The National Audit Office (“NAO”) has just published a report entitled “Lessons from major rail infrastructure programmes”. It says that these lessons should be learned by the government and should inform its decisions on future rail projects – including of course HS2.
The rail projects examined by the NAO are complex and large, with construction either expected to, or having taken, 9 to 10 years, costing a total of £21.4 billion – which is only about one third of the current cost estimates for HS2 .... The welcome news is that they conclude that the Department for Transport (“DfT”) has made progress in its management of rail infrastructure programmes, and on some of them has controlled costs, managed risks and has responded well.
The unwelcome news is that, worryingly, the NAO also found that there are several factors which the DfT needs to address, or where it needs to provide more focus, as current and future rail programmes develop. In particular, the NAO suggests that the DfT should develop clear strategic business cases for new railways, and scrutinise the economic analysis of the estimated benefits of them.
Insufficient evidence of economic benefits
The NAO points out that, amongst other things, there is a lack of evidence to demonstrate the wider national and economic benefits of HS2. I find that to be deeply troubling.
The NAO found that, if the DfT had bothered to check its economic analysis, then it would have found out what is now apparent to us all; namely that – in its unseemly rush to press ahead with HS2 – the Coalition government made manifest “errors” in its early analysis of Phase One of HS2. Those errors led to an initial benefit-cost ratio of 2.4:1; i.e. £2.40 back for every £1 invested by the government. That ratio which has subsequently been revised very sharply downwards to 1.4:1 – much more in line with equivalent programmes.
“Errors” is the NAO’s way of putting it. Some would say “overegging the pudding so as to mislead”.
Although it might seem obvious to the average ten-year old, the NAO had to point out to this government that its “economic assumptions also need to reflect changes in real-life behaviour.” Initially, incredible as it may seem, the DfT assumed that business people do no work at all on the train! So, from the DfT’s point of view, the shorter the journey time (as with HS2), the less time wasted by business people sitting staring out of the train window, and thus the greater the economic benefit of HS2’s shorter journey times – because business travellers would lose less time away from work.
The DfT economists really should get out more, and government ministers should get out of their chauffeur-driven cars; for example, they could take a train from London to Wolverhampton, and see what the passengers in suits (and others, perhaps less visible) are actually doing, and the number of laptops in use. They would have found that some (well, almost all, actually!) long-distance trains have for years had this new-fangled thing called WiFi.
Surely it cannot be that the government knew about travellers working on trains, but pretended not to, so that the economic case for HS2 would look better … ?
Proponents of HS2 say that one reason it is needed is that the West Coast Main Line will be full by the mid-2020s, as forecast by Network Rail – a body which is not exactly renowned for its competence in administering the railways.
However, the DfT’s own figures state West Coast Main Line intercity trains are on average just 32% full, and about 50% full in peak hours. Moreover, a simpler and far, far cheaper way to increase capacity would be to abolish First Class. That would increase the seating in each train by about 13%. It would also be cheaper to lengthen platforms to accommodate longer trains. Having 12 carriages instead of 11 would increase seating by 9%. Taken together these two measures would increase capacity by about 23%.
Academic researchers in Denmark discovered that passenger forecasts are overestimated in 90% of major railway projects; and that, on average, passenger growth is less than half the level forecast before the project was started. As far as I am aware, HS2 has not produced evidence to rebut the inference that the forecasts for HS2 are similarly over-optimistic.
Thus the jury is still very much out on the claimed need for massive new capacity on West Coast routes.
DfT out of its depth?
Both the House of Commons’ Public Accounts Committee and the NAO have repeatedly drawn attention to the DfT’s lack of sufficient “programme management capacity and skills” and its “shortage of skilled staff”.
This shortage is no coincidence. It has arisen because of Conservative government policy. They seem to believe that the market will do everything, and that everything would be better if we had far fewer public sector employees. So this government has failed to invest in hiring the right people to work in the public sector; for example at the DfT.
How naïve can you get? Without those skills in-house, the DfT is at the mercy of the private sector, who do employ people with the necessary skills Then, guess what? The skilled private sector runs rings around the insufficiently skilled civil service. We’ve seen this time and time again when it comes to negotiating rail franchises, most of which have been a failure from the passengers’ point of view – but a big success for the fat-cat private companies.
What to do with your spare £60 billion
From a national perspective, because of the unreliable figures I don’t know whether building HS2 is a good idea or not, but I can think of a lot of other worthwhile things that government could get for £60 billion; for example, a million desperately-needed council houses built on government land. What I do know is that, as someone who has lived almost all his life in Wolverhampton, it looks to me as if HS2 is going to lead to a worse train service for us – yet in round terms this government wants us to pay almost £1,000 each for the privilege.
Rob Marris, Labour Candidate for Wolverhampton South West