LeedsUniWhite Institute for Transport Studies FACULTY OF EARTH AND ENVIRONMENT ITS Logo white Transport Investment Appraisal Case Studies Crossrail and High Speed Rail Chris Nash C.A.Nash@its.leeds.ac.uk LeedsUniWhite ITS Logo Black New Leeds logo green Crossrail Background • Problem •Cluster of main line termini around central London require many passengers to change on to the Underground to complete their journey •This leads to major overcrowding on the central section of Underground Lines • Solution •A new cross London tunnel connecting existing lines •First proposed in 1940s •Revived by SSRA in 2000 • • •First LeedsUniWhite ITS Logo Black New Leeds logo green Key questions •Which terminals to link? •What sort of services • - metro? -Outer suburban (Thameslink?) -Long distance LeedsUniWhite ITS Logo Black New Leeds logo green Crossrail options(SSRA (2000)) Option Variant Capital Cost (£b) NPV (£b) B/C ratio Paddington - Liv St Metro Express 2.8 2.3 4.4 4.5 2.6 3.0 Wimbledon – Liv St Metro Express 4.4 4.2 5.5 5.3 2.3 2.3 Wimbledon – Hackney Metro Express 5.3 5.3 3.5 4.1 1.7 1.8 LeedsUniWhite ITS Logo Black New Leeds logo green Which option to choose? •- Paddington – Liv St has highest BCR and lowest capital cost •- Wimbledon – Liv St has highest NPV but incremental BCR • well below 2 •- Paddington –Liv St leaves option of Wimbledon-Hackney at a later date •(Wimbledon – Liv St blocks both other routes) • • LeedsUniWhite ITS Logo Black New Leeds logo green Crossrail route map LeedsUniWhite ITS Logo Black New Leeds logo green Advantages of the Metro option •Benefits poorer inner London suburbs rather than wealthier commuter areas •High density rolling stock maximises capacity • Simpler service pattern aids reliability •(Cf Thameslink) •BUT a longer distance option may generate more revenue LeedsUniWhite ITS Logo Black New Leeds logo green Objections 1.BCR on the basis of conventional CBA marginal (1.8) 2.Very expensive if all it did was to make journeys of commuters a bit more comfortable and convenient 3.Benefits would go to property owners (Cf Jubilee Line extension to Docklands) – not a good use of taxpayers money •So 1.Were there wider economic benefits? (Venables report) 2.Could the beneficiaries be made to pay for it? LeedsUniWhite ITS Logo Black New Leeds logo green Crossrail wider economic benefits (£mPV2002) •Moves to more productive jobs 3232 •Agglomeration economies 3094 •Labour force participation 349 •Imperfect competition 486 •Total 7161 LeedsUniWhite ITS Logo Black New Leeds logo green Crossrail CBA (£mPV2002) •Time savings 12832 •Crowding 2889 •Other transport benefits 372 •Wider economic benefits 7161 •Total benefits 23254 •Total costs 13902 •Less revenues -6149 •Plus tax loss 1207 •Cost to government 8960 •BCR 2.6 (1.8 excl Wider economic benefits) LeedsUniWhite ITS Logo Black New Leeds logo green Finance •Further studies suggested •Voluntary contributions limited – free rider problems •Scope for specific value capture limited •Property values would rise generally throughout the area •So a general supplementary business rate would be a reasonable way of getting beneficiaries to pay LeedsUniWhite ITS Logo Black New Leeds logo green Funding of Crossrail •Transport for London direct funding £1.9bn •Department for Transport direct funding £4.8bn •Business Rate Supplement/borrowing £4.1bn •Sale of surplus land and property £500m •Private sector/Developer contributions £880m •Community Infrastructure Levy £300m •Network Rail £2.3b •Total £14.8b • LeedsUniWhite ITS Logo Black New Leeds logo green National Audit Office (2014) •Latest update of business case showed that growth of London had strengthened the case (BCR excluding WEIs 1.97; including WEIs 3). •On the whole and to date, the Department together with its co-sponsor Transport for London and its delivery body, Crossrail Limited, have done well to protect taxpayers’ interests in the Crossrail programme. Overall, if progress to date can be maintained, and risks managed, Crossrail is on track to achieve value for money. •But by the time NAO looked at it again in in 2019, it was running late and above budget. • LeedsUniWhite Institute for Transport Studies FACULTY OF EARTH AND ENVIRONMENT ITS Logo white C.A.Nash@its.leeds.ac.uk Appraisal of High Speed Rail Chris Nash LeedsUniWhite ITS Logo Black New Leeds logo green Outline •1. Introduction •2. Costs and demand •3. British case studies •-HS1 (London-Channel Tunnel) •-HS2 London-Birmingham-Manchester/Leeds •4. Conclusions LeedsUniWhite ITS Logo Black New Leeds logo green High Speed Rail (HSR) •A high-speed train is a train capable of reaching speeds of over 200 km/h on upgraded conventional lines