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Chiltern Society HS2 newsletter
March 2011 – Addendum
In our March HS2 email newsletter, I covered the Consultation Process, and made a comment about the Benefit Cost Ratio (BCR) saying that there had been a marginal decline.
In a brief review of the Economic Case produced by HS2 for the Consultation, I found that this was not the case. So this email is to set the record straight. My apologies for the detailed information, but we need to highlight such details if we are to win through with our argument.
In addition, there are a couple of other items to bring to your attention.
Economic case
The ‘Y’ High Speed Rail Network
This extends HS1 to Manchester and Leeds, with Newcastle, Edinburgh and Glasgow served by running classic compatible trains on the existing WCML and ECML tracks. The BCR for this is calculated with and without Wider Economic Impacts. The WEIs comprise Agglomeration impacts (improved communication between businesses), Labour Market Impacts (shorter and/or cheaper journeys encourage more people into the workforce), Imperfect Competition impacts (additional value over and above cost savings to business). I am not going to discuss these in this newsletter.
The BCR in the Consultation Papers is 2.2 without WEIs and 2.6 with WEIs.
These are based on high level cost and benefit assumptions, which are open to challenge.
The Initial London to Birmingham HSR Proposal
The table below gives a detailed comparison between the 2010 calculations and the current assessment. There is a change in the treatment of the loss to government of indirect taxes in the calculation which impacts the comparison of the numbers. The centre column shows 2010 numbers calculated in the 2011 format.
As you can see from the table, using the calculation used in 2011, the BCR excluding WEIs drops from 2.6 to 1.6 and the BCR including WEIs from 2.9 to 2.0.
| Description | Per 2010 assessment | 2010 in new format | 2011 assessment |
| Transport user benefits - Business | 17.6 | 17.6 | 11.1 |
| Other | 11.1 | 11.1 | 6.4 |
| Total | 28.7 | 28.7 | 17.5 |
| Other quantifiable benefits excl carbon | 0.4 | ||
| Loss to government of indirect taxes | (1.5) | (1.3) | |
| Net Transport Benefits | 28.7 | 27.2 | 16.6 |
| Wider economic impacts | 3.6 | 3.6 | 4.0 |
| Net Benefits incl WEIs | 32.3 | 30.8 | 20.6 |
| Capital costs | 17.8 | 17.8 | 17.8 |
| Operating costs | 7.6 | 7.6 | 6.2 |
| Total Costs | 25.5 | 25.5 | 24.0 |
| Revenues | (15.0) | (15.0) | (13.7) |
| Loss to government of indirect taxes | 1.5 | ||
| Net Costs to government | 11.9 | 10.5 | 10.3 |
| BCR without WEIs | 2.4 | 2.6 | 1.6 |
| BCR with WEIs | 2.7 | 2.9 | 2.0 |
The major impact comes from a change in the forecast growth in demand, caused by a lower forecast of economic growth from the Office of Budget Responsibility, and the Government’s decision to raise rail fares by RPI + 3%. If the change was made on the basis of the 2010 cap on demand growth, the BCR would drop to 1.0. However the DfT have now decided that the growth cap will apply in 2043 instead of 2033. There are a number of other questions, but we will deal with these in detail in a later newsletter.
Chequers Walks
Since the start of the Consultation, we have had people walking the footpaths around Chequers to highlight the opposition to HS2. The walks will continue throughout the Consultation. People walking are posting comments and photographs on our Facebook page.
If you would like to take part, for more information, please contact Trish at the Chiltern Society
More Press and Internet Comment
The Guardian
Poll: Will the high speed rail link be good for Leeds? The poll is now closed. The result was 76.7% NO. Read the article.
These next 2 stories relate to Mr Hammond’s recent remarks about residents in Buckinghamshire. We all appreciate the ‘rough and tumble’ of Parliament, but Mr Hammond should remember that there is a public consultation in progress, and therefore make the case for HS2 as objectors are making the case against it, rather than denigrating his opponents.
Metro
Hammond on ‘dishonest’ Nimbys. Read the article.
Bucks Advertiser
Public Reaction to Mr Hammond’s remarks Read the article.
This next Article is about the issue of capacity and demonstrates that other upgrades deliver as much capacity as HS2.
Tax payers Alliance – 30 Mar 2011
Chris Stokes on Capacity. Read the article (Links to a PDF, which you may prefer to download by right clicking).
If there is anything else you would like me to cover, please contact me
John Gladwin
Chiltern Society
