The station is also currently sized for approximately one third of HS2 passengers to interchange there, meaning that the station would need to be resized at additional cost …
… Passengers travelling north-south will tend to see onward opportunities from Euston station whereas those wishing to travel east-west will seek to interchange at OOC. OOC has onward connectivity to Crossrail [the Elizabeth Line] and the Great Western Main Line, but it does not have the capacity to cope [with] the additional demand from Phase 2b services permanently.”119
145.Ben Still, Managing Director of the West Yorkshire Combined Authority, said the “strength of strategic rail comes from the fact that you can locate it in city centres.” He said that maximised the connectivity benefits and therefore the economic benefits. “If HS2 terminates at Old Oak Common, there is a significant risk that you would lose some of that for both directions of travel.”120
Old Oak Common as London terminus for Phase 1 and Phase 2a
146.The Minister accepted that a terminus at Old Oak Common for Phase 1 and Phase would have fewer issues in terms of capacity but would require additional spending on the station:
“Temporarily terminating at OOC, for example until Phase 2b is operational, would have fewer issues in terms of onward travel connections but would still likely require additional infrastructure to turn around the 10 trains per hour envisaged in Phase One … initial analysis indicates only 6-8 trains per hour can be reliably terminated at OOC with the existing infrastructure. It would also complicate the construction process … completing the OOC to Euston section in Phase 2b, would require a new location for a tunnelling and spoil processing facility to be found at additional cost.”121
147.Sir Terry Morgan was however in favour of this option. He described the engineering work involved in redeveloping Euston station as “very complex”“just getting the ground cleared at Euston ready to start the build means spending an extraordinary amount of money. There is a lot of history in the area. Tens of thousands of bodies will have to be moved away from the Euston area, which is hugely challenging.”
148.He said he would “disconnect Euston from Phase One. I would let it come as safely and quickly as it can and take a slightly more balanced view on whether we need Euston on the critical path.” He warned that if too much pressure was put on the redevelopment of Euston to be completed in time for the opening of Phase One in 2026, “it will cost … Take Euston off the critical path and allow the programme team to work out the best way to manage that project … it is possible to vary the timing of Euston versus Old Oak Common. Old Oak Common would be ready. It is a much simpler thing to do.”
149.Bridget Rosewell said she was “very worried” about the redevelopment of Euston over the next decade and the disruption that would cause: “We should do anything we can to simplify that, such as phasing it a bit more slowly.” She said Phase One should be built to Old Oak Common, “get some trains running, see how people use them and see what the interchange actually looks like in practice when people use it.”122
150.Chris Stokes also referenced the disruption that will be caused to existing services at Euston and said Old Oak Common was “probably capable” of dealing with passengers from Phase One and Phase 2a. A delay to redeveloping Euston “would allow an opportunity to, frankly, review more radically whether Euston was the right place to terminate the service in any case.”123
151.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.
152.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.
153.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.
154.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.
155.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.
85 Letter from Secretary of State for Transport to the former Chairman, 1 September 2015
86 Economic Affairs Committee, The Economic Case for High Speed 2 p 23
87 Ibid.
88 Letter from Nusrat Ghani MP to the Chairman, 19 February 2019
95 Letter from Mark Thurston to the Chairman, 7 March 2019
96 Letter from Mark Thurston to the Chairman, 7 March 2019
97 Department for Transport, ‘Review of HS2 London to West Midlands Route Selection and Speed’, January 2012: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/3659/hs2-review-of-route-selection-and-speed.pdf [accessed 1 May 2019]
98 Ibid.
99 Department for Transport, ‘Economic Case for HS2: They Y Network and London-West Midlands’, February 2011 https://webarchive.nationalarchives.gov.uk/20110720164411/http://highspeedrail.dft.gov.uk/sites/highspeedrail.dft.gov.uk/files/hs2-economic-case.pdf [accessed 1 May 2019]
100 Ibid.
101 Atkins, ‘Strategic alternative to HS2 Phase 2b’, November 2016 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/568309/strategic-alternatives-to-hs2-phase-2b-atkins-report.pdf [accessed 1 May 2019]
102 The alternative selected for the comparison here is Option 3 from the Atkins report.
103 The central section of the Elizabeth Line was due to open in December 2018 but it was announced in August 2018 that this would be delayed to Autumn 2019 as more funding was needed to complete the Crossrail project. But in early 2019 Crossrail admitted it could not commit to an opening date and more work was required to understand how to complete the project. London Assembly Transport Committee, ‘Derailed: Getting Crossrail back on track’, April 2019: https://www.london.gov.uk/sites/default/files/final_-_london_assembly_transport_committee_crossrail_investigation_report_0.pdf [accessed 1 May 2019]
104 Transport for London, ‘Have your say on two potential new London Overground stations at Old Oak’, 19 December 2018: https://consultations.tfl.gov.uk/london-overground/old-oak-common/?cid=old-oak-common [accessed 1 May 2019]
105 The tunnel will be a 7.4 kilometre twin-bore tunnel. High Speed 2 Ltd, ‘London-West Midlands Environmental Statement Volume 1’, November 2013: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/259491/Volume_1_Introduction_to_the_Environmental_Statement_and_the_Proposed_Scheme.pdf [accessed 1 May 2019]
106 Economic Affairs Committee, The Economics of High Speed 2,p 18
107 The journey time from Old Oak Common to Paddington on the Elizabeth Line has been assumed to be 4 minutes—the Old Oak Common station on the Elizabeth Line will be situated in between Acton Main Line and Paddington, estimated currently to be a 6 minute journey. Crossrail, ‘Journey Time Calculator’: http://www.crossrail.co.uk/route/ [accessed 1 May 2019]
108 HS2 Ltd have assumed in previous analysis of journey times that the arrival-to-arrival time between Old Oak Common and Euston is seven minutes. High Speed 2 Ltd, ‘Interaction between the London stations at Old Oak Common and Euston’, August 2016: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/549818/Exhibit_Y_Strategic_options_from_House_of_Commons.pdf [accessed 1 May 2019]
109 A five-minute interchange has been assumed between the Elizabeth Line and London Underground lines.
110 All journeys will require an interchange at Euston between High Speed 2 and the London Underground. This interchange is excluded for the purposes of the comparison.
111 All journeys will require an interchange at Old Oak Common between High Speed 2 and the Elizabeth Line. This interchange is excluded for the purposes of the comparison.
112 Department for Transport, The Strategic Case for HS2, October 2013 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/260525/strategic-case.pdf [accessed 1 May 2019]
113 Letter from Nusrat Ghani MP to the Chairman, 19 February 2019
114 Atkins, ‘Report WP1 Analyses of London Interchange Options and Markets’, May 2011: http://assets.hs2.org.uk/sites/default/files/inserts/Analyses%20of%20London%20Interchange%20Options.pdf [accessed 1 March 2019]. Mark Thurston also referred to the same analysis in his letter to the Chairman, 7 March 2019.
115 Ibid.
116 Lucy Pasha-Robinson, ‘HS2 ‘will be most expensive railway on Earth at £403m a mile’’, The Independent, 16 July 2017: https://www.independent.co.uk/news/uk/home-news/hs2-high-speed-railway-most-expensive-world-403-million-mile-michael-byng-a7843481.html [accessed 1 May 2019]
117 Letter from Nusrat Ghani MP to the Chairman, 19 February 2019
118 Letter from Mark Thurston to the Chairman, 7 March 2019
119 Letter from Mark Thurston to the Chairman, 7 March 2019
121 Letter from Nusrat Ghani MP to the Chairman, 19 February 2019