A work of fiction

The day after I had posted my blog … and out to sea … I learnt that HS2 Ltd had published the promised revision to the Benefit Cost Ratio (BCR) calculation that we were told would be available “in the early summer”; it’s funny how the seasons keep getting later in HS2 Land. That same evening I settled down in front of the TV to watch the first episode of Tom Stoppard’s adaption of Parade’s End. I was amazed to see that one of the scenes being played out in front of me appeared to be linking these two events.

In the scene on the TV Christopher Tietjens, a civil servant statistician, was in front of his boss at the Imperial Department of Statistics, Sir Reginald, who was cajoling him to modify a set of figures that he had produced to be more supportive of the case being made by the Minister, Waterhouse, in support of the introduction of the Insurance Bill. Surely as “the cleverest young man in London” this task was within his capabilities?

Although he made clear that he did not wish his name to be associated with the work, Tietjens was able to assure Sir Reginald that there was “no difficulty in adjusting the calculations to produce a more congenial result”, and so the Minister got what he wanted.

Of course, Parade’s End is a work of fiction, but when I look at Updated Economic Case for HS2 (here) I can’t help but wonder whether a similar scene had taken place recently in one of the offices of the Department for Transport, but this time for real. This document, in its brevity and lack of detail, has some similarities to the April 2012 document The Economic Case for High Speed 2 Next Steps and Future Updates (here), which I referred to on my blog … and round the bend … (posted 15 Aug 2012), although at least we are provided with a fuller set of recalculated figures this time. It considers both Phase 1 and Phase 2.

We are told, in paragraph 3.1, that:

“The basic scheme for the first phase of HS2 between London and the West Midlands remains unchanged from that published in January other than for minor corrections to the indicative service specification for capacity released on the existing network.”

What has changed is that the calculations have “incorporated the economic forecasts published by the Office for Budgetary Responsibility in March 2012”; since these were gloomier than the November 2011 forecasts we might have expected a reduced BCR as a result. However, we are told in paragraph 5.2 that “the downward impact of the adjustments we reported in April 2012 have (sic) been largely offset by the introduction of the more detailed model and the impact of changes to the GDP deflator and consequent impacts on real GDP growth”.

So it appears that “a more congenial result” has been achieved, in that the BCR for Phase 1 is now said to be 1.4 (without WEIs), which is “broadly in line with [HS2 Ltd’s] analysis supporting the January 2012 Decision documentation” (paragraph 5.1). We are left to wonder what the details are of the manipulations that have achieved this miraculous result, as no references to where such details may be found have been provided in the HS2 Ltd document.

When it comes to estimating the BCR for Phase 2, the authors of the paper have a definite advantage over the rest of us, in that they know the details of the design options for the extensions to Manchester and Leeds; details that, I understand have lain unpublished on the Transport Secretary’s desk since March, awaiting a decision on the preferred option.

However, we are told in paragraph 4.1 that:

“The impact of the technical issues and revisions to economic forecasts have generally reduced the BCR, but these have largely been offset by improvements in the service specification for the potential scheme and better modelling of travel demand north of the West Midlands.”

And in paragraph 4.2 there is a sinister warning for those for whom HS2 will not be a convenient replacement for the classic services:

“Whilst enhanced HS2 services have increased HS2 operating costs, these are more than offset by the opportunities for efficiency improvements that have been identified on the classic rail network.”

The new paper estimates that the BCR for Phase 2, without WEIs, is 1.9; the prediction in April 2012 was that it was within the range 1.3 to 1.5.

So by a combination of ignoring widespread criticism of the methodology, including from two House of Commons select committees and consultants appointed by the Department for Transport, and glossing over the details of the calculations, HS2 Ltd has brought its BCR figures back from the brink.

I am sure that, just like her fictional counterpart Waterhouse, Justine Greening was pleased with the efforts of her civil servants.

But, whatever you do, remember that the work had nothing to do with Christopher Tietjens!

PS: In the second episode of Parade’s End Christopher Tietjens shows himself to be a man of principle by resigning his post at the Imperial Department of Statistics, saying:

“I detest and despise the work that I am asked to do in the Department, whose purpose appears to be to turn statistics into sophistry. I am resigning. Good morning.”

This outburst is perhaps unsurprising, following as it does the following explanation from Sir Reginald:

“This department exists to show that, just as there are different ways to put things in words, there are different ways to put things in numbers.”

The similarity between fiction set a hundred years ago and today’s reality is, to me, striking. However, there is one important difference – I am not expecting any resignations from the civil service over HS2.

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One response to this post.

  1. Posted by chriseaglen on September 8, 2012 at 1:14 pm

    There are two considerations. Adding the cost of two more tunnels and viaduct, cuttings and embankments for a four track route will reduce the BCR by increasing costs substantially but benefits marginally. Similarly adding stations will increase costs but income marginally.

    There are areas of land where the rail route will enable industrial buidings instead of homes or lower value homes. This loss of prime house building land and the generation of large new swaths of industrial development which would be difficult to have approved is already identifiable.

    The rail route draws in other associated incomes and investments from land not currently able to obtain planning permission.

    Reply

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