HS2 London West Midlands Consultation

Transcription

1 HS2 London West Midlands Consultation Demand and Appraisal Report Report for HS2 Ltd In Association With Mott MacDonald July 2011

2 Document Control Project Title: MVA Project Number: Document Type: Directory & File Name: HS2 London - West Midlands C3A241 Report H:\Railair\C3A24100 HS2 London To West Midlands Public Consultation\Technical Documentation\Demand And Appraisal Report\ HS2 C3A241 Demand And Appriasal V8.0.Doc Document Approval Primary Author: Other Author(s): Reviewer(s): Formatted by: Tony Millward John Segal, David Jowsey John Segal, Frank Shorter, Chris Pownall JS Distribution Issue Date Distribution Comments 1 26/04/2011 MVA/MM Internal review 2 27/04/2011 HS2 Draft 3 04/05/2011 MVA/MM Internal review of update 4 23/05/2011 HS2 Final Draft 5 31/05/2011 HS2 Final 6 02/06/2011 HS2 Final with minor amendments 7 10/06/2011 HS2 Final with further amendments 8 07/07/2011 HS2 Final with further amendments This report, and information or advice which it contains, is provided by MVA Consultancy Ltd solely for internal use and reliance by its Client in performance of MVA Consultancy Ltd s duties and liabilities under its contract with the Client. Any advice, opinions, or recommendations within this report should be read and relied upon only in the context of the report as a whole. The advice and opinions in this report are based upon the information made available to MVA Consultancy Ltd at the date of this report and on current UK standards, codes, technology and construction practices as at the date of this report. Following final delivery of this report to the Client, MVA Consultancy Ltd will have no further obligations or duty to advise the Client on any matters, including development affecting the information or advice provided in this report. This report has been prepared by MVA Consultancy Ltd in their professional capacity as Consultants. The contents of the report do not, in any way, purport to include any manner of legal advice or opinion. This report is prepared in accordance with the terms and conditions of MVA Consultancy Ltd s contract with the Client. Regard should be had to those terms and conditions when considering and/or placing any reliance on this report. Should the Client wish to release this report to a Third Party for that party's reliance, MVA Consultancy Ltd may, at its discretion, agree to such release provided that: (a) MVA Consultancy Ltd's written agreement is obtained prior to such release, and (b) by release of the report to the Third Party, that Third Party does not acquire any rights, contractual or otherwise, whatsoever against MVA Consultancy Ltd and MVA Consultancy Ltd, accordingly, assume no duties, liabilities or obligations to that Third Party, and (c) MVA Consultancy Ltd accepts no responsibility for any loss or damage incurred by the Client or for any conflict of MVA Consultancy Ltd's interests arising out of the Client's release of this report to the Third Party.

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4 Contents 1 Introduction Background Purpose of Report Structure of Report 2 2 Modelling and Assumptions Introduction The HS2 Modelling Framework Recent Updates Demand Growth Assumptions Updates to Demand Forecasts Derivation of Rail Forecasts Derivation of Road Growth Derivation of GB Internal Air Demand Growth Applying the HS2 Service Specification Economic Appraisal Changes to data since 2010 work 13 3 The Demand for Transport and Context for HS Introduction Demand for Transport 16 4 Station Usage Introduction London Stations Birmingham Stations 28 5 Overall Economic Case for HS2 London West Midlands (Day 1) Introduction Passenger Demand for HS HS2 Appraisal Costs Appraisal of Benefits from HS Wider Economic Impacts of HS HS2 Value for Money 41 6 Economic Case for Extension to Manchester and Leeds (Y Network) Introduction Passenger Demand for HS HS2 Appraisal Cost Summary 50 Demand and Appraisal Report 3

5 Contents 6.4 Appraisal of Benefits from HS HS2 Value for Money 56 7 Sensitivity Tests for HS2 London West Midlands Introduction Future growth Business Value of Time Conclusions 63 Tables Table 2.1 Individual enhancements to model and where they are reported 6 Table 3.1 PLANET Long Distance: Average daily rail trips and growth, between London and city council areas 2008, 2021 and Table 4.1 Summary of average daily rail trips at Euston 23 Table 4.2 Average daily HS2 passengers by London station 25 Table 4.3 HS2 Passengers using London stations by origin/destination 27 Table 4.4 Average daily rail demand at Birmingham Stations with and without HS2 29 Table 5.1 Average daily rail demand (without HS2), between London and city council areas 2008 and Table 5.2 Increase and Source of Rail Trips (Both High Speed and Classic rail) to and from London as a Result of HS2 34 Table 5.3 HS2 Daily Demand to/from London 35 Table 5.4 Summary of HS2 costs 36 Table 5.5 Benefits of HS2 by Region and Purpose 39 Table 5.6 Benefits of High Speed 2 using DfT s Transport Appraisal and Wider Economic Impacts Guidance 41 Table 5.7 Appraisal Summary Table of HS2 42 Table 6.1 Average daily demand with and without HS2 Y network between regions in Table 6.2 Source of additional rail trips (Both High Speed and Classic rail) to and from London as a Result of HS2 Y network compared to the do-minimum. 49 Table 6.3 HS2 Y network Daily Demand to/from London 49 Table 6.4 Summary of HS2 costs for the Y network 51 Table 6.5 Benefits of HS2 by Region and Purpose 55 Table 7.1 Summary of sensitivity tests ( m NPV) 61 Table 7.2 Summary of Business Value of Time sensitivity test 63 Demand and Appraisal Report 4

6 1 Introduction 1.1 Background High Speed Two Limited was established in January 2009 to develop proposals for a new high speed railway line between London and the West Midlands and to consider the case for high speed rail services linking London, northern England and Scotland In 2009, Atkins was appointed to develop a forecasting framework for High Speed Two Limited (HS2 Ltd) to model and appraise options for high speed rail. Outputs from that study were published in March 2010 along with a suite of technical documents describing the modelling approach Following the publication of the March 2010 Command Paper, High Speed Rail, which set out the Government s support for the development of a high speed rail network, HS2 Ltd commissioned a programme of additional work to improve the robustness of the modelling and appraisal, and update assumptions underlying the forecasts to reflect political and economic changes. This additional work focussed on a number of areas: model enhancements; changes to economic forecasts and their impact on the demand for travel; policy changes e.g. regulation of rail fares, aviation policy changes; changes to underlying assumptions on supply of transport; improved cost estimates for building and operating HS2 and the revised classic line timetable; and changes to the appraisal process In this updated appraisal the timetable specification of the preferred scheme remained unchanged from the previous work, although the costs and benefits now include a link between HS1 and HS Purpose of Report This report provides details of the revised demand forecasts and appraisal for the High Speed Rail line connecting London and the West Midlands taking on board the updates to the modelling framework and revised economic forecasts. It provides revised details of the demand and the business case for HS2 between London and the West Midlands and a network beyond The assessment is based on the preferred scheme identified in the earlier work and does not reassess the specification of the scheme, e.g. station locations. It also presents an initial assessment of an extended scheme to Leeds and Manchester, and the sensitivity tests undertaken to test the robustness of the HS2 case in the light of the revised forecasts. 1 Demand and Appraisal Report 1

7 1 Introduction 1.3 Structure of Report The rest of the report has the following structure: Chapter 2 provides an overview of the demand model structure and its development, and details of any changes in assumptions and approach; Chapter 3 outlines the demand for transport and the context for HS2 Chapter 4 presents a summary of station usage; Chapter 5 presents the revised Overall Business Case for HS2 (Day 1); Chapter 6 presents the revised Business Case for Extension to Manchester and Leeds (Y network); and Chapter 7 provides details of the sensitivity tests carried out. Demand and Appraisal Report 2

8 2 Modelling and Assumptions 2.1 Introduction The HS2 demand model provides a framework for analysing the potential impacts of HS2. The structure of the framework used to assess the overall package for HS2 remains fundamentally the same as the earlier work. There have been some refinements to the modelling framework and appraisal procedures. This chapter provides a summary of the model and recent changes; more detail on the modelling approach can be found on the HS2 Ltd Website The assumptions underpinning the modelling of HS2 are key to the overall conclusions and the strength of the overall business case. This chapter sets out these assumptions, and their basis. More detail on some of these assumptions is provided in the supporting technical documentation produced by MVA / Mott MacDonald The HS2 Modelling Framework HS2 proposals have been assessed using a modelling framework known as the PLANET Long Distance Framework. The Framework was specifically developed to assess high speed rail options across the UK, including the location of stations. A brief overview of the model is presented below The framework consists of three PLANET passenger demand models together with a Heathrow airport demand model integrated into a single framework. These models are: PLANET Long Distance Model (PLD); PLANET Midlands Model (PM); PLANET South Model (PS); and Heathrow Airport Demand Model (ADM) In the integrated framework the interaction between long distance and local demand is represented The framework takes into account a wide range of impacts on travel behaviour such as journey time, train service frequency, interchange (both between modes and within modes), crowding, and station access/egress times. PLANET Long Distance (PLD) PLANET Long Distance (PLD) was derived from the PLANET Strategic Model. It is a multimodal model with rail, highway and internal air movements within Great Britain (defined below in para ) represented. It is an all day model (that is, a single timetable of journey time/ service frequency and other supply characteristics is used for the whole day, and forecasts are presented for the whole day) Demand and Appraisal Report 3

