die belebende Bedenkung

Trains not included, part two

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Railnews mischief makingAlthough the Department for Transport has said it has been “totally clear and transparent about the costs of HS2” the £8 billion cost of rolling stock is not included in the headline figure. According to Railnews’ Alan Marshall, rolling stock cost is separate, because ‘that will be the responsibility of the operator or operators that run the trains on the network’.

No one has decided yet whether HS2, in 10 or more years time, will be a franchise, a concession or an open access operation, or a mix of these.

When HS1 was built, its budget (which was not exceeded) did not include the cost of trains. The international trains that use it today are the responsibility of Eurostar, which pays for them out of the revenue it earns from passengers.

Previous governments, not train operators, decided who would be the suppliers of the domestic and international passenger trains currently running on HS1. And the current government is heavily involved in train contracts like Thameslink, Crossrail, Pendolino, and the Intercity Express Programme (use of IEP was mandated in the Great Western franchise renewal).

The idea that ‘Eurostar pays for the costs of its trains out of the revenue it earns from passengers’, is nonsense. Since it started up, Eurostar has been either loss-making or barely profitable, and so dependent on government support.

'Eurostar driven to £2.6 billion losses', Daily Express, 2010-01-03

Because HS1 domestic services are bundled with Kent classic trains in an integrated franchise, there is no way of knowing how much money they lose. But it is known that rail commuters from Ashford to London have been getting a £100-a-week subsidy.

If a high speed rail franchisee had a free choice on rolling stock, it’s likely the specification would be for a maximum speed of 249 km/h — undermining HS2’s entire design fundamentals. Because standard (conventional speed) trains are much cheaper to buy and operate.

Mr Marshall went on to claim that the cost of HS2 would be ‘offset by massive income from passengers and the socio/economic benefits to the economy that will arise from regeneration and job creation.’

HS2 Ltd’s chairman Doug Oakervee estimates the benefit/cost ratio of the whole ‘Y’ network will be 2.6, or around £85 billion over 60 years return on an investment of £33 billion.

But Mr Oakervee believes that the 2.6 figure is a ‘very conservative’ one, based on his previous experience of developing the Crossrail scheme, and the realities of booming passenger traffic on HS1’s domestic services, even with premium fares — whereas the HS2 business case assumes fares would continue to be charged on the same basis as now.

The last published BCR figure (August 2012) for the Y network was 1.9, or 2.5 with ‘wider economic benefits’. Since then, the costs have increased, and HS2 Ltd has belatedly proposed extensive changes in London.

Twitter account @bonswattomer on HS2 wider economic benefits

Rather than doing pretend economics, it might have been better if Mr Oakervee had concentrated on his primary responsibilities as HS2 chairman, i.e.

Formulating the Board’s strategy;

Ensuring that the Board, in reaching decisions across its full remit including the route design and environmental assessment, takes proper account of guidance provided by the Department for Transport or the Secretary of State;

Encouraging high standards of regularity and propriety; and,

Promoting HS2 to the general public.

Along with Alison Munro, Mr Oakervee must bear much of the responsibility for the failure to get to grips with the unrealistic ‘Bigfoot’ Euston station rebuild, and continued development of a massively disruptive overground alignment in Ealing. The costs incurred by the delay in cancelling Bigfoot, and surface running in West London, must be considerable.


Written by beleben

April 29, 2013 at 1:24 pm

One Response

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  1. The National Audit Office estimated that net taxpayer support for HS1 may reach £10.2 billion (present value to 2070, in 2010 prices).

    Andrew Bodman

    April 29, 2013 at 5:53 pm

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