The anti Hs2 campaign group Hs2aa like to pretend that they have more integrity than fellow travellers StopHs2 (whom they look down their noses on – especially Campaign Manager Joe Rukin, a man who’s notorious for telling porkies). The reality is – it’s a load of hypocritical nonsense – as the latest rubbish about the ‘true cost’ of Hs2 being £138bn shows in spades.
This fantasy figure was concocted by Dan Mitchell and Andrew Bodman & presented in a petition to the HS2 Select Committee on March 2nd.
Andrew Bodman is a figurehead in SNAG (South Northants Action Group) but he was parachuted into that group to stop it imploding due to its ‘managerial difficulties’ He’s actually a Director of Hs2aa (see here);
Bodman co-concocted the risible £138bn which is justified thus (taken from a StopHs2 press release) http://stophs2.org/news/13236-hidden-costs-double-hs2-bill
“The total cost of HS2 (Phases One and Two) could well reach £138 billion, maybe more. Yet the official figure is £50 billion including trains.
The largest additional amount (£30 billion) is the ongoing subsidy that is likely to be required. Only two high speed lines in the world are thought to be profitable (Paris – Lyon and Tokyo – Osaka) and it is extremely unlikely that HS2 will join that exclusive club. A subsidy will be needed to cover the interest payments on the considerable debt incurred in building this line, higher operating costs of such trains and revenues that fail to match forecasts as passenger numbers will probably turn out to be less than expected. Several countries subsidise their high speed lines by $1bn per year or more. A £0.5bn subsidy per year has been estimated over 60 years.
It also appears that the construction costs for Phase Two have been significantly understated. At present, the estimated construction cost (without contingency) of Phase One is £108m per mile while that for Phase Two is £59m per mile. By referencing the construction cost per mile for HS1, the HS2 Phase One cost per mile seems the more likely. With the current contingency for HS2 construction costs being 70%, it means the Phase Two construction cost is likely to rise from £21.2bn to £39.4bn.
The next element to be factored in is an additional power station bearing in mind how little spare generating capacity the UK has at present. Using input from electrical engineers, it is believed that an additional medium sized power station will be required to meet the demands of these powerful trains on what will be an intensively used series of lines. £16bn has been added to cover this requirement.
Furthermore Crossrail 2 will be needed at Euston to help the onward travel of rail passengers to their end destinations. The existing Underground services will be unable to cope with such significant increases of passenger numbers once HS2 Phase Two is running, and this shortcoming has been recognised by Transport for London. We have suggested a £7bn contribution to Crossrail 2 which is approximately a quarter of its total estimated cost to ensure that this work proceeds, and in a timely fashion.
Currently there is no research and development budget for HS2 which seems extraordinary when the plan is to run trains faster than in most other countries and more intensively between London and Birmingham than on any other high speed line in the world. There are many issues needing investigation including electrical engineering, vibration, sound and other speed related issues. A nominal £5bn for research and development has been added.
Other areas that have been added include security, track maintenance and upgrading the overhead line equipment on sections of the West Coast Mainline and East Coast Mainline (used by classic compatible HS2 trains) to provide improved reliability.
There are a number of costs associated with HS2 which cannot be readily costed at this stage, e.g. the HS2 Growth Taskforce Schemes for getting cities HS2 ready.
In addition there are concerns that some of the contingency amounts may be insufficient bearing in mind the recent cost increases which have occurred on the Great Western and other electrification programmes. The cost of the Great Western Electrification programme has gone up by 70% in the latter half of 2014 alone and 180% since first conceived, while the cost of each connection to the National Grid has increased by 150%.
Dan Mitchell said he was concerned that Parliament was currently being misled as are taxpayers. He is very aware that the Public Accounts Committee and Major Projects Authority also have serious concerns regarding the cost of this significant project. Dan Mitchell has also said that £138 billion is a disproportionate amount of money to spend on a single project. He believes there are other more pressing issues to address on the rail network.”
Let’s dissect these claims, shall we…?
“Ongoing subsidy over 60 years – £30bn.”
As the Hybrid Bill Committee very promptly picked up, other countries make policy decisions to subsidise their railways more than we do. But that’s just one reason why alleging that HS2 will need a subsidy on the basis of international comparisons is invalid.
First, our InterCity trunk routes serving the markets that HS2 will work in now pay premiums to the DfT for their franchises, so why should HS2 not do the same? Then, our high speed line will be used more intensively than those abroad, so will have more trains earning money on its infrastructure to share the cost.
As to the expected figures, the “Economic Case for HS2” in Table 15 shows a Present Value (that is, figures for every year of the project life rolled into one) of operating costs of £22.1 billion, and a Present Value for fares revenue of £31.1 billion. So, far from requiring a subsidy, over the project life fares will exceed operating costs by a total of £9 billion.
“Phase Two construction cost correction – £18.2 bn”
No, it is not valid to estimate the Phase 2 cost from Phase 1, as Phase 1 has more of the expensive items such as stations – not just Euston but also Old Oak Common, Birmingham Interchange with its 4-track section and complex junctions, and Birmingham Curzon Street – and tunnels. By comparison, Phase 2 is a relatively simple job, with less in the way of additional stations, tunnelling and complex junctions relative to its length.
“Crossrail 2 contribution – £7 bn”
Not this old chestnut again! TfL have stated clearly that they regard Crossrail 2 as essential for London full stop. It simply makes sense to construct its station box at Euston/Kings Cross at the same time as Euston is being rebuilt. If anyone could identify a true incremental cost imposed by HS2 they might have a point, but no-one has.
The £7 bn suggested to be charged to HS2 is not only arbitrary but a paper transfer, as it would just make the funding requirement for Crossrail2 £7 bn lower and leave total UK spending exactly where it would have been. But if you insist, just remember when charging HS2 with a quarter of the cost, to credit HS2 with a quarter of the benefits. And that means that effect on the HS2 BCR is zilch.
“Research and Development – £5bn”
This is pure fantasy. When did BR ever spend that much on research, whilst developing pioneering technologies such as Solid State Interlocking for signalling systems? And just for once we are learning from the high speed pioneers, rather than making the mistakes that others then learn from. HS2 is based around proven, off the shelf technology.
“Maintenance of track – £3.36 bn”
No, this has not been forgotten. Maintenance of the HS2 infrastructure, and the track access charge to pay Network rail to maintain theirs, are both in the calculated operating costs.
“Upgraded overhead line equipment WCML and ECML – £2 bn”
Well even if this isn’t just plucked out of the air, and not already counted in the capital costs, its benefits will be shared by all trains on the routes in question, not just HS2 trains. So the costs should be shared, and that doesn’t leave very much to be charged to HS2.
“Additional costs of Euston station – £2 bn”
To be funded by property development.
As for the rest, how am I meant to know any more than Bodman or Mitchell? None of this is their speciality any more than mine. But if their research is as valid as the big items above, it doesn’t bode well – for them.
So much for Hs2aa trying to pretend they have integrity. It’s one of their Directors who’s put his name to this rubbish remember…
Who can forget the lie from Hs2aa Director of Local Campaigns Peter Chegwyn about Coventry having a worse service than in steam days (nailed here)?
Or their lie about £8.3bn of ‘service cuts’ (nailed here)?
Their ‘sword of truth’ is just as bent as the last person who claimed the right to wield it – Jonathan Aitkin…