Rechecking the sums, part 1

The members of the House of Commons Committee of Public Accounts (PAC) were bound to want to follow-up the National Audit Office’s report High Speed 2: A review of early programme preparation. The PAC had previously locked horns with the Permanent Secretary of the Department for Transport (DfT), Philip Rutnam, in an oral evidence session held in April 2012. This session was ostensible called to discuss the sale of HS1, but the committee members could not resist the temptation to raise questions about the way that the business case for HS2 has been constructed. It appeared that some of the committee members – not least its redoubtable lady Chairman, the Rt Hon Margaret Hodge MBE PC MP – were not entirely satisfied with the answers about HS2 given by Mr Rutnam and his two supporters from the DfT (Steve Gooding, Director General, Domestic Group, and Mike Fuhr, Director).

With the excuse of the NAO Report, the PAC was able to recall Mr Rutnam, this time supported by the fairly recently appointed Director General for HS2 at the DfT, David Prout, and the Chief Executive of HS2 Ltd, Alison Munro. The meeting was attended by eleven of the fourteen MP members of the PAC with the Comptroller and Auditor General, the Assistant Auditor General, the Director of the NAO and the Alternate Treasury Officer of Accounts – yes I haven’t a clue who he is either (he didn’t say anything) – also in attendance.

Of the MPs in attendance on the day all but Justin Tomlinson asked questions; the session was curtailed by the division bell, so he may have been prevented from having his turn due to time constraints. I think it is fair to say that none of the questions indicated any great support for HS2 amongst the committee members, and that most were critical, to a greater or lesser extent, of the business case and associated aspects. The most aggressive questioning came from Margaret Hodge, Richard Bacon, Chris Heaton-Harris, Stewart Jackson, Austin Mitchell and Ian Swales. In order to give a flavour of the hostility of some of the questioning, I have put together some extracts from the full uncorrected transcript, grouped by MP.

If you don’t want to slog through the whole 2 hours 21 minutes of the proceedings, I would strongly recommend viewing at least the first 18 minutes (up to Q27 in the transcript), which you could be forgiven for thinking is a long lost episode from the Yes Minister TV series. The real-life Permanent Secretary gives a virtuoso impersonation of his fictional counterpart, Sir Humphrey Appleby, following a script that must surely have been written by Antony Jay and Jonathan Lynn in their prime. This entertaining sequence was occasioned by Philip Rutnam trying to explain away the shameful, and ill-advised, way that his ministers had rubbished the NAO Report on the day that it was issued.

Aside from the sheer fun of the knockabout nature of the PAC session, we did learn an interesting snippet or two. In the first place, Mr Rutnam told the PAC  (answer to Q62) that the HS2 business case will be updated for presentation this autumn  and that this update will employ version 5 of the Passenger Demand Forecasting Handbook. This update will also, of course, have to take into account the increases in the budget cost that were announced recently by the Transport Secretary and confirmed to the PAC (Q36 to Q51).

As I am sure that you, like me, will not want to wait until the autumn to discover the damage that the price hike has done to the BCR calculation, you will be interested to learn, I expect, that HS2 Action Alliance (HS2AA) has done the maths for us. What HS2AA has to tell us is that, on the basis of the cost increases alone, the BCR for Phase 1 has fallen to 1.0, without Wider Economic Benefits (WEI), or 1.3 if the WEIs are included. For Phase 2 the corresponding figures are 1.4 and 1.9.

If, as promised, the DfT uses version 5.0 of the PDFH for the autumn rework, this will further erode these BCRs. In my blog A great reckoning … (posted 12 Sep 2012) I reported that, at that time, HS2AA had calculated that moving to the latest version of the PDFH would erode the BCR by 0.4 across all four calculations. So using this figure as a guide to what the latest number crunching might reveal, the revised BCRs that the DfT present in the autumn could perhaps range from 0.6 to 1.5.

(To be continued …)

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4 responses to this post.

  1. Research was commissioned in 2008 into the value of small savings in travel time, I think by DfT. The report was produced in 2009 and it concluded that rather than claiming all the time saved to be a benefit, we should reckon on 50% to 65% of the time saving to be a benefit. The report was ignored by HS2 in the original 2010 command paper and has been ignored ever since. No doubt when the updated economic smokescreen is published in the autumn they’ll acknowledge this and at the same time they’ll dream up other exciting ways HS2 can transform us such as fairy lights along the track and the foreign currency we’ll earn from visitors coming to see our shiny new railway and other imaginary benefits.
    Rant over, I have to point out I’m in favour of new tracks north from London because we’re likely to need them. The problem is the abysmal plan put forward that’s called HS2. We have spent 3 years going up a blind alley. Or is it a siding? A viable plan will be launched this autumn that follows existing transport corridors, just like HS1 in Kent.

    Reply

    • I describe the circumstances in which the findings of the research to which you refer Les, which had been suppressed by the DfT for three years, were made public due to a freedom of information request in my blog … and down the drain … (posted 19 Aug 2012 at https://hs2andtheenvironment.wordpress.com/2012/08/19/and-down-the-drain). I also provide links to the reports of these findings in that blog. In … and out to sea …(posted 23 Aug 2012 at https://hs2andtheenvironment.wordpress.com/2012/08/23/and-out-to-sea) I summarise the findings. In … to sink without trace …(posted 27 Aug 2012 at https://hs2andtheenvironment.wordpress.com/2012/08/27/to-sink-without-trace) I describe how the DfT avoided accepting the impact of the recommendations of the researchers once the reports had been made public. The DfT hasn’t so much ignored the reports, as sidelined them.
      I hope that you are right that a viable plan will replace the unholy mess that we have now, but I don’t share your optimism on that. There is a small matter of in excess of £300 million that would have been wasted if the route is changed now, and nobody appears to be willing to concede that the wrong choices may have been made. My own view is that HS2 Ltd has made such a fist of things that, when this finally dawns on the powers that be, the whole idea will be put on the back burner and will slide into obscurity – fingers crossed.

      Reply

      • Good point Chris. A season ticket for HS1 from Ashford to St Pancras is £6000 plus. Birmingham and Manchester are much further away from London so what will the fare be and will anyone want to commute that far?

        Peter, thanks for the links, you’re better organised than me! I believe that the prominent people still singing the praises of HS2 are looking for a way out with minimal embarrassment. Labour can say it was our first idea and needed development. Cons can say we inherited it. Libs can say we always supported the principle, not necessarily the route. All of them can point out that all the guff they pour out in parliament is prepared for them by officials. Ministers were let down by officials over the West Coast franchise fiasco and they have been let down on a vastly bigger scale over HS2. Not long now I think before the madness stops.

  2. Posted by chriseaglen on July 23, 2013 at 12:41 pm

    The other BCR is the one a traveller uses and will use to calculate his/her salary and the cost of the HS2 section to be travlled. The problem with HS2 is there are too few sections to travel. Suggest HS2 with its one up and one downm track and no sensible adjacency to population sections of commuters such as along the M1 or A1M missed the key requirement for usefulness and large commuting loadings as seen between Milton Keynes and London or Coventry and Birmingham.

    Reply

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