High speed rail
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What is the main topic discussed in this episode?
Thank you for downloading the More or Less podcast from the BBC. You can find out more about our programme on our website. But before you do that, here's Tim Harford.
Hello and welcome to the last in the present series of More or Less. As always, we'll be taking a look at the numbers flying around the news bulletins, the politicians' speeches and the world around us. This week, we settle a four-year-old bet about whether global warming has stopped, at least by one particular metric, and we'll be demystifying executive pay. And after last week's programme, we return to LottoGate. One, two, three, four, five, six.
In that order.
But first, this week the government approved the High Speed 2 rail link, a line between London and Birmingham by 2026, and later a Y-shaped extension to Manchester and Leeds by 2033. High Speed 1, by the way, was the line linking London and the Channel Tunnel. Most onlookers must be scratching their heads as both politicians and commentators have been switching all week between quoting figures for the first phase of the project and the second. But to give you a flavour, the cost of building and operating the line between Birmingham and London until the 2070s is predicted to be £27.4 billion. But the government expects to take in £13.9 billion from ticket sales. So-called economic benefits are less tangible things, such as the value of the 30 minutes saved by travellers going between London and Birmingham.
These benefits total £23.1 billion, according to HS2 Limited, the company set up by the Department for Transport to produce the business case for High Speed 2. All these numbers, incidentally, are what's called present values. Distant benefits are less valuable than imminent benefits. So to reflect this, HS2 Limited used the standard Treasury discount rate, discounting benefits by 3.5% each year. This means that overall, for each £1 that is spent on the link between Birmingham and London, the government expects £1.70 in return. Politicians and supporters often cite the figures for the full Y shape, where the government expects to get between £1.80 and £2.50 for every pound that it spends. Not everyone's impressed by these numbers.
One of the sceptics is Chris Stokes, a rail consultant who's done some number crunching for 51M, a group that campaigns against High Speed 2.
So what government is forecasting in its latest evaluation of HS2 is that traffic will double by 2037. And the key question is where these people are going to come from. A lot of it is actually what's called generated travel, where if you provide a better service, more people will travel. But will that actually happen between Birmingham and London, Manchester and London or Glasgow and London? I'm not convinced of that. And the parallel is with HS1. It was forecast that Eurostar would carry 25 million passengers a year by 2011, but actually it's 9 to 10 million. That's less than 40% of the forecast.
Well, I put this and other questions to Alison Munro, Chief Executive of HS2 Limited.
Well, clearly, you have to make some judgments about how you think things will be in the future because no one can predict with certainty over that time period. So what we do is we look at what has happened in the past. Over the last 15 years, we've seen the number of people traveling making long distance rail trips double. And over the past three years, even during the recession, we've seen the number of passengers making long distance journeys grow by 14%.
Now, the opponents of high-speed too, though, do question, I think, not those numbers, but how sustainable that trend is going to be. So Chris Stokes, for example, he says that switch to rail is not a trend that can be sustained. It's a temporary switch or a one-off switch from air travel and from road travel. And you can't just draw a straight line and expect that to continue.
Well, we haven't just drawn a straight line. With our latest updating of the numbers, we're effectively assuming that demand for travel continues to grow until 2037 and then it levels off.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–4:27
2
What are the official cost, revenue and benefit figures for the HS2 London–Birmingham phase?
4:27–11:14
3
How does HS2 convert future time savings into present value using the Treasury discount rate?
11:14–14:09
4
Why do critics dispute HS2’s passenger forecasts and how does HS1 compare?
14:09–28:19