Institute for Transport Studies
FACULTY OF EARTH AND ENVIRONMENT

When to invest in high speed rail – Britishexperience
Chris Nash
Research Professor
C.A.Nash@its.leeds.ac.uk

HS1 benefits and costs (£m)
Benefits(1998 Appraisal)

User benefits -InternationalServices

1800

User benefits - Domestic Services

1000

Road Congestion

30

Environmental benefits

90

Regeneration500

Total Benefit

3420

Costs

1990

NPV

1430

BCR

1.72

(excluding regeneration benefits)

1.5

HS1 outcome• 30% shortfall in patronage depressed userbenefits• Subsequent estimates of regeneration andother wider economic impacts much greaterthan in the original appraisal• But are they reliable? Do the regeneration
benefits reflect net gains or reallocation?

The Atkins study in Britain- results

Figure 1.1

Appraisal of Options 1 and 8 (£bnPV)
Option 1

Option 8

Net revenue

4.9

20.6

Non financial benefits

22.7

64.4

Released capacity

2.0

4.8

Total benefits

29.6

89.8

Capital costs

8.6

27.7

Net operating costs

5.7

16.3

Total costs

14.4

44.0

NPV

15.3

45.7

B/C

2.07

2.04

Source Atkins (2003) Summary report, Addendum, Table 2.1 with transcription errors corrected

HS2 Standard appraisal – discounted costs and benefits (over 60 years)(£b 2011 prices)
Source: DfT (2013)

Phase One

Transport benefits(Business)
Transport benefits(Other)Other quantifiable
benefits
Indirect taxes (loss toGovt)
Net transport benefits
Wider economic impacts
Total costs
Revenues
Net cost to Government
Benefit cost ratio (incWEIs)

Oct 2013
16,921

FullNetwork
Oct 2013
40,5297,673

19,323407

788-1,208-2,912

23,793
4,341
29,91913,243
16,676
1.7

57,727
13,29362,606
31,111
31,495
2.3Debates about routeing• Chilterns versus M1 corridor• Old Oak Common, Euston or St Pancras?

• How to link to Heathrow?
• How to link to HS1?
• Out of town sites for Sheffield (Meadowhall) andNottingham-Derby (Totton)

Criticisms of appraisal

1.Unrealistic demand forecasts (2.5% growth p.a. to 2036)
2.Overstated value of business time savings

3.Failure to examine adequately cheaper alternatives
4.Debate about wider economic benefitsIncremental benefits and costs compared with 51M proposal

51MY shaped
incrementBenefits
7.108
46-52Costs to gov
1.173
25-23
BCR
6.06
1.6-2.3
Source: derived from Atkins (2012)

Average change in connectivity by region in 2037 after investment in HS2
Source: KPMG (2013)

City regions

Change in labourconnectivity by rail
Derby-Nottingham 14.7%
Greater
1.4%
Manchester
Greater London
6.9%
South Yorkshire
31.8%
West Midlands
15.7%
West Yorkshire
9.1%
Rest of G. Britain
5.3%

Change in businessconnectivity by rail
23.2%
18.8%
8.8%
22.5%
21.1%
19.7%
11.3%

KPMG estimate of impact on GVA• KPMG regress labour productivity on rail connectivity using
cross section data
• Finds a strong relationship, suggesting that HS2 will add£15b p.a. to UK GVA• But rail connectivity highly correlated with car connectivity
and other aspects of city centre location• How can these effects be disentangled?

Conclusions on HS2- The central business case looks strong,but is a BCR of 2 adequate in current
budgetary conditions?
- Like any megaproject, HS2 requires
decisions in the face of great uncertainty.
- Value of business travel time and wider
economic benefits savings priorities forfurther research