Fight for the cause

On 21 February 2020, the government announced that its ‘integrated rail plan for the Midlands and the north’ would be ‘informed by an assessment from the National Infrastructure Commission’.

The Commission launched a ‘call for evidence’ from ‘stakeholders’, and on 28 May, as part of that process, Hilary Benn MP and ten other northern politicians wrote a joint letter to ‘grumpy grandpa’ NIC chairman John Armitt (reproduced below).

Needless to say, the ‘Benn letter’ is a farrago of nonsense from start to finish. For example, its claim that ‘the eastern leg of HS2 has a benefit cost ratio of 5.6 compared to 2.6 for the western leg’ comes from a July 2011 report created by Arup for the ‘High Speed Rail Eastern Network Partnership’ (i.e., a lobbying group).

Hidden planet

On 4 May the Beleben twitter noted that no updates to the HS2 PLANET forecasting model had been published since July 2017.

The Department for Transport has now confirmed that it is unwilling to publish these updates, apparently because none of them have been ‘fully checked and assured’.

So, the forecasting model updates are apparently ‘assured enough’ to ‘inform’ the decision to go ahead with HS2, but not ‘assured enough’ to be perused by the public.

Sunk and disorderly

The April 2020 HS2 phase one Full Business Case (FBC) treated £5.6 billion of expenditure to December 2019 as sunk, the Department for Transport has confirmed.

As that expenditure was factored out for the purposes of preparing the April 2020 FBC, it would seem reasonable to conclude that

CYN_{2020_04} = CYN_{2019_08} – SUNC_{2019_12}

where CYN_{2020_04} is the Y network cost as estimated in the April 2020 FBC,

CYN_{2019_08} is the Y network cost as estimated in the HS2 Chairman’s Stocktake (August 2019),

and SUNC_{2019_12} are those HS2 costs incurred up to December 2019 declared as sunk for the April 2020 FBC.

The HS2 Chairman’s Stocktake stated that CYN_{2019_08} was between £72.1 billion and £78.4 billion.

Using the Stocktake lowest estimate of £72.1 billion, one would expect the updated April 2020 cost to be £66.5 billion.

( CYN_{2020_04} = 72.1 – 5.6 = 66.5 ).

Using the Stocktake highest estimate of £78.4 billion, one would expect the updated April 2020 cost to be £72.8 billion.

( CYN_{2020_04} = 78.4 – 5.6 = 72.8 ).

However, item 4 in Table 2.9 of the April 2020 FBC gives CYN_{2020_04} as £78.2 billion.

So, after deducting £5.6 billion of sunk costs, the official cost of the Y network is, er, £0.2 billion lower than the highest estimate in the Chairman’s Stocktake.

(All of the above figures are based on year 2015 prices.)

HS2’s the name

 

HS2 disinformation is intrinsic

‘The Department for Transport (DfT) and High Speed Two Ltd (HS2 Ltd) seemed to believe that a lack of transparency with Parliament and the public on the problems facing the programme would in some way protect it.‘ That’s one of the findings of the House of Commons Public Accounts Committee’s HS2 Spring 2020 update, published today (17 May).

Of course, that particular ‘belief‘ was absolutely correct: DfT and HS2 Ltd’s enormous disinformation and obfuscation effort has been highly effective in ‘protecting’ HS2 from cancellation (even though the general public seem to have the measure of the scheme’s worth).

The official disinformation campaign has been going on ever since the project was established a decade ago, and without it, there would be no HS2.

The low-down on HS2 value

According to its April 2020 phase one Final Business Case [FBC], High Speed Two offers ‘value for the taxpayer under all but the most extreme scenarios’.

But what kind of ‘value for the taxpayer’?

In July 2017, the Department for Transport claimed that the full HS2 Y network had a ‘68% chance of having a benefit cost ratio (BCR) above 2’ and a ‘92% chance of a BCR above 1.5’.

[HS2 Phase Two Economic Case | July 2017][…]

Phases 2a and 2b demonstrate high value for money, contributing to a full network BCR of 2.3 with WEIs and 1.9 excluding WEIs.

The Department’s value for money framework (2015) stated that in ‘standard cases’, a BCR of between 1.0 and 1.5 would indicate ‘Low’ value for money (VfM), a BCR between 1.5 and 2.0 would indicate ‘Medium’ VfM, and a BCR between 2.0 and 4.0 would indicate ‘High’ VfM.

[DfT value for money framework]

“[…] However it may be more appropriate to report a hybrid category (e.g. ‘Medium-High’) in cases where it is likely and reasonable to believe, that a proposal may fall into another category, based on analysis using ‘switching values’.”

In the April 2020 FBC the updated benefit-cost ratio for phase one (and for phase one-plus-2b taken together) was 1.2, when wider economic impacts (WEIs) are included. For the larger Y network (phase-one-plus-phase-2a-and-2b), the figure was 1.49, including WEIs.

On closer examination, the gulf between the ‘July 2017’ and ‘April 2020’ BCRs turns out to be even wider. One of the changes made for the FBC was that “spend up to the end of 2019 has been treated as sunk and excluded […] except for purchase costs on land and property that could be recoverable were HS2 not to go ahead“.

On 6 May, the government stated that had the ‘newly-declared-sunk’ costs not been excluded in the FBC,

• the BCR for phase one would have been 0.8 without WEIs, and 1.0 with WEIs [i.e., ‘Poor’ value for money]
• the Y network BCR would have been 1.1 without WEIs, and 1.3 with WEIs [‘Low’ value for money].

From the start, the Beleben blog has taken the view that the economic case for HS2 has been fabricated and manipulated to serve the political purpose of keeping the project going. This has been borne out by events.

Manipulation of the economic case is still happening, and if anything, the HS2 project is becoming less, rather than more, transparent.