Lucky old Philip Hammond. For all the obvious challenges at the Ministry of Defence he must be counting his blessings that is no longer having to manfully struggle on at the DfT in the face of worsening news about its flagship policy: the latest downgrading of the economic case for HS2.
A document just published shows that because of a revision over the point at which passenger growth for HS2 should be capped (i.e. regarded as having saturated) the already low BCR values need to be cut even further:
“Adjusting the cap year in this way would reduce the BCRs for both HS2 and the alternatives to HS2, including a new conventional speed line and enhancements to existing routes. For HS2, this modelling change would lead to a reduction in the BCR (excluding wider economic impacts) for the London to the West Midlands scheme of approximately 0.2. The impact on the BCR for the full Y high speed rail network (excluding wider economic impacts) is estimated to be a reduction of between roughly 0.3 and 0.4.”
That means the BCR of phase one of the scheme now becomes an officially ‘low’ 1.2 and, at worst, the BCR for the full network also tumbles to 1.2.
All of which means that Mr Hammond must be glad he doesn’t now have to act on the words he previously uttered in front of the Transport Select Committee when talking about the original benefits of HS2:
“As rail projects go, a benefit-cost ratio of 2.6 is quite reasonable. If it were to fall much below 1.5, I would certainly be putting it under some very close scrutiny.”