The £32bn Great Train Robbery

The lure of high speed rail travel has proven too much for ministers to resist. Seduced by the chance to finally emulate its European neighbours, Britain will have its very own TGV in the not so near future.

In a 2006 major review of Britain’s transport needs, the former head of British Airways, Sir Rod Eddington, was forthright in this blunt message to politicians:

The risk is that transport policy can be become the pursuit of icons.”

A message clearly taken to heart by successive governments in pursuit of their high speed fantasy. HS2 will serve as an ostentatious symbol, in an age where ministers seem determined to impose their legacies on future generations, however unnecessary or disruptive they may be and despite the underwhelming evidence.

The economic case for HS2 simply doesn’t add up: regional benefits have been dangerously over-exaggerated, lessons from Europe ignored. Decisions have been taken based on shaky assumptions and projections which look no better than overly-optimistic guesswork. Despite strong support from business groups for HS2, none of them have yet offered to commit a single penny to the project.

Writing in his column in The Guardian, last week, Simon Jenkins delivered his rebuke in typically cutting fashion:

…a vast sum of money is going on a single upmarket project whose chief feature is its extravagant glamour. HS2 is gesture spending dressed up as growth. It is Concorde for slow learners.”

In giving Britain’s second high speed rail route (HS2) the go-ahead, the government have spectacularly failed to take into account the Transport Committee’s published report. Even in giving its approval, the verdict came with stark warnings:

HS2 is not commercially viable and it contains huge financial risks: it will require substantial subsidy in both construction and operation, even if all goes to plan. The discounted sum of capital and revenue costs is £44.3bn against projected ticket sales of £27.2bn. If the project proceeds as planned, it will achieve a financial loss of £17.1bn.”

In raw figures, the economic benefits had already fallen dramatically in the appraisal period, before the consultation had even started. The benefit to cost ratio (BCR) with wider economic impacts (WEI) for the London-Midlands section had dropped from 2.7 to 2.0. That is £2 of benefit for each £1 invested. The BCR, without any WEI, had plummeted from 2.4 to 1.6.

As the committee commented:

…[this] demonstrates the sensitivity of the economic case to changes in variables…These revisions were a result of lower GDP forecasts and consequently slower growth in rail demand.”

The most obvious case in favour of HS2 comes, naturally enough, in the form of speed. However, the time-savings “benefit” was met with objections that it assumed that time spent travelling is necessarily unproductive. Yet other studies have shown that time spent commuting can often be highly valuable.

The most soundbite-friendly contention from HS2’s cheerleaders was the ‘1 million jobs’ claim by the Core Cities Group, and their assertion:

Investment in a full high-speed rail network and electrification will underpin the creation of 400,000 jobs in Core Cities, and 1 million jobs in total across their wider urban areas” (see p5).

In fact, the government has only ever spoken of the “creation of thousands of new jobs,” with some 40,000 projected to come from the London-Midlands leg of HS2.  As Andrew Gilligan pointed out in last week’s Sunday Telegraph, the Core Cities report does actually admit that there is:

…relatively little information available that specifically quantifies the economic benefits that can be generated through high speed networks.”

A key argument in support of HS2 comes in the supposedly huge nationwide advantages it will bring. As the Department for Transport commented:

The increased speed, capacity and connectivity provided by a high speed rail network would reshape our economic geography, regenerate our urban centres and help to bridge the north-south divide that has held us back in the past, allowing Britain to build a modern economy fit for the future.”

Once again, this claim cannot be backed up by the evidence and has been based on many flaky assumptions.

In evidence given to the Transport Select Committee last year, Professor John Tomaney, found that:

…the impacts of high speed rail investments on local and regional development are ambiguous at best and negative at worst.”

High speed rail, he added, has, in many examples across Europe, exacerbated geographical divides, and sucked economic activity  towards capital cities at the expense of others. The Paris-Lyon TGV caused the relocation of headquarters to the capital; The Paris-Rhone-Alpes route led to a 144% increase in flight and train journeys to Paris, and 54% increase the other way. In Spain, the Madrid to Seville line have benefited the former most, centralising business and population. In the UK, London and the South East stand to gain most.

Most damningly, HS2 Ltd, the company the government set up to consider the case for high speed rail in the UK, confirmed:

…that it had not assessed the regional impacts and distributions of benefits or losses associated with HS2.”

Indeed:

…the evidence from these countries suggests that HSR is likely to generate or reinforce territorial polarisation.” (see: Evidence HSR14, 4.6, 4.13, 4.16 and 4.17)

All this without even getting to the supposedly environmental advantages, most suspect to say the least, where the transport committee expressed its doubts that HS2 would reduce the demand for domestic air travel, or have any substantial carbon-reduction effects.

Personally speaking, I began as an enthusiastic exponent for HS2, having experienced the delights and efficiency of France’s high speed TGV trains. However, the economic case for Britain’s own version just doesn’t add up.

Last week’s green light demonstrates that ministers have opted for a romantic vision over one which is economically viable.

We will be paying for their ‘vanity project’ for decades to come.