Oxera have delivered a report on HS2 which is designed to inform an inquiry into the plans.
The Transport Select Committee of the UK House of Commons commissioned Oxera to undertake an independent review of the government’s economic case for a high-speed rail programme.
The report was provided to inform the questioning by the Committee Members of those who have prepared the case during its inquiry. Covering an assessment of the scheme benefits, costs, the approach to appraisal and the appropriate comparator, this report sets out a series of questions which evidence suggests might be worthwhile for the MPs to pose to witnesses during the inquiry.
As requested by the Committee, Oxera’s review looked at the economic case only, as opposed to the full business case being considered as part of the consultation. Even within the economic case, a new cost–benefit analysis was outside the scope of the report.
Oxera’s review has highlighted that there are several aspects to the economic case for high-speed rail, including monetised and non-monetised elements. The monetised estimates are subject to uncertainty — indeed, the sensitivities published by HS2 Ltd for HS2 show a range of 0.7–2.7 for the benefit–cost ratio excluding the wider economic impacts, and this only looks at each sensitivity in isolation. The overall balance of the non-monetised impacts—which include landscape, carbon and changes in land use—is difficult to ascertain, but is likely to become more apparent as the understanding of the impacts improves over time, and as HS2 Ltd adjusts the appraisal to reflect the DfT’s revised approach to such assessments.
Oxera says the case for the High Speed Rail programme “seems to depend on whether and when the capacity is needed, the selection of the best value-for-money approach to delivering that capacity, the degree of uncertainty around the monetised benefits and costs of the preferred options, and judgements on the balance of evidence relating to non-monetised items, such as the environment and regeneration impacts (which are likely to be substantive in their own right, but are not currently fully set out in the Government’s assessment)”.