Monthly Archives: February 2014

Misleading on a mammoth scale?

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Mark Hansford, the New Civil Engineer’s new editor, writes on 20th Feb that “The effect of postponing HS2 on our future prosperity would be crippling”.

HS2 is to cost £50bn including the trains but not the connecting infrastructure. The latter may inflate the cost to £80bn. The financial loss to the nation will be similar or larger if the extraordinary passenger forecasts do not arise. How crippling will that be?

HS2 is said to generates some 76,000 passengers per day, (FoI request), corresponding to roughly 22.8 million per year. It is only those which can be “transformational”, since all the rest exist already. In contrast there are currently 1.5 billion passenger journeys per year by surface rail, and 43.5bn passenger journeys by all modes. Hence, HS2’s supposed generated traffic amounts to 1.5% of all surface rail journeys and to 0.05%, or one in 2,000, of all passenger journeys. Transformational? Ha, Ha.

HS2 Ltd say the proposal will generate 100,000 jobs. Others say most of those will be relocations. Whatever the case, the £80bn and 100,000 implies each job (if it exists) will have cost £800,000. How many would that destroy in that part of the economy which actually makes a profit? Crippling again if you ask me.

Perhaps it is because of comment such as Mark Hansford’s that engineers have such low status.

Paul Withrington

Chiltern: Bicester to Oxford railway, a scandal or not?

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This proposal was the subject of public inquiry. Part one of that was in 2010-11. We appeared for the objectors. This piece summarise the most important points to emerge. A version is on our web site along with some of the evidence presented.

The scheme

The scheme involves:

  • Adding a track to the single track railway between Oxford and Bicester, a distance of some 12 miles or 20 km.
  • A connection, the Bicester “chord”, between that line and the Bicester to London line.
  • A new station at Eaton Parkway immediately to the North of Oxford.

The cost was circa £185million at 2009 prices.

The purpose of was to attract passengers to London, currently using the Great Western Trains from Oxford to Paddington, to Chiltern’s proposed service via the new station and Bicester to Marylebone.

The main inquiry took place in 2010 and 2011. It dealt only with Phase 1, costing £122 million.

The business case

The business case is summarised by the following table, taken from Chiltern’s evidence CRCL/P/1/A.

Table 1: Chiltern Railways Commercial Business case

Total 2010-2021 £m

Farebox income 157.3
Network Rail facility charge – 116.5
Incremental maintenance & renewals costs – 26.3
Incremental train operating costs -7.6
Station operations, marketing, staffing costs -5.5
3rd party agreements -18.1
DfT payment for Phase 2A works 18.0
Total cash flow 1.1

We found that data improbable because:

  • Chiltern was making substantial losses. The annual accounts for 2010 show an operating profit of only £7.7m, amounting to 6% on turnover, and that grant in that year amounted to £4.7m and that, despite the grant, the operation made a loss as a whole of £4.4m. The firm’s net debts (creditors minus debtors) amounted to £66,000 in 2010.
  • The incremental maintenance and renewals assume no, or few, additional carriages and relates only to the 12 mile improvement. In fact additional carriages will be required, bringing wear and tear on the track all the way to London. Our evidence suggest that those costs should be £112m rather than the £26.3m in the tabulation.
  • The incremental train costs are far too low. In defence Chiltern said  “….There is actually little change in the numbers of trains we need to lease once Oxford opens because many of the trains already run between London and Bicester and we get a productivity improvement from the fact that on the main line trains run faster than they do today due to the works we have underway at present to improve the speed, so we can sustain a more frequent service overall with the same number of trains”. However, (a) without the Order Scheme’s services Chiltern would be able to reduce its fleet. Hence the trains required by the Order Scheme should be assigned to it. Our competing calculation, based on passenger flows, showed that the additional cost may be £34m over 9 years rather than the £7.6m cited.

We concluded that the notion that this proposal is self funding is a fiction. In general terms there really is no reason why the services can be any more profitable or loss making than is Network Rail as whole. We demonstrated that Chiltern, together with its track costs, costs the tax payer circa 6 pence per passenger-km, a number which was very equivalent to Network Rail’s average.

The economic case

Chiltern’s summary Table 4.1 of their evidence CRCL/ P/5A provides as follows:

  £m 2002 prices
User Benefits  £222.3
Non-User Benefits  
    Congestion 116.3
    Accident 9.2
    Local Air Quality 0.6
    Noise 0.7
    Greenhouse Gases 0.5
Total 127.2
Revenue 88.5
Operating Costs -44.1
Total 393.9
PV Costs   
Capital cost -81.6
Indirect Tax -22.8
Total -104.4
NPV 289.5
Benefit : Cost Ratio 3.8:1
Chiltern’s rebuttal, CRCL//R/0GJ319 and our response, OBJ /319/3, show that the user benefits were derived solely from reduced driving times to the railway stations.  Further and, astonishingly those saving had been multiplied by factor of four in the estimate of benefits.

