It should be little comfort to know that the Californian HS line does not have the support of the Trump administration – you do not need to take political sides when you read the recently released report. The project in its present form and with data to date is a doomed project. Is HS2 also doomed?
For both projects the seemingly obvious starting point is to get costs under control -but NOT SO
Revenue is key
Net revenue (possibly including subjective intangible benefits) must always be larger than capital and operating costs.
Being realistic the HS2 costs to date are sunk costs so the question is will (discounted) future costs be exceeded by (discounted) net revenue and intangible benefits?
Then even if the arithmetical number is a net positive – will funds (real cash) be available to bring the project into operation?
The issue of revenue is one of the points from the Californian project
The authority has overrepresented its ridership projections – – –
This is evidently true for HS2 eg the permanent fall in business travel may have been a surprise to all but the real issue is the original inclusion in revenue of an assumption that 70% of passengers and revenue will come from existing routes.
There is a double hit in this assumption. Even if additional revenue from high speed travel exists other important routes and stations would have much less revenue and become unviable – costs remaining but much revenue disappearing.
Forecasting the future
From Challenge 3 in the 2018 promotional brochure HS2 Realising the potential
Britain’s Future transport network must be future proofed to support the way we will live work and enjoy our leisure time in 2050 and beyond
How does this tie in with today’s reality –
- cheap flights and busses
- more folk working from home
- more folk in city high rise blocks
- more folk in satellite towns in the middle of nowhere
- many less business travellers
- more people having staycations in tourist towns such as York, Edinburgh and of course London (particularly at weekends) but also Skegness, Margate etc
Can the revenue deficit be overcome? for example
- Commuting may increase – on the now less crowded tarins
- The inevitable or forced fall in motoring due to fewer citizens having cars may bring demand.
- Folk may love and pay to travel at high speed to wherever.
- There may be sufficient economically positive intangible benefits with real value.
On point 4 there is a worrying development in that the Treasury Green Book which has been a “not bad” scientific and solid base for UK government investment may now include more wider highly subjective intangible benefits – these are neither revenue or in the form of cash. One dictionary definition of intangible is – not capable of being understood mentally!!
The issues of sufficient revenue for existing routes is a very significant and material issue for Government, the taxpayer and the future of GBR. This surely is a topic being studied by GBR for all the existing routes – where and how much cash will flow to ensure viable routes?
Considering the above it seems highly probable that there will be insufficient real revenue to decidedly support city to city high speed lines being built and operated.
Costs – must be limited and controlled
1 A value for money / cost control review of spend to date is a must.
Where has all the money went – using what I call the Scottish definite case 🤣
2 Descope – is there not a cheaper way into Euston, why go to an isolated station in Birmingham?
3 Cut the maximum speed. 350 to 400 km/hr is just not needed for the UK – see 4 below.
4 Do not over engineer – is there need for the conceited and fashionable notion of “world-class”?
5 Ballast is cheaper – and quieter than (I’ll use the word fashionable again) concrete
A search of the web reveals many excellent papers on the pros and cons of ballast. But more than one points to the irrefutable conclusion that initial cost is lower. Life cycle costing may be a luxury AND who knows who may be travelling to where in 40 years time?
6 Be as fixed as possible in scope, design, procurement and so on
The Californian report includes a heading
- CHSRA has executed numerous change orders and will likely have many more change orders in the near future to account for contractor expenses as a result of project delays;
It would seem at this time of huge public sector demand for cash that any further investment in HS2 will truly be a sunk cost with any economic benefit not arising for 20 or more years.
But there – future votes are also heavily discounted!! We voters seem to be seduced by unfulfillable and often deceitful promises.
Can certain revenue be identified and costs controlled?
There’s much to do.
#HS2
#HS2 THE DEMISE
ralphtiffin 