Today, 16th May 2013, has seen the release of the National Audit Office’s report on HS2. The report has attacked the fundamentals of the business case.
The report has been widely publicised and you will probably have seen or heard the news about the outcome.
Here is a summary, as well as link to the National Audit Office and also the full report, to keep you up to date.
The report identifies a large number of issues, including;
- Rebalancing the economy – there is little evidence of how HS2 will address the North/South divide.
- 10-year-old data – to calculate the benefits for business travellers the DFT has used over 10-year-old data. These benefits make up 67% (£12.6 billion) of the £18.8 net transport benefits proposed for phase 1.
- Working on trains – DfT uses simplified methodology that assumes no business people work on trains currently. The report highlights that DfT research does show that people work on trains, so the value of benefits should be reduced.
- Over-estimated demand – DfT used its latest lower growth model for the WCML franchise competition in 2011, but decided to use the outdated high growth model for HS2’s August 2012 business case. This causes DfT to over-estimate HS2’s benefits.
- Premium fares – no analysis has been done on the reduction in passenger numbers as a result of HS2 charging premium prices when compared to current train services. An advance London to Birmingham ticket on Chiltern Railways can be bought for as little as £6.00 currently.
- £3.3 billion black hole – the NAO estimates that there is a £3.3 billion funding gap over four years (2017-18 to 2020-21) which the Government has yet to decide how to fill
- Business case unclear – it is unclear if the business case covers the route between London to Birmingham or the full ‘Y’ to Manchester and Leeds. The economic case for the ‘Y’ is much less certain than phase 1 as route designs are less well-developed.