Defying Criticism, Government Finalizes Plans for U.K. High-Speed Rail

» A new route from London to Birmingham to be opened by 2026, with further extensions planned into 2030s. Project continues to face healthy skepticism.

Whatever the recession’s effects on government budgets, infrastructure development in Europe continues to advance at a steady pace. The United Kingdom government affirmed last week that it would move forward with the construction of a £18.8 billion ($29 billion) high-speed link between London and Birmingham, due for opening in 2026. This in spite of draconian cuts across all sorts of public services, both in Britain and across the continent.

The U.K.’s high-speed effort — it will effectively produce the nation’s first domestic truly high-speed line — follows almost two decades of travel to and from Paris and Brussels via Eurostar trains that operate under the English Chanel. Though those services have only recently met opening-year ridership expectations, Eurostar holds the large majority of the air-rail market share to these continental capitals, especially since following improvements completed in 2007 London finds itself within about two hours of its mainland peers. The popularity of that service surely had something to do with the government’s decision to move forward on a second line.

HS2 will bring measurable benefits: London to Birmingham in just 45 minutes, compared to 1h20 today, and eventually an hour off of trips to Manchester or Leeds, once extensions north to those cities are opened in 2032 at a cumulative cost of £36 billion. Direct trips between northern cities and Heathrow Airport and even the continent via the Channel Tunnel Rail Link will be put into place. London’s aging Euston terminal will be significantly spruced up. The biggest improvement, perhaps, will be the practical doubling of capacity between the capital and the Midlands by providing a release valve for the West Coast Main Line, which recently went through its own upgrading project but which is predicted to reach capacity with a dozen years. (It already handles more than 40% of the country’s freight and 75 million annual passenger journeys.)

Yet the enormous cost of the link up to Birmingham has been put in question repeatedly not only by those who worry about increasing public debt but also those who question the need for the new rail link — especially along the chosen alignment.

The questions vary, depending on the critique: Is it worth spending this much money, primarily to reduce travel times by half an hour on trips between London and northern cities? Is the West Coast Main Line actually at capacity, or can it easily be expanded? Will UK travel patterns change to a significant enough extent to justify more transportation connections?

Much of the criticism of the project has focused on the line’s segment through the Cotswolds northwest of London, a pristine section of Britain that also happens to hold the residences of some of the nation’s most wealthy. But project planners seem to be unable to find an alternative to that alignment; it has remained the same even after the political transition between Labour and the Conservatives after the 2010 elections. That opposition, however, comes across as nimbyism, especially since its prime backers call from the affected area.

But the complaint that there is not enough of an economic rationale for the project is more compelling. The government’s own study of the project suggests that the first section would have a shaky benefits-cost ratio of just 1.6. This means that each pound of investment in the project would lead to £1.6 in economic benefits (in today’s discounted currency). Public works projects should be considered in comparison with one another to prioritize investments, and this rating is low.* The government’s own study of the 51M alternative, produced by project opponents as a suggestion to expand capacity on the West Coast Main Line, suggested a benefits-cost ratio of five or six for that less costly scheme.

Up in the air is the issue of whether the system will ever be extended north of Birmingham, to Manchester and Leeds as suggested by current planning, and then further north to Scotland. Of course, the financing to make those expansions possible is lacking, despite the fact that they would improve the benefits-cost ratio of the program to between 1.8 and 2.5, a far better result.

Meanwhile, the delayed completion of the line (it will not enter the construction stage until 2018) forces us to ask whether governmental action today is “final.” The justification of the wait has been that the government wants to first complete the equally huge Crossrail urban rail project for London. But who knows what priorities the government of 2018 will have. Will the high-speed rail project by then have lost political support?

A low cost-benefit ratio, however, does not necessarily mean the project shouldn’t be built.** The 51M scheme would be fine, but according to the government, it would fail to provide the capacity expansions to the rail network the country necessitates. It would force increasing freight shipments onto congested roadways. As the U.K. plans for its future, it has a choice: Allow its existing infrastructure to become paralyzed by disinvestment and a lack of capacity, or invest to expand it. The latter choice will allow for expanded travel and trade, the former will not.