The multiplier was said to follow from advice in the Passenger Demand Forecasts Handbook, the PDFA, produced by the Association of Train Operating Companies, ATOC.  That manual is privileged and was not released at the inquiry. Consequently the rationale for the weighing of four is hidden from us. However, if we add to a 20 minute drive time (a) 10 minutes for congestion or uncertainty and (b) ten minutes for parking and walking to the station platform and (c) if those are weighted, as suggested by the DfT, by factors of two and 2.5 respectively then the multiplier on the drive time exceeds three. To that must be added vehicle operating costs providing a value approaching four. However, the walk and, in this case, congestion times are independent of the drive time. Consequently rather than the model being multiplacatory it is additative. Hence, the multiplier of four on drive time savings is likely to be too high by a factor of at least three. That would reduce the £222 million user benefits in the table to £74 million.

Furthermore the non-user congestion savings depended on multiplying the vehicle-km removed from the network by standard values. However, in this case congestion occurs at two or three roundabouts, and would not be much influenced by the scheme. For those reasons the £116.3 million in the table may be overestimated, perhaps by a factor of four.

Taken together the forgoing would reduce the Net Present Value, the NPV, to £53 million.

Lastly, the accepted procedure adopted in these analyses is to subtract fares revenue from costs, the £81.6m in the table. However, that is plainly wrong. The payment is a transfer, generating no resources of itself, see topic 24 http://www.transport-watch.co.uk/topic-24-nata-refresh-and-burger-bar

Staff and rolling stock.

As an aside we found that Chiltern had circa 190 vehicles (traction units plus carriages) and 740 employees in 2010. Hence there were nearly four staff per carriage, excluding those employed by Network Rail to maintain the track

Conclusion

We conclude that both the business case and the economic analysis for this scheme could be considered frauds upon the public and politicians alike. Nevertheless the Inspector found in favour of Chiltern and upwards of one quarter of a billion pounds will be wasted.

The whole will of course encourage the “East West Rail” proposal, connecting Oxford to Cambridge and promoted by the railway lobby. The cost of that will be huge and the product entirely trivial.

Nonsense from London Connections

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London Connections has posted an article full of misinformation. For example it cites the Railway Conversion League and claims a mistake made was that railways are too narrow for roads. See http://www.londonreconnections.com/2014/near-terminal-case-saving-marylebone-rail-road-conversion/

Our caption picture denies that. It is ten metres between the staunchions. We go on to point out that the clear width between tunnel or viaduct walls on the railways is typically 24 feet, the same as required for the carriageway of trunk road void of marginal strips. Beyond the tunnels and viaducts widths would allow narrow marginal strips so providing roads far better aligned than most A-roads and of similar width to most.

It is pure nonsense to say these rights of way cannot be converted to very good roads indeed.

Beleben also has a piece reporting on the London Connections post.  We have responded as follows:

Transport-Watch continues the work or the Railway Conversion League, founded after the seminal paper by Brigadier Lloyd, with the title ‘The Potentialities of the British Railways System as a Reserved Roadway System”, read to the Institution of Civil Engineers on 26th April 1955. That paper and a selection of the League’s archival material is available here: http://www.transport-watch.co.uk/topic-7-archive-railway-conversion-league-1958-1994

One quote from the past available from Item 6 of the Archive reads:

“………. when trains are still the theme of nursery rhymes and children’s stories, it is small wonder that the railways have a romantic fascination for most adults. Only years of nursery conditioning can explain the calm with which the public has accepted a bill of £3,000 millions (£33bn at 2007 prices) to subsidise British Rail over the last decade.

Why should we go on pouring money into the railways? If British Rail were Concorde or Maplin this endless drain on public funds would be regarded as a national scandal. Think, we would be constantly told, how many schools, hospitals, council houses could be built with all that money. When the railways were built in the nineteenth century they evoked the same squeals of anguish from Wordsworth and other Victorian environmentalists as new roads do today.

The people who use BR’s passenger services are mainly the better-off. The poor suffer from the diversion of resources out of improving roads and bus services, into keeping up the railways. It is the suburban owner-occupier who supports BR’s commuter services. It is the businessman who uses Inter-City: the poor go by car. If the resources had been pumped into bus transport that have been lavished on the railways, we would no doubt now have a flexible system of rural transport based on post-buses, instead of a sporadic system of branch line services. We would no doubt have a fast and comfortable express inter-city bus service, on the lines of Trailways and Greyhound in the United States. We might even have taken note of the series of studies which suggested that for town commuting, buses are faster, cheaper, less polluting and use less fuel than trains.”