9 2 Modelling and Assumptions A station choice model (SCM) has been incorporated into this model to assess how passengers access long distance rail services in Greater London and the West Midlands. Access/egress information for the SCM is taken from local transport models in London and Birmingham; Railplan (owned by Transport for London) and PRISM (owned by Centro) respectively. Access to stations outside these areas uses the highway links represented in PLD. PLANET South (PS) PLANET South (PS) is a tool for modelling local movements on the London and South East rail network It is a morning peak period rail-only model, and includes all local services in the south of England, as well as the strategic services from other areas into London. Demand matrices for PS are adjusted to remove any demand from zones external to a cordon depicting travel within a South East, South Central and South Western cordon. To represent passengers on strategic services in PS model runs, demand is loaded onto the network at cordon points, to ensure that crowding levels are correctly represented. PLANET Midlands (PM) PLANET Midlands (PM) is similar to PLANET South, but covers a much smaller area, as the cordon used for this study is much tighter, only covering services that are local to Birmingham itself. Again it is a morning peak period rail-only model. The extent of the model only covers broadly the West Midlands county (i.e. reaching out as far as Wolverhampton and Coventry). It is a rail-only model with strategic demand passed from PLD in the form of link based pre-loads to ensure that crowding levels are correctly represented. Heathrow Airport Demand Model (ADM) Two separate air passenger markets are represented within the PLANET framework GB Internal Air Demand refers to trips made by air where the ultimate starting and finishing location are both within Great Britain (i.e. not including Northern Ireland). These are trips that could be potentially attracted to rail, and as mentioned above, are therefore included in the PLD model. They are not included in the ADM Transfer Air Demand refers specifically to passengers travelling to or from London Heathrow to catch flights to international destinations. These are represented in the Heathrow Airport Demand Model (ADM), along with long distance passengers using other modes to access Heathrow and then making international journeys starting at the airport. This is a spreadsheet model which predicts mode of access to Heathrow, and incorporates forecasts of future passenger throughput at Heathrow. 2.3 Recent Updates Following on from the initial study a programme of additional work was undertaken to improve the robustness of the modelling and appraisal. The following is a summary of the elements of the model that were enhanced: Demand and Appraisal Report 4

10 2 Modelling and Assumptions update to demand matrices to reflect changes to economic forecasts, fares and other network changes; changes to the SCM correction of certain anomalies and improvement of accuracy; and improvements to model behaviour, notably convergence Convergence in this context refers to the model taking into account the level of crowding when selecting which route passengers would choose to take; doing successive runs transferring demand between routes until it has converged. If the network is very crowded, this can result in demand switching backwards and forwards between routes from iteration to iteration, and lack of convergence; this is reflecting a network which is completely inadequate for the level of demand rather than a fault in the modelling process Table 2.1 details where each of the individual enhancements is described. Demand and Appraisal Report 5

11 2 Modelling and Assumptions Table 2.1 Individual enhancements to model and where they are reported Report Author and Title WS Atkins Modelling and Appraisal Updates and their impact on the HS2 Business Case - A Report for HS2 December 2010 MVA-Mott MacDonald Model Development and Baseline Report (This Report includes some further work undertaken by Atkins not documented in above report) April 2011 HS2 Ltd A summary of changes to the HS2 Modelling Framework April 2011 Changes implemented and documented Inclusion of business non-car available rail benefits 4 Revision of weightings of generalised journey cost components Revision of interaction between PLD and PS Updates to ADM SCM changes: - address incomplete capture of local leg benefits - application of behavioural weighting to London local leg benefits - remove double weighting of local leg time transferred to PLD - apply local leg times and station shares on a production/ attraction basis rather than O/D - revised London local leg costs for London/W. Midlands movements - disaggregate London local leg benefits for economic appraisal - add W. Midland local leg costs to non-london movements Updates to future year demand matrices to take account of: - revised short-medium term economic growth forecasts - impact of Coalition government s policy on regulated rail fares (RPI+3% for three years) - the use of DfT s unconstrained air demand forecast rather than constrained for GB internal air demand - revised forecasts for Heathrow throughput for the ADM Further changes to the SCM: - calibration of the parameter controlling users sensitivity to generalised cost - adjustments to access times to reflect the relative ease of interchange at Old Oak Common compared to Euston Changes to behavioural values of time Corrections to coding of certain rail services on the West Coast Main Line (WCML) Addressing convergence problems through changes to the dominimum scenario Changes to capital costs Changes to operating costs Changes to treatment of indirect tax Impacts of connection to HS1 Corrections to discounting 4 These changes were included in the March 2010 report. Demand and Appraisal Report 6

12 2 Modelling and Assumptions 2.4 Demand Growth Assumptions The assumptions underpinning the modelling of HS2 are key to the overall conclusions and the strength of the overall business case. The PLANET Long Distance Framework (PLD) forecasts on an incremental basis. This means it takes forecasts of demand which are calculated outside of the model and estimates the changes to demand as a result of introducing HS2. This means the demand for HS2 is heavily dependent on the assumptions underpinning the forecasts that are inputted into the model (the reference case). If there is high demand for travel (across all modes) in the reference case then there is a greater potential market for high speed rail to capture, conversely if there is low demand for travel then there is a smaller market. In general, treatment of these issues has been conservative and has followed advice on best practice, but there is also a significant degree of uncertainty PLD forecasts the future demand for high speed rail in three stages, as summarised in the diagram below. As described above, the model is an incremental demand model which means that it first requires demand in the future year reference case to be determined. These forecasts are largely exogenous (i.e. they are calculated outside PLD) and can be thought of as the growth in demand that will happen independently of HS2. This growth is driven by changes in population and employment, and in particular, individuals propensity to make more frequent and longer trips as they get richer. The model then calculates how these forecasts change given a change in journey times or cost. This process is summarised in Figure 2.1 below. Figure 2.1 PLANET Long Distance Framework Forecasting Approach 2008 data on the number of long distance road, rail and air trips Future year exogenous or background growth forecasts for road, air and rail demand The demand for HS2 calculated as a change to future year background growth Base Year Demand Data The starting point for forecasting future demand is observations on how long distance trips are currently made and distributed in the 2008 base year. Data has been collected showing the number of trips over 30 km made between each pair of zones in the model split by mode and journey purpose (leisure, commuting and business), with some additional breakdowns of whether a car is available to undertake the trip. The data has been collated from a number of different sources: data on domestic air trips has been extracted from Civil Aviation Authority survey data; this data is considered robust and is consistent with data used by the Department for Transport s aviation model.; rail trips have been derived from a combination of the LENNON ticket sales database and the National Rail Travel Survey (NRTS); NRTS has been used to understand rail travellers actual origin and destination (as opposed to the station used), and how Demand and Appraisal Report 7

13 2 Modelling and Assumptions they access and egress stations; the LENNON data is known to be robust for long distance journeys; and unfortunately there is no robust national dataset providing the origins and destinations of long distance car trips. Data on car trip matrices has therefore been derived from regional Multi-Modal Studies, with some updates using the Highway Agency s North of Thames Highway Model and the West Midlands PRISM model; while these remain the best available sources of car trip data on a national basis, the accuracy of the data still remains much weaker than that for rail or air, and considerable uncertainty remains about the accuracy of the demand matrix for this mode; the data is particularly weak for flows with origin and destination both north of the Midlands, however, these are unimportant for the forecasts of HS2 presented in this report. 2.5 Updates to Demand Forecasts There have been a number of revisions to these demand forecasts over the course of HS2 s work, primarily to account for changes in forecast economic growth as the long term effects of the recent downturn have become apparent, but also to take into account recent changes in government policy regarding regulated rail fares and airport policy Each of the PLANET models within the framework forecasts future travel behaviour by assigning input matrices of trips between different places to the transport network. These input matrices represent the total underlying market for travel, and do not take account of supply side effects, such as improvements in journey time, speed and capacity (as delivered by the WCML upgrade, for example) and constraints such as train, road and airport runway capacity. Supply side effects are applied by the model as part of the assignment process In the PLD model, separate 2008 input matrices are provided for each mode (rail, air, road - mainly car) and journey purpose. PM and PS each have a set of rail only matrices disaggregated by journey purpose Future year matrices are calculated by applying growth factors to the base year (2008) matrices different factors can be applied to different cells to represent differences in growth between different geographical markets and journey purposes Growth factors are calculated independently for each mode, using standard DfT forecasting models, with the underlying assumptions for each mode being broadly consistent. However, because each mode is treated separately, the rail demand forecasts do not, for example, take account of changes in air or car demand, although they do take account (at least in a simple way) of trends in car costs. The air forecasts do not take account of any changes in rail or car costs or times, nor do the car forecasts take any explicit account of the effect of rail journey times, or highway congestion or fuel costs The forecasts continue up to a cap year, after which there is no further growth in any mode, nor any assumed change to other factors such as rail fares; however, for appraisal purposes the value of time is assumed to increase in real terms over the 60 year appraisal period. Rather than assuming that demand grows indefinitely, applying the cap year is a proxy for the assumption that demand will eventually saturate. Demand and Appraisal Report 8

14 2 Modelling and Assumptions Matrices are calculated for two future years (referred to as modelled years ), the first year being shortly before scheme opening, and the second being the cap year. Demand for the intervening years is calculated by interpolation The following sections describe how the growth forecasts have been revised since the March 2010 report in response to updates to economic forecasts and changes to the government s fares regulation policy and airport policy. 2.6 Derivation of Rail Forecasts All forecasts of exogenous rail demand growth used in the HS2 London - West Midlands business case are based on outputs from the DfT s EDGE model EDGE applies rail demand elasticities from the Passenger Demand Forecasting Handbook (PDFH) to a range of different drivers of demand, including: economic growth (measured through GDP per capita); population growth; car ownership; and fares Note that, strictly speaking, fares are not exogenous insofar as they are within the control of the rail industry, but in practice are heavily dependent on government policy decisions regarding fares regulation, and are thus treated in a similar way to the true exogenous variables In keeping with WebTAG guidance (unit , April 2009), the exogenous (socio-economic and cross-modal) elasticities are drawn from PDFH v4.1, with fares elasticities from PDFH v4.0. The elasticity to GDP in PDFH v4.1 is a function of flow distance. For longer flows to London this can lead to implausibly high elasticities, for example 3.7 for Aberdeen to London. In line with other DfT models, the elasticity is capped at a value of 2.8, corresponding to 250 miles EDGE produces demand factors for (a) First plus Standard full-fares, (b) discounted (i.e. Reduced ) products and (c) Season tickets that, after transformation to journey purpose, are applied as uplifts to the 2008 base matrices in PLANET Long Distance (PLD), PLANET South (PS) and PLANET Midlands (PM) For the forecasts used in the March 2010 Report, demand was assumed to grow up to a cap year of Since that report, assumptions regarding two important drivers of rail demand have changed: forecasts of economic growth obtained from the Office of Budgetary Responsibility (OBR) predicted a slower recovery from the recession than in previous forecasts up to 2015, and, in agreement with DfT, WebTAG growth rates are assumed for the medium to long term; and as part of the October 2010 spending review, regulated rail fares will be permitted to rise at the faster rate of RPI+3% for the three years starting in 2012, rather than the RPI+1% rate that currently applies. Demand and Appraisal Report 9