These issues plague the development of many similar infrastructure investment projects. The California High-Speed Rail project, which continues to attract significant criticism from across the country and which lacks the national commitment devoted to Britain’s program, nonetheless represents a fundamental choice about the future of that state. Will it invest in its mobility systems to guarantee that its future inhabitants have access to travel options? Or will it overwhelm its existing infrastructure with the pains of growth? It’s an expensive choice.

* The government’s insistence that the project will create a large number of jobs (and therefore that it is good) improves the benefits-cost ratio only to the extent that external (non-construction) employment growth occurs because of the rail project and wouldn’t otherwise. After all, construction jobs, if that were the priority, could come cheaper: We could pay people to dig holes.

** As long as the ratio is over 1. Otherwise, the project would then produce more costs than benefits…

Image above: Rendering of British High-Speed Rail, from HS2

20 Comments | Leave a Reply »
  • From an economic perspective, the jobs created by construction are part of the cost of the project, not the benefits. Your mention of paying people to dig ditches illustrates this well.

    • Nathanael

      Nope. They’re a benefit, not just a cost….

      ….economic activity is a much more subtle thing than most people think it is. As Keynes said, when we have unemployment, we *can* improve things by paying people to dig holes in the ground, even though that isn’t the best way to improve things.

      (He was commenting on how difficult it was to get people to agree to spend government money on useful things, and how it as actually easier to convince them to spend government money on essentially useless activity like gold mining.)

      If we had full employment, then paying people to dig ditches wouldn’t be a benefit, but since we have unemployment, it is a benefit.

  • I don’t know what the British practice is, but in France and Germany the cutoff for building a project is 1.2-1.3 rather than 1, in order to account for the possibility of cost overruns.

    • Danny

      I have never understood the types of processes or criteria used to allocate funds in any bureaucratic organization, like large businesses and governments…but from a strictly rational utilitarian perspective, the cutoff should fluctuate based on the availability of funding and the cost-benefit ratios (risk adjusted of course) of other projects that are feasible.

      In other words, you funnel your funding to the highest net benefit projects until you run out of funding or hit negative returns.

      • I think the maximum-cost-benefit-ratio principle is true even in infrastructure spending, modulo the fact that different projects can be of very different sizes, thus not directly comparable. But the cutoff is not 1 but 1.3.

  • From a political or social justice perspective, the cost of unemployment is enormous.

    What kind of country can be satisfied with 1 out of 10 of its citizens looking for work but unable to find it? (Or more like 1 out of 6 people unable to find employment by other measures?)

    Paying people to dig ditches and then fill them up would be preferable to doing nothing when unemployment is widespread, as it is across the world today.

    However, the wasted non-work of the unemployed can be deployed to good use building infrastructure, like solid rail projects, creating value for society that will last for many years to come.

  • Ben

    The line will pass through the Chilterns, not the Cotswolds.

  • Rational Plan

    I think the cut off point depends on circumstances. The BCR is not the only thing to consider. There are plenty of rail projects with much higher BCR’s that won’t get built because it would require an increase in operator subsidies.

    Currently rail fares are high in the UK compared to Europe and the US. But this is not uniform across the country.

    For historical reasons fares in the South East of England to London are much higher than the rest of the country. This can be maintained because planners were seen off in the 60’s and the extensive motorway networks planned never happened. People have to use trains for a lot of journeys in the South East, hence fares the higher fares.
    Long distance fares also cover their costs.

    The main areas that require heavy subsidy are remote rural lines and the big commuter networks covered by the PTE(passenger transport executives) of the big northern metropolitan counties. Here most cities had decent roads into their centres and the cities concerned were smaller and less congested. These areas often subsidised the fares within the counties to a much higher degree.

