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'Serious concern' over HS2 demand forecast

HS2 High Speed Rail

The Department for Transport (DfT) has rejected claims made by the chair of the Treasury Select Committee about the reliability of High Speed 2 (HS2) demand forecasts.

In a letter to transport secretary Chris Grayling, committee chair Andrew Tyrie questioned the rise in the projected benefit-to-cost ratio – up to 2.7, which would fall to 1.1 without the additional demand increase – in the government’s latest economic business case for the £55bn HS2 project, published in November.

He claimed that without credible evidence for the increase, HS2 “is scarcely worth the candle,” adding: “So, the credibility of this sharp rise in forecast demand is crucial to the whole HS2 project.”

He added: “One of the causes has been a much more rapid growth in passenger demand between 2011 and 2014 than predicted by HS2 Ltd. That the forecasting model used by HS2 Ltd failed to provide a reasonably accurate prediction for four years’ worth of growth is a serious concern.”

The Department for Transport stressed that the latest demand estimate increased due to a change in the way it is forecast.

“HS2 is an ambitious project that will carry over 300,000 people a day, improving connections between our great cities, generating jobs, and helping us build an economy that works for all,” said a DfT spokesperson.

“We keep our modelling under constant review and our analysis has repeatedly shown HS2 will be high value for money and deliver more than £2 of benefits for every £1 invested.

“The economic benefit of HS2 has been recognised by MPs of all parties and is strongly supported by Northern and Midlands cities.”

Readers' comments (2)

  • HS2 will never pay it's way.
    Repayment-of-borrowing cost will be of the order of £3.65 billion per year, £10 million per day, £500,000 per hour in a 20-hour operational day. One train every 6 minutes on each track on average (through the 20-hour day) will mean 20 trains per hour. If there are 500 passengers per train on average, each passenger using nearly the full length of the route will have to pay an additional 500,000/(500x20) = £50, or £100 for a return journey. This will be over and above the normal fare paid to cover operation and maintenance costs. But will so many passengers pay £100 extra for a return journey between London and one of the northern cities? I doubt it. If I'm right, the cost to the tax-payers could be as much as £2 billion per year.
    David Deriaz (M Ret'd)

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  • David Deriaz thinks HS2 passengers would need to pay £100 extra on average per Manchester (or Birmingham) to London return trip to repay the taxpayers investment in HS2.
    It is not as simple as that. If HS2 leads to a doubling of ridership at an average return fare of £100, David's shortfall per passenger is halved. If each existing peak Manchester etc passenger is replaced by an extra commuter from Milton Keynes etc to London, David's shortfall drops further.
    In the off peak HS2 creates space for extra freight trains and makes the whole economy more productive - benefits which are called Journey Time Savings & Wider Economic Impacts. New rail lines lead to more reliable journey times and space for extra passengers on existing rail lines.
    David's question ought to be are we prepared to invest £500million per year for those economic productivity benefits?

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