… and out to sea …

I promised in my blog … and down the drain … (posted 19 Aug 2012) that I would examine the implications that the documents that were published belatedly in April 2012 have on the business case for HS2, so here goes.

The value ascribed to savings in travel time that HS2 will bring to the employers of business travellers, as currently calculated by DfT under its WebTAG guidance, utilises the somewhat outdated assumption that all travel time is wasted time and that any additional time saved on journeys gives employees more time to work before or after the journey; this, so the argument goes, benefits their employer and, ultimately, the economy as a whole. The HS2 business case uses this old assumption to claim one minute of extra work for the economy for each one minute of journey time HS2 saves a business passenger.

For many months HS2 Action Alliance (HS2AA) has been challenging the assumption that time spent on trains by business people is totally unproductive; even the DfT admits that people work on trains. The “suppressed reports” appear to give important backing to the HS2AA challenge.

The major document from 2009 that has just seen the light of day is Productive Use of Rail Travel Time and the Valuation of Travel Time Savings for Rail Business Travellers – Final Report (here). This report details the data from a large-scale survey of rail business passengers, carried out by questionnaire, and analyses the data from the 1,660 returned questionnaires to reach some conclusions about how such travellers use the time spent on trains and might use any time saved in travel. The study is referred to by its authors as “SPURT” (Study of the Productive Use of Rail Travel-time).

The SPURT report is a detailed read of over 100 pages (plus appendices), and is a statistician’s delight, but fortunately an excellent précis of its findings is provided in the Executive Summary on pages S‑1 to S‑7. The main headlines are:

  • Some 80% of rail business travellers in the UK are now using travel time to work on trains.
  • Across all rail business travellers, on average around 46% of the train travel time is allocated to work activities.
  • There is evidence that people are working more on trains than they did ten years ago, probably due to mobile telephones, PDAs, laptop computers and WiFi access on trains becoming ubiquitous in recent times.
  • Working on a train is approximately 97% efficient, compared to working in the office.
  • On-train productivity remains high even in the worst crowding conditions, “though where standing is involved productivity does drop somewhat, perhaps due to the inability to undertake work whilst standing or the lack of confidentiality in undertaking one’s work if ‘overseen’”. The report’s authors comment that crowding “is not a strong influence on the Value of Time relevant for appraisal, probably because most business travellers secure a seat”.
  • On average, across all business travellers, 60% reported that they would do no work in any time that was saved by a faster journey. This percentage was smaller, at 55%, for arrival times in the morning and rose to 73% for arrival times after 7pm. The report’s authors comment that “this is very different from the usual assumption in transport appraisal in the UK, that 100% of the saved time will be spent working”.
  • The report identifies the need for a number of pieces of further research.

The report calls for “major changes from the guidance currently provided in DfT’s WebTAG … for scheme appraisal”.

One of the comments made in the SPURT report is that traveller behaviour may change in the long-term to make better use of journey time savings and this aspect is investigated further in the short report Value of Working Time and Travel Time Savings: Long Run Implications Report (here). This report also dates from 2009, but was only published in April this year.

This more considered analysis takes five scenarios of how travel time saved could be valued. It comes to a conclusion very similar to the SPURT report:

“The results of this research call clearly for a downward revision of WebTAG values for Rail IWT travel time savings, to somewhere between 65% and 50% of current values.”

The report goes on to say that:

“With further analysis a closer figure may be possible to be arrived at, but this has not been possible within the current timescale and budget available.”

Note however that this caveat only applies to setting a figure more precisely within the 65% and 50% range; the authors are not expressing uncertainty about the use of this range for estimating purposes.

So what would this mean if the DfT took this advice and downgraded the BCR calculations for Phase 1 of HS2? Let’s do this using the most up to date figures. Since the data in the April 2012 document The Economic Case for High Speed 2 Next Steps and Future Updates is insufficiently detailed, we will have to use the set of figures published in January 2012 in Economic Case for HS2: Updated appraisal of transport user benefits and wider economic benefits (here).

The value of journey time saving assumed for business travellers is quoted in Table 10 on page 42 of this document as £7,400 million. So a reduction to 65% of this value will shave £2,590 million off the total benefits and 50% would reduce the benefits by £3,700 million. The net benefits (excluding WEI) are quoted in Table 15 on page 48 of the same document as £19,000 million, so the revised figures are £16,410 million at 65% and £15,300 million at 50%. Since the net cost is quoted as £13,500 million in Table 15, with a BCR of 1.4, the BCR becomes 1.2 at 65% and 1.13 at 50%. So this correction will reduce the BCR by between 0.2 and 0.25, ignoring rounding errors.

Those of you who have been keeping tally will have noticed that, if the DfT takes on board all of the matters that I have identified so far, the BCR has dropped to 0.5.

But the DfT is not about to admit that. In the next blog I will look at how the DfT has applied a damage limitation strategy to avoid accepting the BCR consequences of it being force to make the SPURT report public.

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One response to this post.

  1. Posted by chriseaglen on August 24, 2012 at 8:26 pm

    There is a different approach possible when referring to most peak underground and the suburban milton keynes, watford to euston and peterborough to kings cross journeys as well as the birmingham to coventy standing journies where a seat is what is wanted. The recent LSE article used the term 3rd class for £1 as a representation of daily commuting experiences for thousands. The concerns about costing journey time are in the responses to the JR cases todate and demonstrate the needs to try and quanitify aspects in transportation analysis to get a BCR measure. Most is very approximate. The process is not possible for many areas of comparision where money is not the only representation. The DFT methodology is incomplete in other areas and the work presented is not high quality. The high speed approach leads to time savings and the long distances give the most favourable BCR when compared to short and medium no seat journies. Whilst making these points shows the wrongness of BCR and of most high speed there are requirements to have capacities with seats for the future. Concentrating on acceptable and progressive changes to the capacity is the need not the highest speed. For freight which is under analysed and is the missed opportunity to obtain modal shifts and large loading gauges and for all rail travel the needs for more train paths are important. There is a need with such low BCRs to determine how the increasing travelling needs will be accommodated with a rising population and a falling GDP/capita for many. If you wish to look as another assumption which may be flawed you can look at the forward projection of the GDP assumed to rise linearly after the recession. The analysis behind HS2 is not well done and railways lst money hence Beeching. These are not the issue but what is affordable and where is the location of more tracks and train paths possible. HS2 is a muddle and there are wider matters to consider in short time before the opportunity is lost to determine what is needed and how it can be done. The functioning of the railways today and the underground is woefully poor to shamefully overlooked in areas of overcrowding. HS2 was a too expensive approach because the requirements and constraints and contexts and approaches were not done well. DFT and HS2 had not the competence in the times to tackle fully all the complex legacy issues and the SOSs had not the command of management to know answers were not available which would be acceptable. Better analysis is needed and must be applied more practically. Suggest some of the inputs to evolve some better solutions is needed taking HS2 as a poor solution. There are both north south and east west rail journey limitations currently which have to be addressed and better to follow Einstein’s challenge to develop answers perhaps to assist the HMG find a way forward. The nation needs to function better and currently is in reverse through more and more stopping actions. How does the UK find the answers it can afford to find seats and train paths for the nations daily working requirements. BCR is crude measure cherished by economists but limited.

    Reply

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