15 2 Modelling and Assumptions Both of these changes have the effect of slowing the rate of forecast rail demand growth. Rather than retaining the 2033 cap year, HS2 Ltd took the view that demand was more likely to reach saturation at a particular level of demand, rather than at a particular point in time, so a later cap year has been determined. This cap year has been defined as the year that gives the same level of growth in rail demand in the markets most relevant to HS2 as was previously achieved by the cap year in earlier model runs. Specifically, this is measured by the total flow on the WCML immediately south of Rugby. The cap year was calculated as In addition there have been several changes to future year capacity. Notably, capacity on the East Coast Mainline (ECML) has been increased since the February 2010 work to address convergence problems. This has the impact of routing more Scotland to London demand via the ECML in the Reference case. North Wales services also have a higher capacity in the 2043 forecasts within this report to ensure service levels are not lower than the current train service specification. 2.7 Derivation of Road Growth Road demand is included in the PLD model in two ways: long distance (>30 km) road passenger demand (predominantly car) is provided in matrix format in a similar manner to rail and air (note any demand within a single zone is excluded); and in addition, a pre-load representing shorter distance traffic (<30 km) is added to the Highway network, to enable congestion on the road network to be modelled Growth in the road matrix has been forecast using TEMPRO v5.4 and the pre-load s forecast using the National Transport Model (NTM). 2.8 Derivation of GB Internal Air Demand Growth GB internal air demand refers to trips made by air where the ultimate starting and finishing location are both within Great Britain (i.e. not including Northern Ireland), which are modelled in PLD The air passenger forecasts use the DfT s SPASM forecasts which are designed to forecast air movements to/from and within Britain The SPASM air passenger forecasts used in the original implementation of the model were based on the DfT scenario s12s2, which assumed that Heathrow would have a third runway, and that Stansted would have a second runway, in place by The new Government stance on aviation policy is for no additional runways at either Heathrow or Stansted. However, in considering this issue, it was decided that it was not appropriate to constrain air demand for use in PLD. Constraining demand in the model would lead to the counter intuitive result of reducing demand for high speed rail. Those constrained off air would simply disappear from the model, and as such the available market for long distance trips would appear to be smaller. In reality if there are not enough domestic flights to meet demand, then some passengers would be unable to fly, and a significant number of air passengers would transfer to another mode, generally rail (even without high speed rail). Demand and Appraisal Report 10

16 2 Modelling and Assumptions It was felt that it was more appropriate to estimate the size of the potential market from which high speed rail might draw. A non-constrained SPASM forecast has therefore been used (DfT scenario uc_02c ) based on low economic growth (the closest available to the June 2010 GDP forecasts) for domestic air traffic. This is also consistent with the rail and highway forecasts which do not include supply side impacts SPASM forecasts growth to 2030, so the 2043 growth factors are calculated by extrapolating the growth rate between 2025 and Heathrow Airport Demand Model Update The work to update the ADM has primarily been undertaken by SKM, working with Atkins. The text in the remainder of this section has been adapted from material provided by Atkins- SKM The ADM uses forecasts of air passengers from SPASM, supplied by the Department for Transport. Specifically, it uses forecasts of passengers beginning/ending their trip with an international flight to/from Heathrow. The ADM forecasts the access mode choice to these flights, which today might be air, rail, car or other mode. It then forecasts the potential for such passengers to transfer to HS Unlike internal air demand, for the passengers accessing Heathrow, it is appropriate to use a constrained forecast, as without the flights from Heathrow, people will have to travel by another means (e.g. transferring at an airport in continental Europe) or not travel at all. These passengers do not therefore transfer to rail The s12s2 scenario used in for the March 2010 report had a total forecast throughput of 135 million air passengers (including interliners) at Heathrow in Moving to the s02 scenario reduces this number to 86 million Air passenger forecasts were received from the DfT for the s02 scenario for the years 2020 and The traffic was grown to a 2021 total using growth. By 2030, Heathrow would be operating at capacity; therefore it has been assumed that the 2030 forecast would be approximately valid for 2043 (i.e. no further growth was applied). 2.9 Applying the HS2 Service Specification The service pattern modelled is included in the HS2 report 5 and summarised in Figure 2.2. It represents an indicative outline of the possible service specification for the purposes of the demand model. 5 Demand and Appraisal Report 11

17 2 Modelling and Assumptions Figure 2.2 HS2 Service Specification each line represents one train per hour The development of the service specification is indicative to allow the development of the business case. It is a credible service plan tested against the capacity of HS2 and the WCML on which some classic compatible trains would run on. It also includes an assessment of the potential for released capacity. However it has not been subject to any degree of timetable validation or optimisation, and there is the potential for further iterations as the project develops. Any such changes would change both the costs and benefits reported The application of this specification is limited slightly by the nature of PLANET Long Distance. In particular PLANET Long Distance is an all day model, working on average capacity and demand across the whole day. However the crowding function takes account of the variation of demand across the day. For example, an average load factor of 60% across the day would imply crowding during the peaks. The model therefore applies some crowding penalty even though on average trains are not crowded The service specification is for 400m trains to run between Birmingham and London during the peak hours, with 200m trains at other times. As PLANET Long Distance is an all day model, it does not distinguish between peak and off-peak, so we have coded all trains to Birmingham as 400m trains throughout the day. Coding a mixture of 200m and 400m trains (which the model would assume to be spread across the day), would potentially over-state the level of crowding This will mean that average load factors on Birmingham trains will be slightly understated, but this is likely to provide a more representative picture of the crowding impacts on HS2, with capacity targeted over the most crowded times. Yield management would also help to spread demand and reduce crowding. Demand and Appraisal Report 12

18 2 Modelling and Assumptions 2.10 Economic Appraisal Economic appraisal for HS2 has followed DfT s transport appraisal guidance (WebTAG). The results presented in this report are all present values, discounted over 60 years (unless otherwise stated). However, the economic appraisal has deviated from this guidance in the following two areas: firstly the price reference year is 2009, and not 2002; this is a presentational change, and all present value costs and benefits can be converted to 2002 using a constant factor to allow comparison with other schemes; these adjustments do not change the BCRs; and secondly, a cap year of 2043 as described above has been applied, not the 2026 recommended in WebTAG, as the latter cap year is for more modest schemes that are assumed to be implemented in a few years These changes are necessary for analysis of specific issues relating to HS2. However the core analysis and conclusions are all based on appraisal results that are consistent with existing Government guidance Changes to data since 2010 work This section outlines and explains the key changes to the modelling results since the Atkins February 2010 Demand and Appraisal report. Additional details of changes to individual values are provided as short explanations and footnotes to the text in the subsequent chapters Base Case data Small changes and refinements to the model have resulted in slight differences in the 2008 base data reported compared to that in the February 2010 report The Airport Demand Model has been updated to include some minor enhancements, resulting in changes to the base year air matrices The Station Choice Model has been recalibrated, and now uses a spread parameter value of 0.157, instead of 0.1. The effect of increasing this parameter is that in the base model assignment, demand is more likely to travel via the lowest cost route where there is a choice Errors that affected the passing of demand between the PLD and PS models have also been corrected. This affects the amount of shorter distance PLANET South demand that is preloaded onto the PLD network, affecting demand between places such as London and Milton Keynes. The impact of this is to increase local demand between London and locations in the South East, such as Milton Keynes. This increased demand is primarily local trips so is not in scope for HS2 but as it is on routes into London Euston the corrections have resulted in a higher forecast demand for classic services at Euston compared to that forecast in the February 2010 work. Demand and Appraisal Report 13

19 2 Modelling and Assumptions 2021 Reference case forecast data A number of changes have altered the 2021 forecast data: revised economic growth forecasts taking account of the recession impact of the Coalition government s policy on regulated rail fares (RPI+3% for three years) use of DfT s unconstrained air demand forecast rather than constrained GB internal air demand changes to highway costs and behavioural values of times corrections to the coding of certain rail services on the WCML addressing convergence problems through changes to the do-minimum scenario the refinements to the to modelling framework The first two of the above had the net impact of reducing forecast rate of growth of rail demand. The other changes have had more marginal impacts Reference case forecast data The modelling work supporting the February 2010 report used 2033 as the second forecast model year, and also the point at which growth in underlying demand stops. In updating demand forecasts, HS2 have taken the view that demand in the market most relevant to HS2 (London to the West Midlands) is likely to grow up to the same overall level, but because the rate of growth is slower for the reasons outlined above, this level of demand will be achieved later This has led to the adoption of 2043 as the second model year. This year was selected so that demand on the Rugby to Coventry link of the WCML matched that previously forecast for the same link in Hence forecast demand for London to West Midlands is broadly comparable between 2043 in this report and 2033 in the February 2010 report However, revisions to economic forecasts have affected not only the overall level of economic growth, but also the distribution of growth. For example, the reductions in growth forecasts for the North West and Scotland are greater than for the West Midlands in the revised forecasts. As a consequence, the forecast 2043 rail demand between London and these areas is less than that forecast for 2033 in the previous work In addition there have been several changes to future year capacity. Notably, capacity on the East Coast Mainline (ECML) has been increased since the February 2010 work to address convergence problems 6. This has the impact of routing more Scotland to London demand via the ECML in the Reference case. Services to North Wales also have a higher capacity in the 6 The convergence issues related to how the model takes into account the level of crowding when selecting which route passengers would choose to take; doing successive runs transferring demand between routes until it has converged. If the network is very crowded, this can result in demand bouncing between routes and lack of convergence; this is reflecting a network which is completely inadequate for the level of demand rather than a fault in the modelling process. In this case the adopted solution to ensure convergence on routes to Scotland was by increasing capacity on the ECML in the base case. Demand and Appraisal Report 14

