Blind faith

I have a number of books on my shelves that I bought in anticipation of having plenty of spare time to indulge myself by reading them in my retirement. For the past three years these volumes have laid untouched and gathering dust, whilst my reading time has been devoted to the more prosaic material that has been published in profusion on matters HS2 and the environment in general. I think that I may safely say that this reading has been spurred by a sense of duty rather than in the search of enjoyment; I can think of many other ways that I might want to fill the hours on this earth that fate will decree are left to me.

However, I have just finished reading the fifty-odd pages of the report High Speed 2: A review of early programme preparation, and I must confess that I did actually enjoy the experience, for once. This report has dropped on the Government with a few megatonnes of explosive power, having been produced by Parliament’s own financial “watchdog” body, the National Audit Office (NAO).

I don’t think that ministers and officials at the Department for Transport (DfT) will have enjoyed the experience of reading the report quite as much as I did, though. According to an article in the Daily Telegraph:

“The report ridiculed many of the key economic arguments put forward by the Government, including how many extra jobs will be created and whether there was a demand for the high speed line.”

What the report also does, in spades, is justify a number of the criticisms that have been made by the House of Commons Public Accounts Select Committee (PAC) and by our own HS2 Action Alliance (HS2AA). The Daily Telegraph article describes Margaret Hodge MP, Chairman of the PAC, as being “withering in her reaction” to the report and quotes her as saying:

“The Department has produced a business case that is clearly not up to scratch. Some of their assumptions are just ludicrous.”

Some of the criticisms that have been raised by the NAO echo issues highlighted by the PAC and HS2AA. The list of NAO observations include:

  • The DfT has provided little in the way of evidence to support the claim that HS2 will address the north/south divide.
  • The average salary level that the DfT has employed to calculate business traveller time saving benefits is derived from data that is over ten years old.
  • The value of business traveller time saving benefits should be reduced to take account of people working on trains.
  • The outdated demand model that the DfT has employed over-estimates passenger numbers and benefits.
  • The DfT model does not take account of price competition and the likelihood that HS2 will, like HS1, charge premium fares.

Your own blogger has trod much of the ground that has been surveyed by the NAO in a series of blogs that I posted in August and September 2012 and so I feel somewhat vindicated also.

So does the DfT feel chastened? Well, to judge by the interviews given by ministers on the morning that the NAO report was published, not a bit of it – in public, at least.

Take, for example, the interview given by Transport Minister, Rt Hon Simon Burns MP, to BBC TV (video). In that interview, Mr Burns accuses the NAO of “reaching conclusions in May 2013 based on a business case from December 2011, 18 months ago”. Now this seems a very tiny fig leaf and almost shrinks to insignificance if one takes into account that DfT co-operated with the NAO investigation. So if the business case information put before the NAO assessors was out of date, surely DfT has only itself to blame.

The irony of Mr Burns’ accusation should not be missed either. One of the most telling criticisms that the NAO has made against DfT is that it has used ten-year old data and a superseded demand model for its business plan calculations. So Mr Burns, eighteen months seems a mere bagatelle compared to ten years.

Mr Burns’ boss, Transport Secretary Patrick McLoughlin, doesn’t seem to care whether his department’s sums are right or wrong. The Daily Telegraph article quotes him as saying:

“We are not building HS2 simply because the computer says ‘yes’. We are building it because it is the right thing to do to make Britain a stronger and more prosperous place.”

Now I am all in favour of conviction politicians. However, this statement appears to owe more to blind faith than conviction, and flies in the face of the view of the NAO:

“It is not clear how High Speed 2 will deliver the Department’s strategic objective of delivering and rebalancing economic growth.”

The NAO has also identified a “gap in affordability” that the next administration will need to address:

“… the increase in capital spending on High Speed 2 may restrict the ability to fund other capital projects across government. We estimate that there could be a gap in affordability of £3.3 billion spread over the four years from 2017-18 to 2020-21, which are the peak spending years for phase one. The Department’s capital forecast for these four years is £33.7 billion but its capital budget if kept constant at 2014-15 levels would be only £30.4 billion.”

The report also drops a strong hit that it doesn’t think that the DfT’s management and methods are up to the task, particularly bearing in mind the workload on the department, and describes the timescales set by its political masters as “challenging”. The NAO doesn’t let us forget the WCML franchise fiasco either:

“Our report on cancelling the InterCity West Coast franchise procurement highlighted the mistakes that can be made in trying to meet an unrealistic timetable.”

We are told in the NAO report that we can expect a revised business case later this year. So the DfT will have the opportunity to put right all that the NAO has found to be wrong. Let’s hope that the department and HS2 Ltd are capable of taking good advice and will make amends.

According to the BBC TV report Maria Eagle MP, Shadow Transport Secretary, regards the NAO report as a “worrying wake-up call” for the Government. She is surely right, but it should also be ringing alarm bells for the Opposition frontbench. It is the responsibility of the Hon Lady and her colleagues to scrutinise the HS2 proposals and oppose where these prove to be not up to the mark. The current “all party support” for HS2 appears to make effective scrutiny unlikely. The first opportunity for the Labour Party to show its mettle in this respect will be in a few weeks when the High Speed Rail (Preparation) Bill is due to receive its second reading. It would be a sad failing of duty of those whose buttocks polish the green leather in the House of Commons were this legislation simply to be nodded through.

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