The government is doing a terrible job of assessing or explaining the value of HS2

London Euston. Image: Getty.

A new high-speed rail route between London and the north of England has finally been given the go-ahead. Boris Johnson, the UK prime minister, announced the government’s decision, despite the dramatic escalation in construction costs – from £37.5bn in 2011 to £50bn in 2013, £65bn in 2015, and in excess of £100bn in 2019.

HS2’s potential value for money has been calculated with a standard approach for public sector investments, which compares benefits with costs. It is measured with a benefit-to-cost ratio (BCR). As the cost of the project rises, questions have been raised about the value offered by HS2.

There are significant problems with how the government has calculated the value for money offered by HS2. One is that the analysis is open to manipulation. Another is that one of the primary drivers in the strategic case for HS2 is not reflected in the economic case. This driver is national economic rebalancing – the creation of wealth in cities and regions in the Midlands and North.

Instead, the government has assumed that journey time savings are the main benefit to users of a faster rail route. This is supposed to allow us to work more productively or get more enjoyment from our time off. Other lesser benefits have also been added to the calculation. These include improved reliability and reduced overcrowding, as well as some wider economic impacts, such as productivity gains and environmental impacts.

Flexible calculations

It was noteworthy that the initial increases in the cost of HS2 did not change the supposed economic benefit as measured by the benefit-to-cost ratio. This held steady at close to 2.0, or £2 of benefit for every £1 of cost. Substantial additional benefits were recognised by the promoters (the publicly owned HS2 Ltd and the Department for Transport) even though nothing fundamental had changed in the business case.

However, the independent review by civil engineer Douglas Oakervee, commissioned by the government and just published, puts the BCR at 1.1 to 1.5, reflecting the increase in costs. The National Audit Office’s recent report on HS2 estimated a BCR of 1.4.

The Department for Transport is yet to issue a revised business case for HS2 that takes account of the latest plans and possible cost savings. When it does, I expect to see the usual tweaking and massaging of assumptions about an uncertain future state of the world. This can be defended as a legitimate exercise of professional judgement by transport economists who wish to please their clients: in this case, ministers who have decided to press ahead. The objective will be to achieve a BCR of 2.0, which is the threshold for the Department for Transport’s high value for money category.


Missing factors

Apart from such malleability in analysis, there are two big problems with the standard approach to the economic appraisal of proposed transport investments. First, the time-saving benefits arise from trips between cities and say nothing about economic development within cities.

The strategic case for HS2 is to boost the economies of the cities of the Midlands and the North by improving their connectivity to London and the south-east. However, the Department for Transport’s cost-benefit calculation is silent on the geographical distribution of HS2’s benefits across the country.

The economic boost from HS2 might turn out to be quite substantial if the linked cities can take advantage of the modern high-speed connection to London. This could include local investment in property development near to new stations, and in urban rail to enlarge the benefits to surrounding districts. The impact on cities will include the job creation that results.

The second problem is that average travel time, as measured in the National Travel Survey, has hardly changed over the past 45 years. This is despite many billions of pounds of public investments in the transport system justified by the value of journey time savings. What actually happens is that these investments into quicker travel allow us to travel further and to gain access to more distant destinations, opportunities and choices.

These are the real benefits experienced by users, not the hypothetical time savings assumed by the economists. Transport projects like HS2 lead to changes across the country as people and businesses take advantage of improved access to land and property capable of better use.

The standard approach to economic appraisal of transport investments is quite narrowly focused and disregards the value created by changed land use and the geographical reach of economic activity. The Department for Transport has failed to value the real benefits of HS2 by not investigating the land use impacts of this transport investment. The economists’ focus on time savings has been quite misconceived.

The Conversation

David Metz, Honorary Professor of Transport Studies, UCL.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 
 
 
 

To build its emerging “megaregions”, the USA should turn to trains

Under construction: high speed rail in California. Image: Getty.

An extract from “Designing the Megaregion: Meeting Urban Challenges at a New Scale”, out now from Island Press.

A regional transportation system does not become balanced until all its parts are operating effectively. Highways, arterial streets, and local streets are essential, and every megaregion has them, although there is often a big backlog of needed repairs, especially for bridges. Airports for long-distance travel are also recognized as essential, and there are major airports in all the evolving megaregions. Both highways and airports are overloaded at peak periods in the megaregions because of gaps in the rest of the transportation system. Predictions for 2040, when the megaregions will be far more developed than they are today, show that there will be much worse traffic congestion and more airport delays.

What is needed to create a better balance? Passenger rail service that is fast enough to be competitive with driving and with some short airplane trips, commuter rail to major employment centers to take some travelers off highways, and improved local transit systems, especially those that make use of exclusive transit rights-of-way, again to reduce the number of cars on highways and arterial roads. Bicycle paths, sidewalks, and pedestrian paths are also important for reducing car trips in neighborhoods and business centers.

Implementing “fast enough” passenger rail

Long-distance Amtrak trains and commuter rail on conventional, unelectrified tracks are powered by diesel locomotives that can attain a maximum permitted speed of 79 miles per hour, which works out to average operating speeds of 30 to 50 miles per hour. At these speeds, trains are not competitive with driving or even short airline flights.

Trains that can attain 110 miles per hour and can operate at average speeds of 70 miles per hour are fast enough to help balance transportation in megaregions. A trip that takes two to three hours by rail can be competitive with a one-hour flight because of the need to allow an hour and a half or more to get to the boarding area through security, plus the time needed to pick up checked baggage. A two-to-three-hour train trip can be competitive with driving when the distance between destinations is more than two hundred miles – particularly for business travelers who want to sit and work on the train. Of course, the trains also have to be frequent enough, and the traveler’s destination needs to be easily reachable from a train station.