and of over 250 km/h on new lines designed specifically for high speeds •(European Commission) •I will talk largely about new lines LeedsUniWhite ITS Logo Black New Leeds logo green Cost per route km of HSR projects •Mean £31m •Range £11m – 79m •Simple rural routes £11-20m •Urban routes £43-61m • High proportion of tunnel up to £79m • •Source: PWC (2016) High speed rail international benchmarking study. HS2 Ltd • LeedsUniWhite ITS Logo Black New Leeds logo green Costs and capacity •So HSR inevitably very expensive •But enormous capacity •If all trains identical, capacity of up to 18 trains per hour with 1000 seats per train. LeedsUniWhite ITS Logo Black New Leeds logo green HSR operating costs • •Depend mainly on -Rolling stock requirements -Staff requirements -Energy consumption - Maintenance costs - •Very high utilisation of assets and staff may more than offset high energy and maintenance costs (Civity, 2013) • • LeedsUniWhite ITS Logo Black New Leeds logo green Source of High Speed Rail Traffic (%) (Preston, 2017) Paris- Paris- Lyons Brussels Madrid- London- Barcelona Paris/ Brussels Plane 20 8 60 49 Train 40 47 10 12 Road Induced 11 29 34 11 10 20 19 20 LeedsUniWhite ITS Logo Black New Leeds logo green Rail Share of the rail/air market and rail station to station journey times (source Nash, 2015) Corridor Year Travel time Rail share (%) Paris–Brussels 2006 1 h 25 min 100 Paris–Lyons 1985 2 h 15 min 91 Madrid–Seville 2003 2 h 20 min 83 Brussels–London 2005 2 h 20 min 60 Tokyo–Osaka 2005 2 h 30 min 81 Madrid–Barcelona 2009 2 h 38 min 47 Paris–London 2005 2 h 40 min 66 Tokyo–Okayama 2005 3 h 16 min 57 Paris–Geneva 2003 3 h 30 min 35 Tokyo–Hiroshima 2005 3 h 51 min 47 Paris–Amsterdam 2004 4 h 10 min 45 Paris–Marseilles 2000 4 h 20 min 45 London–Edinburgh 1999 4 h 25 min 29 London–Edinburgh 2004 4 h 30 min 18 Tokyo–Fukuoka 2005 4 h 59 min 9 LeedsUniWhite ITS Logo Black New Leeds logo green Ex post appraisal of French high speed line construction Sud Est Atlant-ique Nord Inter Connec-tion Alpes Mediter-ranean Passengers in first year (m) 15.8 26.7 19.2 16.6 18.6 19.2 Social rate of return (%), IRR 30 12 5 13.8 10.6 8.1 Source: Conseil Général des Pont et Chaussées (2006) Annex 1 updated from Crozet (2013) LeedsUniWhite ITS Logo Black New Leeds logo green Ex post appraisal of Spanish high speed line construction (Betancor and Llobet, 2017) Madrid-Andalusia Madrid-Barcelona Passengers in 2013 (m) 5.5 8.0 Social return % (50 year life) 0.15 2.55 LeedsUniWhite ITS Logo Black New Leeds logo green Determinants of demand for HSR • •Population •Density •Corridors (‘string of pearls’ in Japan generates over 200m trips p.a.) •Competitive position with air and car • LeedsUniWhite ITS Logo Black New Leeds logo green High Speed 1 Map Description automatically generated LeedsUniWhite ITS Logo Black New Leeds logo green High speed 1 •Passenger traffic on HS1 2018 (m passenger trips) • •Eurostar (London –Paris/Brussels) 11m •Javelin domestic services 10m •Total 21m LeedsUniWhite ITS Logo Black New Leeds logo green Ex ante appraisal of HS1 (London to Channel Tunnel) (£millionPV) 1998 Appraisal Benefits User benefits - International Services 1,800 User benefits - Domestic Services 1,000 Road Congestion 30 Environmental benefits 90 Regeneration 500 Total Benefit 3,420 Costs 1,990 NPV 1,430 BCR 1.72 (BCR excluding regeneration benefits) 1.5 LeedsUniWhite ITS Logo Black New Leeds logo green HS2 Proposal – phases 1 and 2 need to reeaxmine HS2 documents LeedsUniWhite ITS Logo Black New Leeds logo green Options examined •East, West, Both or Y shaped network •Sifting process looked at 60 London termini and 6 routes •Stations included Old Oak Common (severe loss of user benefits compared with Central London) •Routes including M1 corridor (closer to built up area so involved a lot of demolition and/or tunnelling) •New orthodox line (200km p.a.) •Upgrading existing lines • LeedsUniWhite ITS Logo Black New Leeds logo green Journey times from London • now with HS2 •Birmingham 1:21 0:49 •Leeds 2.12 1:23 •Manchester 2.08 1.08 •Newcastle 2.52 2.19 •Edinburgh 4.23 3.38 •Glasgow 4.08 3.38 • LeedsUniWhite ITS Logo Black New Leeds logo green Passengers forecast to use HS2 (>40m p.a.) Switch from classic rail 69% New Trips 26% Modal Shift from Air 1% Modal Shift from Car 4% •Rail already dominant except for London-Scotland •So not much scope to reduce CO2 by modal shift. Likley reason why HS2 shows less diversion from other modes than any project ex ante or ex post that I have ever looked at LeedsUniWhite ITS Logo Black New Leeds logo green Pricing Policy assumed in the appraisal −Rail fares rise by RPI +1% from 2020 −HS2 fares same as conventional