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The low-down on HS2 value

with 3 comments

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’?

Forecast benefit cost of the Y network, DfT HS2 phase two economic case, July 2017, Figure 7

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 VfM framework, 2015, category definitions

[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.

HS2 phase one full business case, 15 April 2020, Table 2.1

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“.

www.parliament.uk, written question on HS2 sunk costs, House of Lords, 2020-04-22

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.

BBC News, 27 Aug 2019, 'Ministers know HS2 was over budget years ago'

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

Written by beleben

May 15, 2020 at 11:31 am

3 Responses

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  1. There are hundreds of compulsory purchased businesses and properties which have not been paid for. These have not been taken into account either. Hs2 takes corruption to a new level

    Pauline Harkin

    May 15, 2020 at 2:22 pm

  2. The Editor of transportxtra says:
    The £108.9bn is the estimate of total costs – capital costs, renewals and operating costs over the 60 year appraisal and is in 2015 prices. It is not therefore comparable to the £35bn-£45bn capital cost estimate of Phase One, which is in 2019 prices – Ed]

    In fact £108.9bn is the net present value.

    https://eur04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.transportxtra.com%2Fpublications%2Flocal-transport-today%2Fnews%2F65455%2Fnumber-crunching-through-the-hs2-phase-one-business-case

    andrewneedhamukhotmailcouk

    May 16, 2020 at 3:06 pm

  3. it is not £109 it is £120 billion they have used creative accounting to write off £10billion
    it will end up as per lord Berkley at£300 billion + what a ripp off

    michael gross

    May 21, 2020 at 3:13 pm


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