20 2 Modelling and Assumptions 2043 forecasts within this report to ensure service levels are not lower than the current train service specification The net impact of these two effects is that the demand forecasts for HS2 in this report are lower than previously. The February 2010 report estimated HS2 having a daily average weekday demand of 145,000, this report estimates this value at 136,000. Do Something Classic rail forecast demand To ensure consistency with the reference case, the additional ECML capacity and adjustment to the WCML services to North Wales identified in have also been applied to the dosomething scenario. This additional capacity means that the overall level of classic rail demand is now higher than reported in the 2010 report. In addition, corrections to the way in which demand is passed between PLANET South and PLANET Long Distance models have also resulted in higher levels of classic rail demand. This primarily affects overall local classic rail demand into and out of Euston, particularly from the South East including Milton Keynes, resulting in higher demand at Euston compared to the February 2010 work. HS2 Benefits and appraisal Slower growth in demand means that benefits also accrue at a slower rate, and reduces the overall net benefit across the appraisal period. The reduction in benefits is proportionally higher than the impact on demand because a significant proportion of benefits arise from crowding, and these benefits vary in proportion to the number of passengers in excess of train capacity, rather than the total number of passengers. Demand and Appraisal Report 15

21 3 The Demand for Transport and Context for HS2 3.1 Introduction This chapter describes how the demand for transport has changed over time and sets the context for HS2 by describing how the demand for rail travel may look like in Further information on the demand for transport can be found in the HS2 Factsheet Demand for Long Distance Travel Demand for Transport The demand for transport has grown substantially over time. As people become richer they tend to travel further and more often and, as the transport network has grown, so it has become easier to travel. The total distance travelled by passengers on all modes has grown by 36% in the last 20 years as shown in Figure 3.1. Figure 3.1 Passenger Travel (All Modes) Billion Passenger km Year Total Passenger Travel Cars, Vans and Taxis Other Source: Department for Transport (DfT) Transport Trends This growth has been driven primarily by increasing car traffic which accounts for almost 85% of the overall distance travelled. However in the last 15 years or so, there has also been rapid growth in the number of passengers, and distance travelled, on Britain s railways. 7 Demand and Appraisal Report 16

22 3 The Demand for Transport and Context for HS2 The number of passenger km on rail has increased by just over 70% during this period, compared to less than 15% for car km as shown in Figure 3.2. Figure 3.2 Total Passenger Travel by Rail Billion Passenger km Year Source: Office of the Rail Regulator (ORR) National Rail Trends Similarly, long distance trips of have been growing in line with recent trends, with an increase of more than 30% since This rapid growth is forecast to continue, with trips into and out of London being particularly important. Table 3.1 shows the growth in total journeys from 2008 after assignment of demand to the networks in the forecasting model. These form the basis of the forecasts used in determining demand for high speed rail, and summarised within this report Note that these forecasts have been updated since the March 2010 report to take into account a number of changes to assumptions, including: revised economic forecasts taking account of the recession and speed of recovery; also revised assumptions about the distribution of economic growth across the country which have generally led to lower forecast growth between London and the North West and Scotland; impact of the Coalition government s policy on regulated fares (RPI+3% for three years from 2012); and revisions to the air forecasts used to take into account the Coalition government s policies on airport expansion The net impact of these effects has been to reduce the rate of growth of demand that we are forecasting There have also been changes to improve the modelling methodology in a number of areas. The changes to both the assumptions and methodology are summarised in Section 2.11 of this report. Demand and Appraisal Report 17

23 3 The Demand for Transport and Context for HS2 Table 3.1 PLANET Long Distance: Average daily rail trips and growth, between London and city council areas 2008, 2021 and Key HS2 zone to zone % Growth 2043 % Growth movements demand demand demand Birmingham - Central London Manchester - Central London 6,600 8,200 23% 15, % 6,000 7,500 24% 14, % Leeds - Central London 4,800 5,600 18% 10, % Glasgow - Central London 900 1,200 30% 2, % Liverpool - Central London 2,400 2,900 19% 5, % Newcastle - Central London Edinburgh - Central London 2,700 3,400 26% 7, % 2,000 2,700 34% 6, % Source: MVA Model Development and Baseline Report, numbers may not add due to rounding The increases in demand on the various corridors into Central London are slightly different to those outlined in the High Speed Rail, London to West Midlands and Beyond, HS2 Demand and Model Analysis Report, of February 2010, as since that time a number of the assumptions used in the demand forecasts, in particular those relating to economic growth have been reviewed and updated. In our revised forecasts, demand grows at a slower rate, to the extent that the level of demand that was forecast on rail between London and the West Midlands for 2033 is not now forecast to be achieved until Such substantial increases in demand will increase passenger flows and crowding on the West Coast Main line (WCML). In 2008 there were approximately 46,000 long distance passengers per day using inter-city trains on the southern section of the WCML. By 2043 long distance demand on the WCML is expected to more than double. Although most Pendolino trains currently running on the WCML will have been lengthened to 11 cars, the average train loading 9 at arrival/departure at London would have increased to around 76% 10. This is an average figure, with trains during the peak times likely to have even higher loadings, many greater than 100%. 8 Definitions of zones for the cities used are different to those used in he February 2010 report so the numbers and growth rates are not directly comparable 9 Average train loading is the average all day load factor (number of passengers as a percentage or available seats) of services modelled within PLD. This includes all long distance services but excludes local and suburban services. 10 The February 2010 report stated a load factor of 80% however it is not clear where exactly this is measured. As explained in Para , demand for trips between London and West Midlands have been matched to the levels in the previous report, but growth rates on other flows using this section of the WCML (e.g. London to Manchester) have grown less slowly in our revised forecasts due to revised assumptions about the distribution of economic growth across different parts of the country. Demand and Appraisal Report 18

24 3 The Demand for Transport and Context for HS The following maps show the number of long distance trips on the WCML in 2008 (Figure 3.3) and the increase in those volumes by 2043 (Figure 3.4). Figure 3.5 shows the load factor on long distance journeys on the WCML by 2043 based on assumptions about what would happen in the future without HS2. Figure 3.3 WCML Long Distance Daily Rail Trips in Revisions to the coding of the Base Year Model have resulted in changes to corresponding diagram in the February 2010 report; see Section 2.11 for further explanation. Demand and Appraisal Report 19

25 3 The Demand for Transport and Context for HS2 Figure 3.4 WCML Long Distance Daily Rail Trips in The levels of demand in this diagram are lower than those shown in the February 2010 report due to changes in assumptions regarding the distribution of economic growth across the country. Further explanation is provided in Chapter 2. Demand and Appraisal Report 20

26 3 The Demand for Transport and Context for HS2 Figure 3.5 WCML Long Distance Load Factors in As noted in Para , our forecast demand between for 2043 is lower than the 2033 demand in the February 2010 report. While 2043 demand between London and the West Midlands (measured on the link between Rugby and Coventry) has been matched directly to the demand on this link previously reported for 2033, demand on other flows to the North West and Scotland is lower because in the latest economic forecasts, the growth of these Demand and Appraisal Report 21

27 3 The Demand for Transport and Context for HS2 areas relative to the West Midlands has reduced. As a consequence, overall demand and resulting load factors have decreased since the previous report. In addition, corrections to services from London to North Wales have increased overall capacity, further reducing load factors HS2 offers the opportunity not only to speed up journeys for passengers along the line of the WCML, but also to provide substantial additional capacity to Birmingham and on long distance trains north of Birmingham. In addition, the capacity released by HS2 can be reused to reduce crowding on short distance services into London. Demand and Appraisal Report 22

28 4 Station Usage 4.1 Introduction The earlier work defined the preferred option for the HS2 line between London and the West Midlands. A key element of that work was determining the location of stations serving HS2. This involved analysis to identify preferred station locations for: Central London; London Interchange; Central Birmingham; Birmingham Interchange; and Intermediate Stations (it was decided not to have any such stations) In producing updated forecasts the station locations identified in the earlier work have been accepted and the analysis has focussed on determining usage of the proposed stations. 4.2 London Stations Impact at London Euston The impact of HS2 at Euston is described in Table 4.1 below. Table 4.1 Summary of average daily rail trips at Euston Daily Demand 2008 Base Year 2043 Without HS With HS2 with OOC Impact of HS2 Impact of HS2 All day: National Rail Passengers using Euston Mainline AM Peak 3 hours: National Rail Passengers using Euston mainline All Day: National Rail Passengers using Euston LUL AM Peak 3 hours: National Rail Passengers using Euston LUL 57, , ,000 32,000 27% 24,000 38,000 46,000 8,900 24% 28,000 58,000 74,000 16,000 27% 15,000 23,000 29,000 5,500 24% Source: i) All Day demand from PLANET Long Distance. This represents all rail trips (both long and short distance) made on long distance trains. It excludes short distance trips made on local commuting services. ii) AM peak 3 hours demand from PLANET South. This includes all rail trips (both long and short distance) made on all services (both long and short distance). iii) LUL demand is based on survey data which show that in the morning peak 62% of Euston National Rail passengers use the Euston Underground station, the daily average figure is 50% use Euston Underground There are a number of changes in the demand at Euston compared to the February 2010 report. Firstly, the 2008 base data is slightly different and the reasons for this are described Demand and Appraisal Report 23