rail −Air fares continue to decline −Motoring costs decline as efficiency improves but no rise in fuel tax or further use of road pricing •So by 2036 in real terms: • Rail +25% • Air −30% • Car −40% • (HS2 forecasts) • LeedsUniWhite ITS Logo Black New Leeds logo green Capacity benefits •HSR route has huge capacity •Relief of capacity problems on parallel routes leading to: −Reduced overcrowding −Improved reliability −More capacity for freight •Particularly important between London and Rugby, but also approaches to Birmingham, Leeds and Manchester (part of Northern Powerhouse Rail? •How best to use capacity on the Northern part of the route? •What would happen without HS2? • LeedsUniWhite ITS Logo Black New Leeds logo green Wider economic benefits •Current appraisal method considers these only for major conurbations on the assumption of unchanged land-use : •Agglomeration benefits •Labour market benefits •Imperfect competition •The figure of £14billion is on this basis. •Graham examined whether there were further agglomeration benefits from improving inter city rail business travel? Concluded very small (£0.1bn?) due to low share of all journeys in the course of work. • LeedsUniWhite ITS Logo Black New Leeds logo green Wider economic benefits (cont’d) •Additional mechanisms (Venables, Laird and Overman, 2014). •Increases in density and city size leading to further agglomeration effects •Specialisation and economies of scale •Attraction of additional private investment •KPMG estimate £15b p.a.; but much criticism of how they separate out rail accessibility from other factors. • LeedsUniWhite ITS Logo Black New Leeds logo green Benefits and Costs of the full “Y” network PV, 2015 prices, £bn (DfT, 2020) 1 Net transport benefits 74.2 2 Wider Economic Impacts (WEIs) 20.5 3 Net benefits including WEIs 94.7 4 Capital costs 78.2 5 Renewals 5.4 6 Operating costs 25.2 7 Total costs = (4) + (5) + (6) 108.9 8 Revenues 45.4 9 Net costs to Government = (7) – (8) 63.5 10 BCR without WEIs (ratio) = (1) / (9) 1.2 11 BCR with WEIs (ratio) = (3) / (9) 1.5 • LeedsUniWhite ITS Logo Black New Leeds logo green Breakdown of benefits for HS2 (full Y network) (PV, 2015 prices, £m) (DfT, 2020) Rail user benefits 76670 Road user benefits 820 Wider Economic Impacts 20500 Reduced External Costs 810 Loss of indirect Tax -4140 Net Benefits 94660 LeedsUniWhite ITS Logo Black New Leeds logo green National Infrastructure Commission Report on rail needs in the Midlands and the North 2020 •Northern part of HS2 plus other aspirations (new line Leeds-Manchester; upgrading Sheffield-Manchester etc) not affordable •Should examine the possibility of terminating the Eastern leg of HS2 in the East Midlands and upgrading the existing line from there north •This has been adopted as part of the Integrated Rail Plan LeedsUniWhite ITS Logo Black New Leeds logo green General Conclusions 1.Rail project appraisal is complex because of the number of options to be considered (including route, rolling stock, price, quality of service) 2.May be able to modify distributive consequences by revising the scheme and how it is financed 3.Interactions between schemes complicated 4.Major uncertainties are: •-future demand (esp post Covid 19) •-wider economic benefits 1. LeedsUniWhite ITS Logo Black New Leeds logo green References •See: •National Audit Office (2014) Crossrail, London • •National Audit Office (2019) Completing Crossrail, London • •T. Worsley (2011) The Evolution of London’s Crossrail Scheme and the Development of the Department for Transport’s Economic Appraisal • Discussion Paper 27, ITF, Paris • •More information about Cross Rail may be found at www.crossrail.co.uk • • • • LeedsUniWhite ITS Logo Black New Leeds logo green References •On high speed rail in general see: •Nash, Chris (2013) When to invest in high-speed rail? OECD/ITF joint transport research centre discussion paper 2013/25 (www.oecd.org) •National Audit Office report on HS1: •NAO (2012) The completion and sale of High Speed 1. Report by the Comptroller and Auditor General, HC1834, 28 March 2012. https://www.nao.org.uk/wp-content/uploads/2012/03/10121834.pdf •HS2 Strategic Case (2013) •https://www.gov.uk/government/publications/hs2-strategic-case •Oakervee Review (2019) •https://www.gov.uk/government/publications/oakervee-review-of-hs2 • • • • • • LeedsUniWhite ITS Logo Black New Leeds logo green References CTD •DfT (2020) Full Business Case. High Speed 2 Phase One (https://www.gov.uk/government/publications/hs2-phase-one-full-business-case) •National Infrastructure Commission (2020) Rail Needs Assessment for the Midlands and the North •Rail Needs Assessment for the Midlands and the North - NIC