    What this means that projects that create capacity for long distance traffic or in the South East are easy to justify as they usually cover their operating costs. Meanwhile projects in other areas may have it harder.

    The rule of thumb I’ve heard is that BCR’s of 2 and above will generally join the queue in an investment programme, the order in which they happen will often come down to politics. Schemes below this have jump through more hoops and other political objectives have to be taken into consideration.

    With HS2, it come down the environment, it may prove a fight against Nimbys to build a new railway, but that is nothing compared to a new runway or motorway scheme. We need capacity from somewhere.

  • Tom Marney

    If “jobs” per se is still an issue in 2018, Britain will have far more pressing problems than undercapacity on the WCML.

  • Andrew

    It seems hard to justify a very expensive high speed rail scheme between London and Birmingham instead of many smaller and less expensive upgrades to infrastructure which would have greater benefit. The existing train between London and Birmingham is perfectly adequate in terms of speed; capacity is an issue but some increase could be accomodated using the second line (Chiltern Line) between Marylebone/Paddington and Birmingham. More important priorities would be upgrading the London tube system and modernizing existing UK rail lines. Also there needs to be some improvement in the road network in London (not that it should be a primary method of transportation in London, but more road bridges across the east Thames are needed). Finally money needs to be spent on affordable housing in London, and planning laws need to be changed to make it easier to build new housing and reduce housing cost, which might mean limited housing construction on the greenbelt. Ridiculously long commutes and greenbelt jumping are a problem in London and we do not want to encourage commuting on HS2 from London to Birmingham.

  • Buckeyeman

    the biggest shortcoming of this project by far is the use of Euston for the London terminus, rather than St. Pancras. The latter would provide the absolute easiest trnsfer for international passegers, rather than the long walk people will have in changing from HS2 trains to Eurostar and vice versa. Ig capacity is an issue keeping St. Pancras from being the terminus of HS2 than the next best thing would be to use King’s Cross because at least th it and St. Pancras are practically neighbors of one another.

  • DBX

    I’m definitely in favor of spending £30-40 billion plus on rail upgrades in the UK, but not all on this project. It’s ultimately more productive to spend money on upgrading the existing rail network, widening existing main lines, finally introducing full cab signaling in the UK, restoring lines wrongly dismantled under Beeching, and expanding and upgrading and if necessary supplementing the country’s overcrowded railway stations. It’s worth pointing out that without the Beeching Axe, Britain probably would not be having this HSR debate today, but instead simply modernizing existing routes and expanding the most congested big-city stations as most of the system would be able to absorb increasing use. The Great Central alone would have been able to deal with overcrowding to the Midland and North, with only the London commuter section requiring capacity increases.

    For much the same reason I strongly support the HSIPR program in the US — I think you can ultimately get much more out of it than out of a comparable expenditure on dedicated high speed rail. Once you create a broad 125-135mph network with 90 and 110mph feeders (and even 79mph feeders so long as the 50mph bottlenecks are removed from the system, and yes, even some bus feeders as long as they are of decent quality), you will have a complete system that can routinely be used as an alternative to car ownership, not just a one-shot, A-to-B super-speed route that occasionally gets you out of your car — and that’s advantageous to passengers and rail operators alike. Just like Britain in the 1960s, the US in the 1970s and 1980s over-abandoned, but unlike Britain, wider rights-of-way make it easier and cheaper to upgrade existing routes with much less need to revive the abandoned ones. And new technology, such as improvements in crash-worthiness and long-reach pantagraphs already in use in other countries, enables electric passenger trains and doublestack freight to share track.

  • Drewski

    One big reason for this project is political–or at least it’s PR, and therefore political. It’s the mess that was made of the West Coast Main Line (WCML) upgrade project, which took ten years for some very modest improvements.