29 4 Station Usage in Section In Table 4.1 the Do Minimum 2043 all day demand at Euston is lower than reported in February 2010 due to changes in exogenous growth and more London Scotland demand being routed to Kings Cross on the ECML due to the increased capacity modelled on this route. Capacity was increased on the ECML to solve convergence issues within the model, see paragraphs and for further details. However, the 2043 Euston demand with HS2 is higher in Table 4.1 largely due to increased demand on residual classic services at Euston, (67,000 compared to 40,000 in the February 2010 report 11 ). The increase is due to improvements in the modelling which ensures all demand (pre-loads 12 ) is captured from PS and PLD particularly the conversion of peak demand in PS to all day demand and inclusion of pre-loads. The result is that the demand at Euston without HS2 was previously over-stated, while demand at Euston with HS2 was previously under-stated, and hence the net impact of HS2 was also previously under-stated The PLANET models indicate that in ,000 national rail passengers arrived or departed Euston Main Line Station each weekday on long distance services. In the 3 hour AM peak period from 0700 to 1000 around 24,000 passengers arrived or departed on both long distance and short distance services. Survey data demonstrates that in the peak period 62% of Euston mainline passengers use the Underground, which would correspond to around 16,000 passengers While Euston Underground station is not currently the most heavily used London Underground station, many trains passing through the station are still very crowded during the 3 hour AM peak period. The HS2 demand model (PLANET South) has been used to look at the impact of HS2 on the Underground. This model tends to overestimate the number of passengers using the Underground, in part because it does not include taxis as a mode of dispersal PLANET South suggests the most heavily crowded trains in the AM peak are southbound on Northern and Victoria lines where even now there are currently more than 2 passengers for every seat. The average loading on all London Underground services going through Euston in the 3 hour AM peak period is 138% which increases to 185% in 2043 without HS2 and 191% with HS2 if no enhancement is made to LUL services Capacity on the Northern and Victoria lines is expected to increase by around 20% (an extra 40,000 seats at Euston during the 3 hour AM peak period) by 2018, but this will not be sufficient to cater for all the growth that is forecast This increase is driven by several factors, many of which are related to growth in London s economy (which drives growth in use of the Underground network by London passengers). However, one further element is that more people will want to travel to and from national rail stations due to the high growth in national rail demand. At Euston, the number of passengers arriving or departing the station even without HS2 is forecast to grow by 100% 13 by This means that by 2043, even without HS2 there will be around 29, additional national rail passengers using the Underground network at Euston. 11 HS2 Demand Model Analysis (Feb 2010) Page Corrections to pre-loads are described in Para Lower than the 143% quoted in the February Contributory factors to this change include reduced exogenous growth and increased ECML Demand and Appraisal Report 24

30 4 Station Usage HS2 will add further demand. The central case which includes an interchange at Old Oak Common - would result in almost 147, passengers arriving at or departing from Euston each day on long distance services in 2043 an increase of 32,000 passengers compared to the case without HS2. These passengers are made up of almost 80,000 passengers using HS2 and around 67,000 using residual long distance classic rail services. This is equivalent to around 8,900 extra passengers during the course of the 3 hour AM peak period, of which 65% are likely to use the Underground network Overall analysis suggests that despite the major investment provided by the PPP, by 2043 there will be increased crowding on Underground services through Euston and it is likely further investment may be needed to manage this. The addition of HS2 will put some further pressure on the Underground network but the impact is relatively small (around 2%) compared to the total numbers of other Underground passengers travelling through Euston. Relieving Dispersal at London Euston The pressures on the Underground network at Euston have been outlined above, both with and without HS2. It also outlines the impact of HS2 at Euston in the central case including Old Oak Common. The role of the interchange in relieving pressure at Euston is now considered Table 4.2 shows the number of HS2 passengers arriving at and departing from Euston each day under each scenario. In addition to the HS2 passengers using Euston, there are approximately 67,000 passengers on the residual long distance classic rail services using Euston. Table 4.2 Average daily HS2 passengers by London station HS2 without OOC HS2 with OOC Total OOC 0 56, Total Euston 127,000 80,000 TOTAL 127, ,000 Numbers may not add due to rounding The number of HS2 passengers at London stations is overall slightly lower than reported in February 2010 due to the overall reduction in HS2 demand primarily due to lower forecast economic growth. In addition, a greater proportion of HS2 passengers are forecast to use 14 The February 2010 report refers to 10,000 additional passengers, however this is for morning 3 hour peak demand only and whereas the 29,000 additional passengers is a daily figure. Table 3.1 in this report shows that we forecast an additional 8,000 users in the 3 hour peak. 15 Higher overall demand at Euston with HS2 is due to increased demand on residual services, 67,000 compared to 40,000 in the February 2010 report. This is partly due to enhancements to the modelling framework and particularly the interaction between PLANET South and PLD 16 The February 2010 report states in Table 5.3a that 31,000 will use OOC, however this figure only refers to trips with an ultimate origin or destination in Greater London, therefore this is not comparable with the 56,000 within Table 4.2 Demand and Appraisal Report 25

31 4 Station Usage Old Oak Common as the Railplan 17 access time from all Greater London zones to Old Oak Common was reduced to better represent the convenient interchange between HS2 and Crossrail. The result of this was to increase HS2 demand at Old Oak Common compared to the February 2010 data and decrease HS2 demand at Euston by a larger amount than the overall reduction in London station HS2 demand Without a London interchange station, the number of passengers at Euston and on the Underground network would be increased. Compared to the central case (which includes Old Oak Common), there would be an additional 47,000 passengers per day using Euston and an additional 11,400 using the underground in the 3 hour AM peak period. Overall this would increase the impact of HS2 on the underground network at Euston. However even this significant growth would only represent an increase in the level of crowding on the Underground at Euston of just 5%, since Euston passengers make up a relatively small proportion of the total number of passengers on the Underground network at this point Figure 4.1 shows the forecast proportion of people accessing Euston and Old Oak Common from various zones in London. The colour green indicates that the majority of people would access Euston, blue that the majority would use Old Oak Common. Figure 4.1 Proportion of passengers choosing to use Euston and Old Oak Common by area in Greater London Source: Mott Macdonald 2011 (data represents example trips using HS2 from London to Manchester). This figure differs from the one published in the February 2010 report due to 17 Further details of adjustments to the Railplan data can be found in Appendix B of the April 2011 Model Development and Baseline Report. Demand and Appraisal Report 26

32 4 Station Usage changes to assumptions about the ease of interchange at OOC and to the modelling of station choice. Usage of Old Oak Common Station The largest market that is forecast to use HS2 is people travelling to and from locations within the Greater London area. London already dominates the rail market accounting for almost 80% of trips by rail between the wider south east and the West Midlands, North West and Scotland. This trend is forecast to continue, with over 99,000 HS2 passengers travelling to and from Greater London each day in In the central case, similar to today, around 80% of passengers on HS2 London West Midlands are travelling to and from locations in Greater London The interchange station planned at Old Oak Common would have different impacts on these passengers depending on where they are travelling to or from. Some would see improved access times as a result of the interchange station, particularly those travelling to and from West London. However those who do not use the interchange station will experience journeys that are 4 minutes longer as a result of stopping at Old Oak Common Table 4.2 also shows how many passengers using HS2 are accessing Greater London, and which HS2 station these passengers use. It suggests that a station at Old Oak Common would increase the total number of passengers travelling to and from London on HS2 compared to having no interchange. This means that the benefits of improved accessibility would more than outweigh the costs of slower journeys for those travelling on to Euston as a result of having to stop at Old Oak Common Table 4.3 shows the numbers of passengers and their origin/destination at London HS2 stations with and without Old Oak Common. Table 4.3 HS2 Passengers using London stations by origin/destination HS2 with no London Interchange HS2 with OOC to/from Greater London 102,000 99,000 to/from Heathrow to/from non-london 23,000 36,000 Total HS2 passengers using London Stations 127, ,000 Numbers may not add due to rounding The addition of Old Oak Common provides improved access for some users within London (see figure 4.1) but other users have a journey time disbenefit from the additional stop. The net impact is to slightly reduce demand on HS2 to/from Greater London. However, the Old 18 The February 2010 report refers to 1,000 daily HS2 passengers to Heathrow from Old Oak Common, this was based on a 3 runway scenario at Heathrow. The latest work assumes 2 runways at Heathrow, in line with current Government policy Demand and Appraisal Report 27

33 4 Station Usage Oak Common station provides improved access to Heathrow hence increasing demand to/from the airport and improves access for a number of locations outside of London such as Reading which has a direct interchange with HS2 at Old Oak Common 4.3 Birmingham Stations Values referred to in this section are very similar to those reported in the February 2010 report. Total 2043 demand at Birmingham stations without HS2 is the same as reported for 2033 without HS2 in February With the introduction of HS2 there are slight differences in the demand compared to February 2010 due to slightly fewer people switching to HS2, due to changes to the station choice parameter. Residual demand at New Street, Moor Street and Birmingham International are slightly higher than the February 2010 values due to improvements in the way demand is converted between Planet Midland (PM) and PLD. This is a similar issue to the transfer of demand between PS and PLD as described in section The increased demand at Birmingham classic stations compared to the February 2010 work is local trips and therefore not in scope to use HS2 services In the absence of HS2, rail demand at Birmingham New Street and Moor Street is set to grow between 2008 and 2043 by around 65%, increasing from 141,000 to 232,000 users per day. This represents boarding, alighting and interchange passengers, but not through passengers, on all short and long distance services Table 4.4 outlines the impact of HS2 at the major Birmingham Stations both classic and high speed rail. Building HS2 into Birmingham Curzon Street would see Curzon Street used by 27,000 HS2 passengers per day in 2043 in the central case. Around 25-30% 19 of these passengers would use classic rail services into New Street or Moor Street in order to access HS2 services. The rest would access Curzon Street by walking, using non rail public transport or car/taxi. The models are not detailed enough to understand the impact of HS2 on the local road or bus networks, although this issue is not considered to have a significant impact on the choice of central Birmingham station location New Street is forecast to experience a net reduction of 27,000 passengers per day which would help overcrowding at New Street as well as the surrounding local transport network. Moor Street would see a net increase of 4,000 passengers per day. The change in demand at New Street and Moor Street is driven by the following behaviours: Reduced demand as a result of passengers transferring from classic rail long distance services onto HS2 services using Curzon Street or Birmingham Interchange. Increased demand as a result of new HS2 passengers using local rail services in order to access Curzon Street. Increased demand as a result of new classic rail passengers on services on the classic rail network using capacity released by HS2. 19 The National Rail Travel Survey suggests that 30% of New Street Passengers use local rail services to access or egress the station. PLANET is forecasting 25%. Demand and Appraisal Report 28

