Tuesday, January 10, 2012

A High Speed Future or an Expensive White Elephant?

So High Speed 2 (HS2) has been approved. Come 2026 we’ll be able to travel from London to Birmingham on fast, punctual services with the promise of high speed extensions to Leeds and Manchester to come. The media is full of contrasting opinions on this development, with some proclaiming the benefits of a sorely needed new line and others deriding the project as an expensive and environmentally damaging white elephant. So who’s right?

If you’re pressed for time the simple answer is ‘who knows?’, but if you’re after a bit more of an analysis read on. The arguments for HS2 rest largely on its abilities to reduce journey times and increase capacity on the UK’s railways. The first of these arguments is the best known due to the impressive 225 mph planned top speed for the line – that’s a good 100 mph faster than current West Coast Main Line (WCML) that HS2 will mirror. But, whilst impressive, speed is not necessarily a benefit in itself.

The first reason why faster may not be necessarily (much) better is the geography of our country. The well respected Eddington Transport Study back in 2006 pointed out that when compared to countries such as France and China (which the UK’s train network are often compared to) the UK’s main cities are much closer together. If you’re travelling long distances in these countries then the time savings produced by high speed rail may be hours, but if you’re travelling from London to Birmingham or beyond the time savings from HS2 will be measured in minutes.

The analysis supporting HS2 suggests though that these saved minutes are highly valuable, mainly through the assumption that people making business journeys are largely unproductive whilst travelling. This is the area where objectors to HS2 have perhaps their strongest argument – if you’ve been of a train of late you’ll have undoubtedly noticed that people tend to work whilst travelling. I regularly make the hour long journey from my home in Brighton to London, a trip just long enough to have a sandwich and make plans for the meeting I’m travelling to. If the train took half the time I’d just need to do some of this planning before I left.

If the time saving case is dubious the capacity argument is far more compelling. Passenger miles on the UK’s rail network have been growing strongly since the mid 1990s. The WCML is one of the UK’s busiest railways and on current rates of passenger growth it will be full to capacity within a matter of years. HS2 addresses this issue and also has spill over capacity benefits for the rest of the network. As most passengers travelling between the major cities on the route will take HS2 the existing WCML will be freed up for local journeys, freight and east-west journeys across the network. These are all currently restricted due to the need to focus on the north-south express services.

However HS2 will be colossally expensive, with construction of the full Y shaped network to Leeds and Manchester estimated to come in at a cool £32.7 billion at today’s prices. Fare revenues are expected to be £34 billion over a 60 year period, and, as that revenue will need to cover operating costs too, there’s clearly a big gap that will need to be covered by the taxpayer. So to prove the project will be beneficial to the UK, and therefore deserve that huge subsidy, the analysis behind HS2 calculates the benefits it will bring us. And here’s where things get a bit silly.

Analysis of HS2 has tried to calculate the costs and benefits of the line over a 60 year period, which, to put it gently, is quite a long time. The chances of a forecaster accurately predicting how many people will want to travel between London and the north and the value of their trip on this time scale are vanishingly small. As the years roll forward correctly forecasting social, technological and economic changes that will impact on the viability of HS2 becomes impossible.

You’d think that officials at the Department for Transport are well aware of the shortcomings of forecasts on this sort of a timescale, but need some hard figures to justify the political decision to press ahead with HS2. There's a lovely story to illustrate this kind of position. When the (future) Nobel laureate Kenneth Arrow was a young statistician during the Second World War he discovered that month-long weather forecasts used by the army were completely useless. He warned his superiors against using them and received the response, ‘The Commanding General is well aware the forecasts are no good, however he needs them for planning purposes.’

So who knows if in 60 years time HS2 will be seen as a resounding success or an underused white elephant. On the balance of things it’s probably better for the Government to provide modern infrastructure that the country is seen to need at the present time, rather than sit on their hand due to the risk it won’t be fully utilised in an uncertain future.

What we do know though is that many people, particularly children and politicians, love a train set. I spent last weekend at the Museum of Childhood in London, where a friend’s 2 year old pumped endless 20p coins into a model railway whilst gleefully watching the circulating trains. You rather suspect that they’ll be several former Ministers for Transport with similar looks on their faces when HS2 starts operation in 2026.

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