The benefit-cost ratio for HS2 is now estimated at 2.3 compared with a figure of 2.5 given last year

HS2 economic case revised down

The predicted economic benefit of the £50bn HS2 high-speed rail project has fallen in recent months.

The benefit-cost ratio (BCR) for the full two-phase project linking London to Leeds and other cities in northern England is now estimated at 2.3 compared with a figure of 2.5 given in August 2012, meaning that for every £1 spent the wider economic benefit of the entire scheme will produce a benefit of £2.30 compared with £2.50 estimated last year.

Presenting the new figure in a publication called The Strategic Case For HS2, the HS2 Ltd company said the new BCR was based, partly, on a recalculation of the number of business travellers using the 225mph trains and the amount of work they do on trains.

The reduction of the BCR is sure to be seized on by opponents of the scheme, including councils and residents' groups in Tory heartlands through which the London to Birmingham first phase of the line will pass once completed in 2026.

But the Government said the revised BCR for HS2 was "similar to Crossrail and higher than the BCR ratio for some other major projects when approved, such as Thameslink and the Jubilee Line extension" and it added that the BCR for HS2 will increase to 4.5 if rail demand continued to rise until 2049.

Transport Secretary Patrick McLoughlin said that without the scheme the West Coast, East Coast and Midland main lines were likely to be "overwhelmed", while having the scheme would "transform inter-city travel, radically improve commuter services into London and other major cities and increase the amount of rail freight".

The report drew on one published by Network Rail and engineering company Atkins which said there would be 14 years of weekend engineering work on the railways if HS2 did not go ahead.

And it said the line was vital to make more equal the North-South divide. By completion of the full scheme around 2032/33 with the building of a Y-shaped route north of Birmingham to north east and north west England, there would be a trebling of the number of train seats an hour into Euston station in London.

At present there are 13 trains an hour on the West Coast main line. Building HS2 would increase the number on the West Coast corridor to 30 an hour.

The 400m long trains, carrying 1,100 passengers, would run at the rate of 14 an hour for the first phase of the project and this would increase to 18 when the full line is completed.

Philippa Oldham, head of Transport at the Institution of Mechanical Engineers, said: “This business case offers welcome clarification of the benefits of rolling out HS2. HS2 provides the step change required to help to remove the bottlenecks in our transport infrastructure by increasing our capacity limits and helping to bridge the North South divide.

“Introducing HS2 will increase capacity for long distance travellers but also regional and local services on the existing railway; HS2 would be at the heart of an enhanced UK transport system that interfaces with every part of the UK.”

HS2 would produce London-Birmingham journey times of just 49 minutes, with London-Manchester coming down to one hour 8 minutes and London-Leeds down to one hour 22 minutes.

Other benefits included in the document are estimates from Network Rail that more than 100 cities and towns could take advantage of new or improved services as a result of capacity released on the existing rail network.

This could mean additional commuter services into London from places such as Watford, Milton Keynes, Rugby and Northampton; and new commuter services into Birmingham, Leeds and Manchester.

It could also allow new longer-distance services, as well as more capacity for rail freight, with at least 1,000 lorry-loads a day carried on the network.

Oldham added: “Commitment to HS2 also provides the UK’s engineering industry with the much-needed confidence to invest in future skills and will help the UK become a world leader in the development and delivery of railway technology.

“Over 95 per cent of Crossrail’s budget to date has been won by UK-based businesses and this is something which could and should be replicated in HS2.

“It is also important to note, that upgrading the UK’s railways is not an inexpensive alternative to HS2. These upgrades would likely lead to reduced operating services, travel disruptions and delays, as illustrated by the recent West Coast Main Line upgrade, which will also adversely affect business performance.

“The upgrade of the West Coast Main Line will also only meet forecasted demand until the mid 2020s and we would then need to invest again in a new transport corridor. The HS2 project is at a far more advanced stage of planning and scrapping the project at this stage would mean the waste of millions of pounds worth of work that has already happened.

“The UK national rail network continues to see growth year on year, with 1.5 billion passenger journeys in 2011/12, which represents an increase of over 50 per cent in a decade.  With this increase expected to continue to match population growth, we need strong Government leadership to ensure HS2 happens.”

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