34 4 Station Usage Table 4.4 Average daily rail demand at Birmingham Stations with and without HS2 Daily Boardings and Alightings (including interchanges) 2043 Without HS With HS2 Impact of HS2 Moor Street 20,000 24,000 4,200 New Street 212, ,000-27,000 International 26,000 16,000-10,000 HS2 Curzon Street 27,000 27,000 HS2 Birmingham Interchange 23,000 23,000 TOTAL 259, ,000 17,000 Note: This data is a combination of long distance all day demand extracted from the PLANET Long Distance model and short distance 3 hour AM peak period demand extracted from the PLANET Midlands model. A factor of 3 has been applied to convert the peak period demand to all day demand and produce total all day demand. Numbers rounded so may not add up In considering these numbers, it is important to remember that the Station Choice Model uses access times to stations in Birmingham based on highway times, and so is likely to underestimate the attractiveness of Curzon Street when compared with Birmingham Interchange. This is because Curzon Street is easier to reach by public transport than Birmingham Interchange and the Station Choice Model does not take account of public transport access. Future modelling work is intended to improve on this. Demand and Appraisal Report 29

35 5 Overall Economic Case for HS2 London West Midlands (Day 1) 5.1 Introduction Analysis that supports the decisions taken by HS2 and the overall design of the scheme has been set out within previous chapters of this report. This chapter draws together these elements to consider the strength of the economic case for the preferred scheme. It begins by setting out forecasts of demand for HS2 London West Midlands, before moving on to consider the costs and benefits of the scheme. It concludes by looking at the overall value for money, attempting to weigh the substantial financial and economic impacts against the environmental and social impacts that will also occur. 5.2 Passenger Demand for HS Chapter 2 outlines the forecast levels of the growth in demand to 2043 without HS2. This shows substantial growth in demand for long distance rail trips. Between 2008 and 2043 demand on the WCML is forecast to double, mainly driven by people s propensity to travel further and more frequently as they grow wealthier. Table 5.1 sets out the forecast change in demand without HS2 between London and the key cities that would be served by HS2. Table 5.1 Average daily rail demand (without HS2), between London and city council areas 2008 and 2043 London city council area without HS2 London - Birmingham 6,600 15,200 London - Manchester 6,000 14,900 London - Liverpool 2,400 5,500 London - Glasgow 900 2, With HS2, journeys between London and Birmingham, Manchester, Liverpool and Glasgow would be up to 30 minutes faster than current services. A new high speed line would also allow a more frequent and reliable service, with greater rail capacity provided to Birmingham (particularly in the peak) These improvements in travel time and experience would attract significant numbers of passengers onto the high speed trains. Around 136,000 would use HS2 itself which provides faster journeys to London. A further 14,000 passengers would use classic compatible trains without travelling on the high speed line itself. These journeys are between places such as the north of England and Scotland where HS2 classic compatible services replace the existing classic rail service. Demand and Appraisal Report 30

36 5 Overall Economic Case for HS2 London West Midlands (Day 1) Figures 5.1 and 5.2 show the change in long distance passenger flows when HS2 is operational and the percentage loading factors on the long distance trains along the WCML and HS2. North of Birmingham the demand for WCML and HS2 are combined as both will use the same tracks. Here significant increases in passenger flows along the WCML are evident. There would also be a significant net increase in long distance flows using the WCML and HS2 south of Birmingham. Overall the number of passengers on this corridor would increase by around 57,000. This is made up of a reduction of some 79,000 trips 20 on the WCML into London and an increase of 136,000 trips on HS2. The HS2 services would be well used with average load factors approaching 60% The demand levels shown in these two figures are generally lower than those presented in the February 2010 report due to the changes in the distribution of economic growth forecasts, with lower economic growth currently forecast for areas served by HS2 compared to those used in the February 2010 forecasts As a result of lower demand for HS2 load factors are also lower than that forecast in February Compared to Figure 3.3 load factors are lower across almost all of the WCML. On the section south of Birmingham this is because of the additional capacity of HS2 which allows long distance services from Birmingham, Manchester and Scotland to use the new line. North of Birmingham the load factor also decreases due an increase in the number of services operating on the WCML. For instance, in 2043 without HS2 there is an hourly service to Scotland. With the introduction of HS2 this service remains but there is an additional hourly service to Scotland operated by HS2 hybrid trains that can use the classic WCML and the new high speed line, HS2. Therefore, as result of the introduction of HS2 there will be more people travelling by rail between London and Scotland, but the overall level of crowding on the trains will decrease. 20 The reduction on the WCML previously stated in the February 2010 work was overstated due to inconsistencies in the way demand was passed between PLANET South and Long Distance. In addition, refinement of service frequency for WCML services between North Wales and Euston services with the introduction of HS2 added some capacity and hence demand further lowering the change. Demand and Appraisal Report 31

37 5 Overall Economic Case for HS2 London West Midlands (Day 1) Figure 5.1 Change in Long Distance Daily Rail Trips Resulting from HS2 in 2043 Demand and Appraisal Report 32

38 5 Overall Economic Case for HS2 London West Midlands (Day 1) Figure Rail Load Factors with HS2 Demand and Appraisal Report 33

39 5 Overall Economic Case for HS2 London West Midlands (Day 1) These flows represent a substantial increase in passengers, particularly over longer distances. For example the number of rail passengers travelling from Scotland to London increases by almost 45% (with over 10,000 passengers using HS2 and a reduction of around 6,000 Classic rail passengers). Flows on the WCML south of Glasgow more than double. Such substantial increases could be driven by two impacts: reductions in journey times may make rail more competitive with other modes (particularly air travel in the case of Scotland), driving modal shift; faster journeys and more access to other locations will attract more people to travel, and travel more often (trip generation) Table 5.2 shows the increase in the number of rail trips per day (both HS2 and Classic rail) to London. There is an increase of around 5,800 trips between Scotland and London (both directions). The majority of these trips (58%) would otherwise have used air to travel. Only around 2,400 of these trips are new trips that are generated by the journey time savings from HS2. Table 5.2 Increase and Source of Rail Trips (Both High Speed and Classic rail) to and from London as a Result of HS2 Daily Demand To/From London Increase in Rail Source of Additional Rail Passengers Passengers (HS and Classic) Car Air Generation Scotland 5,800 1% 58% 41% North West 11,900 8% 14% 79% West Midlands 12,300 23% 0% 77% British and international experience shows that when rail journey times reduce to about four hours, rail starts to compete strongly with air and take market share (between 25% and 30%); once rail times reduce to three hours, rail mode share typically reaches 60% or more Trip generation becomes more important for journeys over shorter distances, where air is a less important mode. These new trips account for over 75% of the increase in demand for rail travel between London and the West Midlands and North West resulting from the introduction of HS2. However, whilst trip generation is a more significant part of the increase in rail demand, Table 4.3 shows that this represents fewer than 25% of passengers on HS2. Over these distances, shift from existing classic rail services becomes a more significant factor in HS2 demand. On average around two thirds of passengers between London and the West Midlands and North West would otherwise have travelled by classic rail. 21 See Figure 4 in Demand for Long Distance Travel, Demand and Appraisal Report 34

40 5 Overall Economic Case for HS2 London West Midlands (Day 1) Table 5.3 HS2 Daily Demand to/from London Daily Demand Total HSR Source of HS2 Passengers Classic Rail Road Air Generated West Midlands 38,700 26,400 68% 2,800 7% 0 0% 9,400 24% North West 46,600 34,700 74% 900 2% 1,600 4% 9,300 20% Scotland 10,400 4,700 45% 40 0% 3,400 32% 2,400 23% Rest of the Country 22 3,300 2,400 73% 200 5% 60 2% % Total 99,000 68,000 69% 3,900 4% 5,100 5% 22,000 22% Only trips with an origin or destination in Greater London (excluding London Heathrow). Numbers have been rounded so may not add People would travel on HS2 for a range of reasons. Faster journeys would attract more business travel. Modelling suggests almost one third of HS2 passengers would be undertaking business trips, with a 10% overall increase in the number of long distance business trips as a result of HS2. The majority of passengers (70%) would be people travelling for other purposes, with leisure trips likely to be particularly important. 5.3 HS2 Appraisal Costs The costs that make up the HS2 Business Case are described in the HS2 report A Summary of Changes to the HS2 Modelling Framework April They are summarised in Table The Rest of Country demand to/from London is lower than the 9,000 daily trips reported in the February 2010 report. This is due to corrections to definitions of regions and changes in the underlying exogenous demand at a regional level 23 Demand and Appraisal Report 35

41 5 Overall Economic Case for HS2 London West Midlands (Day 1) Table 5.4 Summary of HS2 costs billion (PV 2009 discount year and prices) Capital Expenditure Construction 13,900 Renewals 1,100 Rolling Stock 2,800 TOTAL Capital Costs 17,800 Operating & Maintenance Infrastructure operations and maintenance 1,000 Rolling stock maintenance 3,300 Rolling stock traction power 3,100 Train crew 1,700 Station costs 400 Classic line cost savings -3,300 Total Operating & Maintenance Costs 6,200 TOTAL COSTS (PVC) 24,000 Source: HS2 Ltd. 5.4 Appraisal of Benefits from HS The appraisal of benefits is based on, and essentially consistent with, DfT s WebTAG appraisal guidance. Estimates of generalised costs from the HS2 demand model are used to calculate the benefits to transport users, and changes in the number of car vehicle km and air passenger movements are used to estimate the value of other impacts such as accidents, highway congestion, air quality and noise for which there are established monetary values A high speed line would offer benefits from faster, more reliable, more frequent and, in many cases, less crowded services. On this basis it is estimated that HS2 would generate benefits of some 20.7 billion (PV) and increase net rail revenues by almost 14 billion over the course of the 60 year appraisal period. Demand and Appraisal Report 36

42 5 Overall Economic Case for HS2 London West Midlands (Day 1) Over 80% ( 18.0 billion) of these benefits comes to transport users. These benefits are driven by time savings which make up 17.5 billion. The time savings accrue from a number of different benefits: - rail (in vehicle) journey time saving: 7.3 billion - rail improved reliability: 2.3 billion - rail reduced crowding: 2.6 billion - other rail impacts (such as frequency and station access benefits): 3.5 billion - road decongestion benefits: 1.8 billion These benefits are spread across much of the UK. The three largest economic centres in the country London, Birmingham and Manchester representing almost a quarter of the UK s employment, would benefit directly from the scheme. In particular connectivity between these cities would be significantly improved. The benefits would not be limited to areas directly served by HS2. Passengers from a wide catchment area would be likely to access high speed services, using both road and classic rail to access the high speed stations Figure 5.3 below shows the distribution of benefits according to where trips start. Of course where a trip starts may not represent where the benefits are experienced, but it provides some indication of who will gain as a result of HS2. Demand and Appraisal Report 37