The author was Frances Cairncross writing on 29th April 1974. She was then the Economics Correspondent for The Guardian. Now she is CBE and the Chairs the Executive Committee of the Institute of Fiscal Studies among other.

There can be few greater scandals than the railways. The network absorbs billions of pounds of taxpayer’s cash every year whilst carrying only 3% of the nation’s journeys on a system which, if converted to roads, would provide seats for all London’s crushed railway commuters in express coaches occupying one seventh of the capacity available at a fraction the cost of the train. 

For the arithmetic, a map and pictures see: http://www.transport-watch.co.uk/topic-15-london-waste-battersea-and-north-marylebone.  For comparisons see: http://www.transport-watch.co.uk/topic-2-road-rail-comparisons-summary-findings and the associated links

Consider Bombardiers evidence to the Transport Committee’s Inquiry into the Future of the Railway, seventh report of session 2003-4. In Volume 2 at Ev 479 we find this train manufacturers saying, “To give a few figures – to carry 50,000 people per hour in one direction we would need a road 175 m wide used by cars, or a 35 m road used by buses or a 9m wide track bed for a metro or a commuter railway. In contrast to that we have the New York Express coach lane, 4 miles long including 1.5 miles in tunnel, a lane which is a mere 11 feet wide, offering 30,000 seats in the peak hour in close to 700 45-seat coaches.  Moreover, as long ago as the 1970s Don Morin, Chief of Public Transport in the USA said that there was no movement corridor in the world which could not be satisfied by one express coach lane. To illustrate, 1,000 coaches per hour travelling at 100 kph would have average headways of 100 metres. If those coaches each had 75 seats they would offer 75,000 per hour. In comparison, at Waterloo main line we have less than 50,000 crushed passengers in the peak hour travelling in trains requiring four inbound tracks. Express coaches to satisfy that would occupy less than one-quarter of the space there available.

Here I cite Stewart Joy, Chief Economist to British Railways in the late 1960s, or early 1970s.  He wrote in his book ‘The Train that Ran Away’ that “… there were those in the British Transport Commission and the Railways who were cynically prepared to accept the rewards of high office in return for the unpalatable task of tricking the Government on a mammoth scale.  Those men”, Joy wrote, “were either fools or knaves”.

Now, some 40 years later, we have the same – at immense cost to the nation, and particularly to London commuters, let alone HS2.

Peter Hall was once a supporter of the Conversion Campaign, see the Hall Smith Report at items 13 and 14 here: http://www.transport-watch.co.uk/topic-7-archive-railway-conversion-league-1958-1994.  However, the professor claims to have had a Damascene moment and now supports rail.

Paul Withrington

HS2: astonishing differences between the January 2012 and October 2013 studies

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The data and calculations below show that (a) the lower values of time coupled with (b) the lower total HS2 trips, in the 2013 study should reduce user benefits by about 35%. Instead the new study pretends to an increase of 24%, which is astonishing, if not entirely unbelievable.

Likewise the effect of the £10bn added construction costs seems far below the expected.

(1) Trips using HS2:

In 2012 we had 380,000 per 16 hour week day (i).  In 2013 that had fallen to 301,140 , a 21% reduction (ii) . A reasonable presumption is that this reduction would reduce the user benefits by 20%.

(2) Values of time – from table 3 of the October 2013 report we have:

Travel Purpose    Old Values of Time    New Values of Time    % change
Business                     £47.18                      £31.96                      -32.26
Commuting                 £6.46                        £6.81                        +5.41
Leisure                        £5.71                        £6.04                        +5.78

The lower bound benefits from the 2012 study, see table below, are £28.8bn from business users and £15.3bn from the rest, mostly leisure. Hence the expected effect of the changes in time values would be to reduce business user benefits by £9.3bn and to increase the other user benefits by approximately 0.86bn providing a net reduction of £8.4bn. That would reduce the net transport user benefits (range £41.4bn to £46.9bn, mid value £44.1bn) by about 20%.

The effect, coupled with the loss from (1) above, implies an overall reduction in user benefits of circa 35%. Instead there is an increase from the mid-range value of £44.1bn to 54.8bn, or 24%, for heavens sake.

(3) Generated or New Trips

In 2012 24% of trips were new (iii) providing 91,200 (e.g. 380,000 from (1) above x 0.24 = 91,200). The 2013 report cites 26% (iv) providing 78,296 (e.g. 301,140 x 0.26 = 78,296). The latter is close to the 76,886 obtained from HS2 Ltd (v).

