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High Speed 2 benefit to cost ratio reset at 2.3 to 1

The government has today revised the benefit to cost ratio (BCR) of the £42bn High Speed 2 (HS2) rail line up from below 2 to 2.3 to 1.

It has said that the BCR could even hit 4.5 if rail demand continues to rise at the current rate of growth until 2049.

The last official calculation of the project’s BCR was in August 2012 when project promoter HS2 Ltd set it at 2.5 for the full “Y” route from London to Leeds and Manchester. Today’s revision therefore suggests that the BCR has fallen slightly.

But since then the capital cost of the project has risen sharply to £42.6bn, driving the BCR below 2. But today the government has revealed additional benefits have been calculated, setting the official BCR at 2.3.

The revision means the BCR has not drastically shifted, to the frustation of many of the project’s supporters including outgoing chairman Doug Oakervee. Last week he hit out at the economic models used to assess the value of major infrastructure projects.

The revised benefit to cost ratio is contained in the government’s strategic case for HS2, a 156 page report and supporting documents that sets out in great detail the need for a new railway line to provide the vitally needed extra capacity.

Central to the case is new data that reveals the true extent of the crisis facing the UK rail network and the impact alternatives to building HS2 would have.

The document outlines how demand for rail travel will continue to grow. By 2026 on commuter services into London during the evening peak, 40% of passengers will be standing, the report says. Meanwhile research by Network Rail and Atkins shows that the alternative to HS2 would result in up to 14 years of weekend closures on existing lines and deliver only a fraction of the additional capacity.

“We need a radical solution and HS2 is it,” said transport secretary Patrick McLoughlin. “A patch and mend job will not do – the only option is a new north south railway.”

The government expects considerable regeneration around stations delivering jobs and growth similar to the experience of HS1. The Strategic Case points to £10bn private sector investment around the new HS1 station sites as well as Google, the Crick Institute and other major international firms moving in to the area around King’s Cross and St Pancras demonstrating the likely economic investment expected along the HS2 route.

The government has accordingly updated the benefit to cost ratio (BCR) of the railway, valuing it at 2.3 today, but claiming it could reach 4.5 if rail demand continues to rise until 2049.

Other benefits of the railway included in the document are estimates from Network Rail that over 100 cities and towns could benefit from new or improved services as a result of capacity released on the existing rail network. These include:

  • additional commuter services into London from places such as Watford, Milton Keynes, Rugby and Northampton
  • new commuter services into Birmingham, Leeds and Manchester
  • new longer distance services, for example providing new and better links between Bradford and London; Lincoln and London Shrewsbury and London; and Leeds and Cambridge

    * more paths for rail freight, with at least 1,000 lorry-loads a day carried on the network

In addition, the government says it will also aim to ensure that all towns or cities which currently have a direct service to London will retain broadly comparable or better services once HS2 is completed. It said it intends to launch a study to recommend how this can be done and also how services can support long term economic growth.

Readers' comments (1)

  • Where did NCE get the idea HS2 cost benefit ratio was previously "near break-even"? Neither wonder the profession doesn't engage in the HS2 controversy and basically has nothing to say. We are just not to be taken seriously.

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