43 5 Overall Economic Case for HS2 London West Midlands (Day 1) Figure 5.3 Benefits of HS2 by Origin of Trip in 2043 Demand and Appraisal Report 38

44 5 Overall Economic Case for HS2 London West Midlands (Day 1) Figure 5.3 shows that the benefits of HS2 accrue all along the line of the WCML. Trips starting in London, Birmingham, Manchester, Glasgow and Liverpool drive much of the benefits, reflecting the major centres of population and economic activity. However the benefits stretch all along the WCML, and are particularly clustered around stations which will be served by HS2 Classic Compatible trains, including Warrington, Preston and Crewe Table 5.5 gives the regional breakdown of benefits to long distance trips starting in different regions (looking at the benefits according to where a trip finishes would give a similar pattern of benefits). Although London accounts for the largest single share of benefits, in total well over 50% of benefits fall outside London and the South East, with significant benefits from trips starting in the West Midlands and the North West. Around one third of the benefits accrue to trips starting north of Birmingham with the North West the biggest beneficiary. Table 5.5 Benefits of HS2 by Region and Purpose Regional User Benefits Business Other London 35% 30% South East 8% 8% West Midlands 22% 27% North West 24% 22% Scotland 5% 5% Other 6% 8% TOTAL 100% 100% Business passengers would gain the most value from HS2, representing over 60% of the benefits. This is despite representing only around 30% of trips and largely reflects the high value that business users and their employers attach to having faster journeys. Other users of HS2 would also gain significantly from improved journey times, reliability, and relieved crowding delivering benefits worth over 6 billion. Benefits by Transport Mode As would be expected, the benefits would not be spread evenly across the transport modes as the vast majority of benefits are experienced by the HS2 passengers themselves. HS2 Passengers. These gains are mainly driven by improved journey times, with reliability and reduced crowding also generating significant benefits. Passengers on the Classic Line. Taking long distance journeys onto HS2 would free up capacity for more shorter distance journeys on the WCML. This would reduce crowding substantially and greater frequency would be offered on local and regional Demand and Appraisal Report 39

45 5 Overall Economic Case for HS2 London West Midlands (Day 1) services where appropriate. This is expected to deliver benefits of around 2.6 billion. Road Users. Around 11,000 long distance car trips would be likely to transfer to HS2. This would lead to a reduction in congestion but the net impact of this is relatively small. For example traffic flows on the southern section of the M1 would fall by around 1%. However across all road users, this adds up to some 1.8 billion in benefits While the majority of transport users would benefit from the introduction of HS2, some passengers could experience longer or less frequent services. For example, whilst travellers on the GWML would benefit from improved connectivity to HS2 at Old Oak Common, they would also see a slight increase in journey time to central London due to the additional stop. Also, depending on how released capacity is used on the WCML, some stations could see an increased journey time, or even a reduction in services, to London, and as more passengers use rail and underground services to access HS2 there could also be localised increases in crowding. These impacts and the disbenefits they generate have been included in the assessment of the costs and benefits of HS2, but are significantly outweighed by the larger benefits generated. They also might be minimised further through further detailed development of the classic rail timetable and train service specification. 5.5 Wider Economic Impacts of HS The benefits of HS2 considered so far have mainly been those traditionally estimated in transport appraisal such as time savings, crowding and reliability. There is an increasing volume of evidence that transport interventions can generate further benefits, mainly to the productivity of the economy. These Wider Economic Impacts (WEIs) include the benefits from improved linkages between different firms and between firms and their workers, which can lead to economies of scale, and other efficiencies. Further potential impacts may be realised if HS2 results in changes in the spatial pattern of economic activity in the UK DfT has been developing a methodology to assess the first of these WEIs for a number of years. Guidance is due to form a part of the Department s WebTAG guidance on appraisals shortly and as such will form a requirement for appraisals to assess these impacts The largest such benefits relate to what is called agglomeration benefits where many firms are closer together in terms of travel time, they operate more efficiently and there are additional benefits not captured in a traditional transport appraisal. There are also some benefits due to competition in reality not being perfect (which is an assumption underpinning traditional transport appraisal). Correcting for this can lead to additional benefits The calculations to quantify these benefits are complex and described in WebTAG Table 5.6 provides a summary of both the traditional appraisal impacts and the additional Wider Economic Impacts, as estimated using this draft guidance. Demand and Appraisal Report 40

46 5 Overall Economic Case for HS2 London West Midlands (Day 1) Table 5.6 Benefits of High Speed 2 using DfT s Transport Appraisal and Wider Economic Impacts Guidance Benefits Welfare ( m PV 2009 discount year and prices) A) Conventional Appraisal Time Savings (including crowding) Business user savings 11,100 Commuting & Leisure user savings 6,400 Other Benefits Other User Impacts (highway accidents, air quality and HS1 link) Total transport user benefits - conventional appraisal ,000 B) Wider Economic Impacts Labour Market Impacts Increase in labour force participation 0 People working longer 0 Agglomeration benefits 3,000 Imperfect competition 1,100 Additional to conventional appraisal 4,100 C) Total (excluding financing, social & environmental costs & benefits) 22, Improvements to the way in which demand is modelled in PLANET South mean that the updated WEI calculation gives a marginally higher value than in the February 2010, in contrast to User Benefits, which have decreased Section A of Table 5.6 summarises the results of the more conventional appraisal of transport user benefits outlined in WebTAG. These have been described in more detail in the previous section. Section B outlines each of the components of Wider Economic Impacts that represent additional benefits, as calculated using the draft guidance from DfT Overall Wider Economic Impacts based on DfT s draft guidance are estimated to add a further 4.1 billion (18%) to the benefits of HS HS2 Value for Money Within preceding sections, the substantial benefits and costs of HS2 have been outlined. In this section this is drawn together to consider the strength of the overall economic case, and Demand and Appraisal Report 41

47 5 Overall Economic Case for HS2 London West Midlands (Day 1) whether the benefits justify the costs. Table 5.7 summarises all of the key impacts that can easily be quantified and valued in monetary terms. Table 5.7 Appraisal Summary Table of HS2 Quantified Costs and Benefits of HS2 (PV 2009 discount year and prices) (1) Transport User Benefits Business 11.1 bn Other 6.4 bn (2) Other Benefits (excl. Carbon) 0.5 bn (3) Loss to Government of Indirect Taxes bn (4) Net Transport Benefits (PVB) = (1) + (2) + (3) 16.6 bn (5) Wider Economic Impacts (WEIs) 4.1 bn (6) Net Benefits incl WEIs = (4) + (5) 20.7 bn (7) Capital Costs 17.8 bn (8) Operating Costs 6.2 bn (9) Total Costs = (7) + (8) 24.0 bn (10) Revenues 13.7 bn (11) Net Costs to Government (PVC) = (9) (10) 10.3 bn (12) BCR without WEIs (ratio) = (4)/(11) 1.6 (13) BCR with WEIs (ratio) = (6)/(11) 2.0 Numbers may not add due to rounding The net transport benefits (shown as item 4 in the table) would be worth almost 17 bn. Benefits to business and other transport users make up the bulk of this ( 11.1 billion and 6.4 billion respectively), with small further benefits (just over 0.5 billion) from reductions in accidents, noise and air quality from lower road traffic. HS2 would reduce indirect tax revenues by 1.4 billion as a result of a reduction in the number of long distance car trips, which is counted as a disbenefit. A further 4.1 billion of benefits could be added through Wider Economic Impacts (item 5). This means the total benefits of the scheme are estimated to be 20.7bn Demand and Appraisal Report 42

48 5 Overall Economic Case for HS2 London West Midlands (Day 1) Against these benefits, the costs of high speed two are substantial. Over the 60 years of an appraisal, costs would be 24.0 billion. The bulk of these are capital costs (infrastructure and rolling stock) 17.8 billion. The remainder (about 30% of costs) are the net impact on operating costs, covering both HS2 trains and the classic network DfT consider the value for money of a scheme in terms of the value of benefits per pound of government spending. The cost of the scheme is not the same as Government spending since increasing revenues on the rail network (worth almost 14 billion) would offset the costs. The net cost to government would be 10.3 billion The Benefit Cost Ratio (BCR) is the net benefits divided by this net cost to government. On this basis the BCR would be 1.6. Adding in the Wider Economic Impacts generated by HS2 increases the BCR to 2.0. This means the scheme would deliver 2 in benefits for every 1 spent by government. Demand and Appraisal Report 43

49 6 Economic Case for Extension to Manchester and Leeds (Y Network) 6.1 Introduction This chapter considers the economic case for a high-level assessment of the Y network for HS2 to Manchester and Leeds. This is for two separate corridors one corridor direct to Manchester and then connecting on to the WCML, and the other to Leeds via the East Midlands and South Yorkshire, with stations in both areas, before connecting to the East Coast Mainline (ECML), this is known as the Y network. The Y network would serve some locations currently served by the Midland Mainline (MML). At this stage the train service operating over the HS2 network is only indicative; while it is a plausible service, no attempt has been made to optimise it either in terms of matching supply to demand or in terms of maximising the BCR This chapter begins by setting out forecasts of demand for the HS2 Y network, before moving on to consider the costs and benefits of the scheme. It concludes by looking at the overall value for money, attempting to weigh the substantial financial and economic impacts against the environmental and social impacts that will also occur. 6.2 Passenger Demand for HS We set out in Chapter 3 our view of the growth in demand to 2043 without HS2; this was shown in Table 3.1, and showed substantial growth in demand for long distance rail trips and a substantial increase in crowding on the WCML With the Y network in place, journeys between London and, Manchester, Leeds and Glasgow/Edinburgh would be up to 60 minutes faster than current services. A new high speed line would also allow a more frequent and reliable service, and provide greater rail capacity These improvements in travel time and experience would attract significant numbers of passengers onto the high speed trains. Around 297,000 would use HS2 itself which provides faster journeys to London Table 6.1 shows the change in long distance passenger numbers with and without HS2. Demand and Appraisal Report 44