This reduction in generated trips is strange. Has HS2’s consultant reduced these and increased the pre-existing trips? If so the move would increase the calculated benefits since new trips are generally assigned half the values of time etc of those attributed to existing trips.

(4) Construction cost

The 2012 construction (or capital) cost was £33bn. That had risen to £43bn for the 2013 by 2013. The £10bn is in Phase 1. Setting the expenditure year to 2023 and the base year to 2011 would provide an additional PV cost of £6.6bn. However, the actual increase in PV capital costs is only £2.1bn, see table overleaf. Again, what on earth has happened?

(5) Cost benefit analysis
The  table below compares the the January 2012 and October 2013 data sets. From that table we find that:
• Net transport benefits (row 4) from the 2013 standard case are 32% above the 2012 low growth value and 17% above the High growth value, corresponding to 24% above the mean value, which is astonishing. Instead a 35% reduction was expected, reference (2) above..
• Capital costs have gone up much less than implied by the £10bn construction cost increase.
• Operating costs, presumed to include maintenance and renewals, have gone down slightly.
• Wider Economic benefits have risen above the high end of the previous range.

What is going on? Have they vastly increased the proportion trips which are for business or what?

TABULATION comparing the 2012 and 2013 economic assessments

2011 PV Base 2012 PV Base
  Jan 2012 Oct 2013 Oct 2013
Low High (a) Standard
(1) Transport User Benefits business other 28.80 32.30 38.49 40.50
15.30 17.40 18.34 19.30
(2) Other quantifable benefits 1.00 1.10 0.76 0.80
(3) Loss to Government of Indirect Taxes -3.60 -3.90 -2.76 -2.90
(4) Net Transport Benefits (PVB) = (1) + (2) + (3) 41.40 46.90 54.83 57.70
(5) Wider Economic Impacts (WEIs) 5.70 12.30 12.64 13.30
(6) Net Benefits including WEIs = (4) + (5) 47.20 59.30 67.47 71.00
(7) Capital Costs 36.40 36.40 38.49 40.50
(8) Operating Costs 21.70 21.70 21.00 22.10
(9) Total Costs = (7) + (8) 58.10 58.10 59.49 62.60
(10) Revenues 31.80 34.00 29.55 31.10
(11)Net Costs to Government (PVC) = (9)–(10) 26.30 24.10 29.93 31.50
(12) BCR without WEIs (ratio) = (4)/(11) 1.60 1.90 1.80 1.80
(13) BCR with WEIs (ratio) = (6)/(11) 1.80 2.50 2.30 2.30

(a) Standard case deflated to 2012 values

Data is from Table 9 of the Jannuary 2012 report and table 25 of the October 2013 report

Notes

(i) The Economic Assessment of January 2012 provides, at paragraph 3.2.1, 270,000 trips per day in and out of London plus 110,000 inter-regional trips, a total of 380,000.

(ii) HS2 Ltd FoI number 13-873

(iii) Table 2 of the January 2012 report provides 24%

(iv) Table 22 of the October 2013 report provides 26%

(v) HS2 Ltd FoI number 13-873

Dawlish – rail life line to the South West

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The headline “Storm forces closure of the West’s lifeline” in The Times of 6th Feb 2014, is somewhat overdone. Here is the reality:

Penzance to Paddington provides one train an hour (11 all day). The journey takes five and a half hours. The open return costs over £120. The typical passenger load on South Western Trains is a 140 people [1].

Torquay to Exeter (through Dawlish) offers three trains per hour. However, a recent picture on TV showed a train with only two carriages on the affected stretch.

Instead of this railway being a “lifeline” it is instead an extraordinarily expensive, fully working, modernised, transport museum.

Further, it is amusing to note that the money now earmarked for the flood defences in the area, amounts to perhaps £130 million or nearly 400 times less than the £50bn required for HS2, a scheme which, far from being transformational, will increase the nation’s passenger journeys by a vanishingly small 0.05%[2].

The flood defences may very well be very much more transformational than that.

Paul Withrington

Footnotes

1] ORR Data shows  First Great Western averages 140 passengers per train

[2] HS2 is now said to generates some 76,000 passengers per day, (FoI request),  corresponding to roughly 22.8 million per year.  It is only those which can be “transformational”, since all the rest exist already.   In contrast there are currently 1.5 billion passenger journeys per year by surface rail, and 43.5bn passenger journeys by all modes.  Hence, HS2’s supposed generated traffic amounts to 1.5% of all surface rail journeys and to 0.05%, or one in 2,000, of all passenger journeys. Transformational? HA, HA.