'Uncertainty' on new rail benefits

There is a "degree of uncertainty" around the financial benefits of the Government's HS2 high-speed rail project, an independent report prepared for MPs said today.

There is "relatively little evidence presented" on the regional and socio-economic impacts of the £32 billion HS2 programme, the report prepared for the House of Commons transport committee said.

London was likely to benefit from HS2 "possibly at the expense of less service-oriented cities on the line", said the report from consultants Oxera.

The report was published as the House of Commons transport committee held the first of five hearings into the HS2 scheme which involves a high-speed rail line from London to Birmingham to be completed in 2026.

There are also plans for a Y-shaped extension of the line to Manchester and Leeds and possibly further north which would be finished around 2032/33.

Having ruled out expansion at south east England airports, the coalition Government is firmly behind HS2.

But the route passed through beauty spots in Tory heartlands and while some local authorities and business leaders are firmly in favour of it, local residents' groups and some councils are adamantly opposed.

In written evidence to the committee, the Department for Transport said analysis indicated that the proposed Y-shaped network would generate "monetised economic benefits with a net present value of around £44 billion".

The Oxera report today said: "The monetised estimates are surrounded by a degree of uncertainty.

"The overall balance of non-monetised impacts - which include landscape, carbon and changes in land use - is difficult to ascertain."

Oxera said that overall the case for a high-speed rail (HSR) programme seemed to depend on "whether and when the capacity is needed, the selection of the best value-for-money approach to delivering that capacity, the degree of uncertainty around the monetised benefits and costs of the preferred options, and judgments on the balance of evidence relating to non-monetised items, such as environment and regeneration impacts (which are likely to be substantive in their own right but not fully set out in the Government's assessment)".

Asking the question "Who benefits?" from HS2, the report added: "There is relatively little evidence presented on the regional and socio-economic impacts of the programme."

The report went on: "There is evidence that those cities where the service sector (including tourism) counts for a large proportion of the economy, are the most likely to benefit from access to high-speed lines.

"London is thus very likely to benefit, possibly at the expense of less service-oriented cities on the line. In fact, a large proportion of the quantified benefits (34%) in the economic case are to long-distance passengers from London, so the regeneration effects (if they exist) would be large in London."

Oxera also said that the regeneration benefits of areas in the vicinity of high-speed rail hubs are likely to be understated but that these may be offset by "economic losses in other areas, including locations not served by the high-speed line".

The report continued: "Thus, the London and Birmingham economies might benefit partly at the expense of areas not served by the new scheme. The precise impacts will depend on the reallocation of conventional services on the West Coast Main Line and elsewhere."

Giving evidence to the committee today, Anthony Smith, chief executive of rail customer watchdog Passenger Focus, said he was hoping that HS2 would not be seen as "a rich man's railway".

He said: "The way the line is presented and ultimately sold is very, very important. It will attract commuters travelling between London and Birmingham. How tickets are priced is going to be absolutely key to the whole project."

Mr Smith said passengers on the West Coast Main Line had gone through "eight years of pain" while the line was upgraded, so building a new high-speed line had its attractions.

Association of Train Operating Companies chief executive Michael Roberts said the West Coast would be "full by 2024" whereas, even if everything went to plan, the London-Birmingham section of HS2 would not be ready before 2026.

"So we are facing the prospect of having a gap between these two dates," he said.

In its written evidence, the Department for Transport also said that the London-Birmingham first phase of the project would support the creation of more than 40,000 jobs and only high-speed rail (HSR) could provide the step-change in capacity needed on the railways.

Alternatives to HSR offered "only an interim solution" and upgrading existing lines was likely to cause far greater levels of disruption to the existing network than building HSR lines, the department added.

But HS2 Action Alliance, one of the groups opposing the project, said HS2 and HSR in general offered poor value for money.

In written evidence to the committee, HS2 Action Alliance said the stated benefits of the project relied upon "an exaggerated value to journey-time savings" while rail demand growth had been "substantially overestimated".

The alliance said improving the existing rail network was "a better alternative" and offered better value for money.

Supporters of HS2 will appear before the committee on June 28, while the main opponents of the scheme will give evidence on July 12.

Aviation and environmental groups are due to appear on September 6, with Transport Secretary Philip Hammond giving evidence to the committee on September 13.