    I agree with the conceptual need for a new high speed line, but I agree more with many of you that there are other improvements which could be made and which could have greater cost-effectiveness. Two that come to mind are full electrification of the Great Western line all the way to Swansea, and electrification and ROW improvements to the Midland Main Line. Also, begin development of plans to create S-Bahn-type networks in Birmingham and Manchester, to untangle the local services from the mainlines. In turn, this would almost certainly require a change in current law, allowing a return to unified urban transit networks maintained by significant subsidies.

    For all the money made in the UK during the 1990s and 2000s, perhaps the only European country with less to show for rail improvements relative to wealth might be the Netherlands (land of inadequate traction power). Even there, the relative service standard (can you get where you want to go in a reasonable amount of time) is higher than in the UK.

    I get why there’s a push to go ahead with HS2, but a look at two major projects gives even the most positive booster reason to hesitate. One is Thameslink, and the other is Crossrail. Paris has trains every 2.5 minutes on the RER A, and the best London will do is every 5 minutes on a project thoroughly sequestered from the rest of the network. At least Thameslink will serve various branches, but I have to wonder why it doesn’t even seem to have occurred to anybody at Railtrack/ Network Rail (or TfL for that matter) that looping the third-rail Southern network through a couple of tunnels under the center of London would’ve had the potential for greater efficiencies of scale and integration, while simplifying operations by focusing on fewer but more frequent routes on the same track. (Sorry for the run-on sentence.)

    It seems like it’d be better to stop HS2 for now, and instead invest money in projects with potential for better return.

    • John W

      @Drewski – could you possibly rephrase this?
      At least Thameslink will serve various branches, but I have to wonder why it doesn’t even seem to have occurred to anybody at Railtrack/ Network Rail (or TfL for that matter) that looping the third-rail Southern network through a couple of tunnels under the center of London would’ve had the potential for greater efficiencies of scale and integration, while simplifying operations by focusing on fewer but more frequent routes on the same track.

      I’ve taken that route into London hundreds of times, and I can’t make out what you are trying to say. By Southern network, do you mean the London-Brighton mainline, or something else? Southern is a rail franchise (the central portion of what was pre-nationalisation the Southern Railway Company) whose service area overlaps that of First Capital Connect (the operator on the full Thameslink route) as far north as East Croydon or London Bridge. The southerly part of Thameslink is third-rail electrified (the switchover to pantograph is at Farringdon, I believe), so it’s not just Southern who uses third-rail capable trains there. Or do you mean to extend the Southern service currently between East Croydon and Victoria to somehow go beyond Victoria?

      Here’s a map of Southern’s services: http://www.southernrailway.com/images/network_map_full.jpg

      All main lines go via East Croydon and Clapham Junction to Victoria with the exception of the Milton Keynes line (which runs on the same tracks as London Overground through West London), the line through South London linking Victoria and London Bridge (which I believe will be discontinued when the final link in the London Overground orbital is completed at the end of this year), and services to London Bridge from Brighton (which more or less duplicate FCC services) and from and across South London via their meandering Metro routes.

    • Nathanael

      “Two that come to mind are full electrification of the Great Western line all the way to Swansea,”

      They are doing full electrification of the Great Western to Cardiff. Not sure how much added benefit Swansea gives you, but they’re building an *electrification train* to do the work in a factory-line fashion — so I have my suspicions that as the main project finishes they will just start moving the electrification train around to electrify more lines.

    • Nathanael

      HS2 is necessary to gain Scottish votes.

      Make no mistake, HS2 will end up going to Scotland. The Scottish backing is total.

      • John W

        You’re assuming, of course, that Scotland will still be a part of the UK by the time HS2 even breaks ground. Not sure which votes you’re talking about, though. The Conservative Party are shut out in Scotland, and even if they weren’t, all the main parties are on board for HS2 to happen anyway.

    • David Oleesky

      Regarding your suggestion about the need for a S-bahn-like network in Manchester, the current expansion of the light rail Metrolink system is effectively creating such a network, separate from main line railways. There is also a single light rail line in Birmingham, but proposals to expand this system significantly are considered unaffordable.

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