HS2 Questions

Examining the issues around the proposed High Speed 2 route

How does the WCML franchise debacle impact on HS2?

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The West Coast Mainline (WCML) franchise debacle has a significant impact on HS2.

 

The problem as DfT have admitted it is:
“The flaws stem from the way the level of risk in the bids was evaluated. Mistakes were made in the way in which inflation and passenger numbers were taken into account, and how much money bidders were then asked to guarantee as a result”.

 

So essentially its about risk and how to cope with it.  It’s a bigger problem now in the new franchise structure, introduced by the Coalition, because franchises are longer, typically 15 years. DfT can’t just re-feed the four different WCML bids into their model, as its their model that is bust.

 

The link between the WCML franchise and HS2 is around capacity. The claims about capacity are inconsistent.

 

First Group project a doubling in demand by 2026.  They say they can accommodate this without any more capacity on the southern part of WCML ie just the already extended 11 car Pendolinos.  They say the franchise has unused capacity and they start with just 35% seat occupancy.

 

But this leaves the opportunity in 2026 to increase capacity by extending all of the fleet to 11 car and then to 12 car (excluding Liverpool) and to rebalance first and standard class accommodation, as its standard class that suffers overcrowding, i.e. the 51m alternative.

 

In effect, the DfT are accepting that there is no need for HS2 on capacity grounds.

 

The Government has now admitted that there are fundamental problems with the way DfT evaluates projects and makes decisions. The parallels with HS2 are very relevant:

 

  • On the consultation process, by their own admission with lost responses
  • On the business case on numerous matters, such as not applying the latest forecast model, not incorporating pricing, not applying their own research into value of time, not adequately assessing rail and non rail alternatives; undervaluing landscape losses
  • On the environmental case, which led to take legal action as they have not followed the correct process.
It was only the legal action that Virgin took that led to the errors and incompetence of DfT to be exposed. Expect similar revelations as a result of our HS2 legal challenges on 3 December.

 

A further twist was revealed in an interesting article by Sue Cameron in the Telegraph today:

 

“Yet by yesterday afternoon rumours were starting to circulate in Whitehall that ministers may have been better informed about some of the details of assessing franchise bids than it first appeared. The DfT says mistakes were made in the way projections for inflation and passenger numbers were calculated. Unconfirmed reports suggest that ministers were told months ago that the method being used to forecast inflation in the West Coast bids was the same as that being used for HS2, the London-to-Birmingham high-speed rail project. There are also claims, again unconfirmed it must be stressed, that ministers were warned that if the method for calculating inflation was changed for both projects then HS2 would no longer be viable”.

 

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Written by hs2questions

October 4, 2012 at 11:07 am

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