MPs scrutinising the sale of High Speed 1 (HS1) have called on the government to further justify the business case of High Speed 2 (HS2) amid concerns that it would repeat mistakes made over passenger forecasts.
The Public Accounts Committee said that while the Department for Transport could be proud of some aspects of HS1 – the ultimate construction of the scheme to the revised timetable and budget and the “exemplary handling of the asset’s sale in 2010 – there were some “costly mistakes”.
Its report, The Completion and Sale of High Speed 1, found that the much lower than forecast passenger demand for international services is the “root cause of the failure of the original deal and of the call on the Department’s debt guarantees”. International passenger numbers have only been one-third of LCR’s original 1995 forecast and two-thirds of the level the Department forecast in 1998.
Committee chairman Margaret Hodge added that this was not the first instance of “over-optimistic planning” and “insufficiently robust testing of planning assumptions” getting the DfT in trouble, pointing also to the committee’s findings over the East Coast Mainline. She warned that the DfT “must revisit its assumptions on HS2 and develop a full understanding of the benefits and costs of high speed travel compared to the alternatives”.
What Hodge said
“HS1 will continue to cost the taxpayer money – £10.2bn over the next 60 years – so before going ahead with HS2 we need a robust cost benefit analysis,” said Hodge.
“Some of the Department’s assumptions about the benefits of faster travel are simply untenable. For example, the time business travellers save by using high speed rail is valued at £54 per hour yet the time commuters save getting to and from work is only valued at £7 per hour.
“It is difficult to see how this can be justified. The Department also assumes that all time spent on a train is unproductive. And unrealistic assumptions about ticket prices act to exaggerate passenger demand forecasts.
“The Department also told us that it had not considered the benefits and costs of alternatives to HS2 such as investment in broadband videoconferencing or investment in alternative, more local train routes. It is nonsense that the Department does not have a full understanding of the wider economic impact and regeneration benefits of transport infrastructure, including HS1, to inform future investment decisions.”