50 6 Economic Case for Extension to Manchester and Leeds (Y Network) Table 6.1 regions in 2043 Average daily demand with and without HS2 Y network between To/from London 2043 Without HS With HS2 Impact of HS2 % Impact of HS2 Scotland to West Midlands 11,000 12,200 1,200 11% Scotland to London 13,000 24,000 11,000 85% North West to West Midlands North West to London Yorkshire and Humber to West Midlands Yorkshire and Humber to London 16,000 19,000 2,700 17% 43,000 60,000 17,000 40% 32,000 37,000 5,200 16% 37,000 45,000 8,000 22% These flows represent a substantial increase in passengers, particularly over longer distances. As with the Day 1 London West Midlands HS2 scheme, these will be the result of two impacts: Reductions in journey times may make rail more competitive with other modes (particularly air travel in the case of Scotland), driving modal shift; Faster journeys and more access to other locations will attract more people to travel, and travel more often (trip generation) Figures 6.2 and 6.3 show the change in long distance passenger flows when HS2 Y network is operational and the percentage load factors on the long distance trains along the WCML, ECML, MML and HS2. North of Manchester the demand for WCML and HS2 services are combined as both will use the same tracks. Here we see significant increases in passenger flows along the WCML. The same applies to the ECML north of Leeds where we all see an increased in passenger flows. There would be a significant net increase in long distance flows using the WCML/ECML/MML and HS2 south of Birmingham. Overall the number of passengers on this corridor south of Birmingham would increase by around 104,000. This is made up of a reduction of some 81,000 trips on the WCML, 15,000 trips on the MML, 43,000 trips on the ECML, all into London and an increase of 243,000 trips on HS2. Demand and Appraisal Report 45

51 Figure 6.1 HS2 Specification on Y network each line represents one train per hour Demand and Appraisal Report 46

52 Figure 6.2 Change in Long Distance Daily Rail Trips Resulting from HS2 Y Network in 2043 Note: the above diagram is intended to show the changes in volume of demand and not accurately portray the exact route the Y network will take nor the modelling links within PLD Demand and Appraisal Report

53 6 Economic Case for Extension to Manchester and Leeds (Y Network) Figure Rail Load Factors with HS2 Y Network Note: the above diagram is intended to show the load factors but not accurately portray the exact route the Y network nor the modelling links within PLD Demand and Appraisal Report 48

54 6 Economic Case for Extension to Manchester and Leeds (Y Network) Table 6.2 shows the source of the increase over the do-minimum in the number of rail trips (both HS2 and Classic rail) to London. Table 6.2 Source of additional rail trips (Both High Speed and Classic rail) to and from London as a Result of HS2 Y network compared to the do-minimum. Daily Demand To/From London Source of Additional Rail Passengers (%) Car Air Generation Scotland 1% 56% 43% North West 8% 13% 80% West Midlands 22% 0% 78% The proportions coming from each source are slightly different to those for the London-West Midlands scheme (Table 5.2), due to the bigger journey time reductions to Scotland and the North West that the Y network scheme offers, and the different way in which rates of abstraction and generation are calculated. The level of abstracted demand is a function of the journey time relative to the other mode, whereas the level of generated demand is a function of the percentage decrease in journey time of the rail mode Between Scotland and London the majority of new trips are transfer from air, with much of the remainder newly generated trips. Between the North West and London the majority of the additional rail trips are newly generated Table 6.3 shows the source of total HS2 daily demand to/from London. This indicates that for most locations the significant proportion of demand is shift from classic rail, the exception is Scotland. Table 6.3 HS2 Y network Daily Demand to/from London Daily Demand Total HSR Source of HS2 Passengers Classic Rail Road Air Generated West Midlands 40, ,000 68% 2,900 7% 0 0% 10,000 25% North West 55,000 38,000 68% 1,300 2% 2,300 4% 14,000 25% Scotland 14,000 3,600 25% 100 1% 6,000 42% 4,600 32% Rest of the Country 68,000 52,000 77% 2,100 3% 900 1% 13,000 19% Total 177, ,141 68% 6,400 4% 9,200 5% 41,000 23% 24 Daily demand between London and the West Midlands is slightly higher in the Y-network because there is an additional hourly service between London and Birmingham Interchange, which then continues to the East Midlands and Yorkshire. Demand and Appraisal Report 49

55 6 Economic Case for Extension to Manchester and Leeds (Y Network) People would travel on HS2 for a range of reasons. Faster journeys would attract more business travel. Our modelling suggests one third of HS2 passengers would be undertaking business trips, with a 20% overall increase in the number of long distance business trips as a result of HS2. The majority of passengers (62%) would be people travelling for other purposes, with leisure trips likely to be particularly important. 6.3 HS2 Appraisal Cost Summary HS2 Ltd. have used estimates of the unit cost of track in different situation (tunnel, at surface and viaduct) to provide a high level assessment of the likely costs of extending the line to Manchester and Leeds. Based on this assessment, HS2 Ltd. estimate the total infrastructure capital cost of the Y network including a link to Heathrow, would be around 32.2 billion (Quarter 3, 2009 prices), including risk allowances and optimism bias. Based on the costs estimated as part of the economic case for HS2, it is estimated that the Y network would require capital expenditure of 5.3 billion (Quarter 3, 2009 prices) for rolling stock inclusive of optimism bias. Taken together and taking account of when spending would occur, these amount to 30.4 billion in present value terms Table 6.4 below summarises all the cost items for the Y Network. Demand and Appraisal Report 50

56 6 Economic Case for Extension to Manchester and Leeds (Y Network) Table 6.4 Summary of HS2 costs for the Y network billion (PV 2009 discount year and prices) Capital Expenditure Construction 24,000 Renewals 1,700 Rolling Stock 4,500 TOTAL Capital Costs 30,400 Operating & Maintenance Infrastructure operations and maintenance 2,200 Rolling stock maintenance 6,600 Rolling stock traction power 7,500 Train crew 3,300 Station costs 600 Classic line cost savings 25-6,500 (-3,400 to -9,500) Total Operating & Maintenance Costs 13,900 (17,000 to 10,800) TOTAL COSTS (PVC) 44,300 (47,400 to 41,300) Source: HS2 Ltd. 6.4 Appraisal of Benefits from HS A high level assessment of the Y Network for HS2 has been undertaken to appraise the benefits. Significant further optimisation of both engineering design and service patterns will be undertaken before a final report is submitted by HS2 Ltd. to the Government by the end of the year. The initial assessment is calculated using a combination of detailed modelling 25 This figure includes classic line operating cost savings from the London Birmingham scheme as well the extensions to Manchester and Leeds, and hence is different from the figure in Table 2 of the Economic Case document, which is for the incremental cost saving of the extensions only. Demand and Appraisal Report 51

57 6 Economic Case for Extension to Manchester and Leeds (Y Network) and estimates extrapolated from our experience of work on HS2 London West Midlands. We express the extrapolated numbers as a range, but take a mid-point to identify a central case BCR. Estimates of generalised costs from the HS2 demand model are used to calculate the benefits to transport users, and changes in the number of car vehicle km and air passenger movements are used to estimate the value of other impacts such as accidents, highway congestion, air quality and noise for which there are established monetary values Work on the design and appraisal of the Y network is on-going, and HS2 have assessed a range of possible impacts that have not yet been included in the modelling. This is reported in Section 6.5 and the Economic Case. The following section reports the outcome of the model run on which HS2 based their assessment The Y network would deliver reduced journey times of up to an hour between some of the UK s largest cities. This, combined with greater reliability and capacity (reducing crowding levels on long distance trains across the rail network) leads us to estimate that around 240,000 passengers per day in 2043 (or 85 million passengers per year) would be expected to use the main high speed line into and out of London, with as many as 6 million air trips and 9 million road trips transferring from the road network. The Y network would generate overall benefits including Wider Economic Impacts (WEIs) of between 40 billion and 48 billion (with a mid-point of 44 billion), mainly from the time saving offered by high speed rail, compared to classic rail Our assessment is based on the model and methodology using in London to West Midlands work. The service assumptions that underpin are set out in Figure 6.1. Table 6.6 sets out the components of the benefit. The quantified benefits are 37.6 billion. This includes an estimate of the benefits from released capacity on the Midland Mainline and East Coast Mainline, both of which would otherwise see significant overcrowding by the 2030s. In order to make an estimate of these benefits, we looked at the modelled benefits from released capacity on the WCML in our London to West Midlands work, and made a deliberately cautious assumption that we would receive only half that level of benefit from released capacity on the Midland and East Coast main lines combined There are other benefits from improvements to the transport network, leading to greater efficiency in the economy as described in Section 6.5 of this report. Our modelling has shown that the proposed London to West Midlands scheme would generate Wider Economic Impacts of around 4.1 billion. We would expect the Y network to deliver further benefits. If these are in the same proportion to transport benefits for the London to West Midlands scheme, the Y network would deliver a further 4.9 billion of benefits. Indeed, the proximity of Leeds, South Yorkshire and the East Midlands may mean agglomeration benefits are stronger than those observed in the London to West Midlands scheme. However, to be prudent, for these estimates only half the proportionate benefits were taken The total user benefits are spread across much of the UK. London, Birmingham, Manchester, Leeds, South Yorkshire and the East Midlands would benefit directly from the scheme. In particular connectivity between these cities would be significantly improved. The benefits would not be limited to areas directly served by HS2. Passengers from a wide catchment area would be likely to access high speed services, using both road and classic rail to access the high speed stations. Demand and Appraisal Report 52

58 6 Economic Case for Extension to Manchester and Leeds (Y Network) Figure 6.4 below shows the distribution of benefits according to where trips start. Of course where a trip starts may not represent where the benefits are experienced, but it provides some indication of who will gain as a result of HS2. Demand and Appraisal Report 53

59 6 Economic Case for Extension to Manchester and Leeds (Y Network) Figure Benefits of HS2 by Origin of Trip in 2043 Source: Mott McDonald Demand and Appraisal Report 54