An important factor in reaching higher railway speeds is the recent federal law requiring all trains to have a positive train control safety system, where automated devices manage train separation to avoid collisions, as well as to prevent excessive speeds and deal with track repairs and other temporary situations. What are called high-speed trains in the United States, averaging 70 miles per hour, need gate controls at grade crossings, upgraded tracks, and trains with tilt technology – as on the Acela trains – to permit faster speeds around curves. The Virgin Trains in Florida have diesel-electric locomotives with an electrical generator on board that drives the train but is powered by a diesel engine. 

The faster the train needs to operate, the larger, and heavier, these diesel-electric locomotives have to be, setting an effective speed limit on this technology. The faster speeds possible on the portion of Amtrak’s Acela service north of New Haven, Connecticut, came after the entire line was electrified, as engines that get their power from lines along the track can be smaller and much lighter, and thus go faster. Catenary or third-rail electric trains, like Amtrak’s Acela, can attain speeds of 150 miles per hour, but only a few portions of the tracks now permit this, and average operating speeds are much lower.

Possible alternatives to fast enough trains

True electric high-speed rail can attain maximum operating speeds of 150 to 220 miles per hour, with average operating speeds from 120 to 200 miles per hour. These trains need their own grade-separated track structure, which means new alignments, which are expensive to build. In some places the property-acquisition problem may make a new alignment impossible, unless tunnels are used. True high speeds may be attained by the proposed Texas Central train from Dallas to Houston, and on some portions of the California High-Speed Rail line, should it ever be completed. All of the California line is to be electrified, but some sections will be conventional tracks so that average operating speeds will be lower.


Maglev technology is sometimes mentioned as the ultimate solution to attaining high-speed rail travel. A maglev train travels just above a guideway using magnetic levitation and is propelled by electromagnetic energy. There is an operating maglev train connecting the center of Shanghai to its Pudong International Airport. It can reach a top speed of 267 miles per hour, although its average speed is much lower, as the distance is short and most of the trip is spent getting up to speed or decelerating. The Chinese government has not, so far, used this technology in any other application while building a national system of long-distance, high-speed electric trains. However, there has been a recent announcement of a proposed Chinese maglev train that can attain speeds of 375 miles per hour.

The Hyperloop is a proposed technology that would, in theory, permit passenger trains to travel through large tubes from which all air has been evacuated, and would be even faster than today’s highest-speed trains. Elon Musk has formed a company to develop this virtually frictionless mode of travel, which would have speeds to make it competitive with medium- and even long-distance airplane travel. However, the Hyperloop technology is not yet ready to be applied to real travel situations, and the infrastructure to support it, whether an elevated system or a tunnel, will have all the problems of building conventional high-speed rail on separate guideways, and will also be even more expensive, as a tube has to be constructed as well as the train.

Megaregions need fast enough trains now

Even if new technology someday creates long-distance passenger trains with travel times competitive with airplanes, passenger traffic will still benefit from upgrading rail service to fast-enough trains for many of the trips within a megaregion, now and in the future. States already have the responsibility of financing passenger trains in megaregion rail corridors. Section 209 of the federal Passenger Rail Investment and Improvement Act of 2008 requires states to pay 85 percent of operating costs for all Amtrak routes of less than 750 miles (the legislation exempts the Northeast Corridor) as well as capital maintenance costs of the Amtrak equipment they use, plus support costs for such programs as safety and marketing. 

California’s Caltrans and Capitol Corridor Joint Powers Authority, Connecticut, Indiana, Illinois, Maine’s Northern New England Passenger Rail Authority, Massachusetts, Michigan, Missouri, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Texas, Vermont, Virginia, Washington, and Wisconsin all have agreements with Amtrak to operate their state corridor services. Amtrak has agreements with the freight railroads that own the tracks, and by law, its operations have priority over freight trains.

At present it appears that upgrading these corridor services to fast-enough trains will also be primarily the responsibility of the states, although they may be able to receive federal grants and loans. The track improvements being financed by the State of Michigan are an example of the way a state can take control over rail service. These tracks will eventually be part of 110-mile-per-hour service between Chicago and Detroit, with commitments from not just Michigan but also Illinois and Indiana. Fast-enough service between Chicago and Detroit could become a major organizer in an evolving megaregion, with stops at key cities along the way, including Kalamazoo, Battle Creek, and Ann Arbor. 

Cooperation among states for faster train service requires formal agreements, in this case, the Midwest Interstate Passenger Rail Compact. The participants are Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, and Wisconsin. There is also an advocacy organization to support the objectives of the compact, the Midwest Interstate Passenger Rail Commission.

States could, in future, reach operating agreements with a private company such as Virgin Trains USA, but the private company would have to negotiate its own agreement with the freight railroads, and also negotiate its own dispatching priorities. Virgin Trains says in its prospectus that it can finance track improvements itself. If the Virgin Trains service in Florida proves to be profitable, it could lead to other private investments in fast-enough trains.

Jonathan Barnett is an emeritus Professor of Practice in City and Regional Planning, and former director of the Urban Design Program, at the University of Pennsylvania. 

This is an extract from “Designing the Megaregion: Meeting Urban Challenges at a New Scale”, published now by Island Press. You can find out more here.