… to sink without trace …

(For the background to this blog, please refer to … and out to sea …, posted 23 Aug 2012.)

What was the DfT to do? It had been forced to publish the Mott MacDonald reports. Even if it ignored the thorny problem of version 5 of the Passenger Demand Forecasting Handbook potentially ruining the BCR estimates, accepting the Mott MacDonald downgrade recommendation would send the Phase 1 BCR (without WEI) across the critical threshold value of one. With the words of the previous Transport Secretary ringing in their ears (that he and the DfT had “taken the view from last May that we will not consider projects of that nature [with BCR less than one], however attractive they may be for other reasons”) the brains at the DfT realised that they had to come up with something. These are resourceful – some would say devious- people; and come up with something they did.

The “something” in question is a short DfT paper bearing the title Review of the value of time assumptions for business travellers on HS2 (here), which reviews the findings of the SPURT project and other research in this field. The DfT review appears to concede that the WebTAG approach that it currently employs in its estimations of HS2 benefits, which regards all travel time as unproductive, is probably “unrealistic”:

“Simple observation and a range of academic studies confirm that some of the time spent on trains by business travellers is used productively.” (page 8)

However, the brilliant stroke that allows the DfT conveniently to ignore the Mott MacDonald downgrade recommendation is to employ a two-stage strategy.

The first step is to sow seeds of doubt about the soundness of the research:

“Most of the formal evidence relies on surveys in which travellers report their own behaviour, which may be subject to substantial bias.” (page 8)

The second is to use this doubt to support an argument that says we should continue to do what we do now as there is considerable uncertainty about what alternative method we should use:

“The current appraisal approach should therefore be seen as a necessary simplification in the absence of robust evidence to underpin a more sophisticated approach.” (page 8)

In a further refinement, the DfT avoids refusing to budge entirely in the face of all the evidence (you have to admire the sophistication of these characters):

“DfT will continue to monitor emerging evidence to determine if the existing approach provides a reasonable valuation of business traveller time savings.” (page 2)

And the final masterstroke:

“Nonetheless, given the scale of the proposed investment, it would be prudent for DfT to enhance its understanding of the impact of alternative approaches on the economic case for HS2 through the application of a broader range of sensitivity tests. Potential additional sensitivity tests are proposed in Table 3, below. It is proposed that the individual tests are run separately to understand the impact of individual factors, and that results are also combined to provide a plausible range of net outcomes.” (page 8)

So DfT won’t accept the firm recommendation of its own consultants and apply a “downward revision of WebTAG values”; as we have seen, this would directly impact on the BCR. Instead, the headline BCR is to remain unsullied and more sensitivity tests applied. As I said this is quite brilliant; but it is also devious and disingenuous.

On pages 2 and 3 of Review of the value of time assumptions for business travellers on HS2 another criticism of the WebTAG calculation of the value of time savings by business travellers is mentioned:

“Current webTAG values are based on 1999-2001 National Travel Survey (NTS) data, and so are ten years old. A number of consultation responses suggest that the value used may be too high, and some suggest the value used equates to an income of around £70,000 per year.”

We are told that the “DfT will assess the second issue separately and provide commentary in its consultation response”. Since I have been unable to find this commentary in any of the January 2012 documents, I feel that I need to examine this issue in my next blog.

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