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HS2 Economic analysis - more Sleight of hand

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The January 2012 and October 2013 economic analyses provide very similar benefit to cost ratios. 

That is remarkable.  After all, the value of business time was reduced by 32%, from £47.12 per hour to £31.96 per hour, the passenger forecasts were reduced by 15% and the net costs to government were increased by 24% for Phase 1 and by 26% for the full network.

Had those changes been simply substituted into the January 2012 study the economic case would have collapsed.  Instead, and remarkably, the new study produced benefit to cost ratios which are almost identical to those in the old study.

There are at least two reasons for that.

  • The first is that the percentage on business was inflated to 40%, far above the 30% suggested by survey data and far above the percentages used previously (26% for Phase 1 and 29% for the full network).
  • The second is obscure.  In the earlier study the values of time associated with crowding and interchange for business passengers was the same as commuter time, namely £6.46per hour.  In the later study business time, then valued at £31.96 per hour, was used for those items.  That alone generated benefits of circa £3bn for Phase 1 and £6.6bn for the full network.

Additionally, we find that those two unjustified changes are inadequate to rescue the scheme - substitution into the 2012 analysis produces stubbornly low benefit to cost ratios (1.24 for phase 1 and ranging from 1.4 to 1.6 for the full network, void of the contentious Wider Economic Benefits).  Hence we suspect some other sleight of hand.

As things stand the original benefit to cost ratios would be rescued only if the above changes are admitted and if the percentage on business were to be inflated to 50% and above.

For those reasons we say that this analysis has been shamefully manipulated so as to obtain “the right answer” in defiance of the data.

Paul Withrington, director of Transport Watch comments:

“The economic analysis is based on a system enabling almost any tune to be played.  Tweak this or that and huge changes arise.  The tune selected by HS2 Ltd is a Honky-tonk.  It should be switched off and HS2 abandoned immediately”

For more details, or to arrange an interview, please contact Paul Withrington on 01604 847438 or [email protected] and open topic 17.

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