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High speed vanity projects unfit for an austere age

A critique of the HS2 project by John Kay in the FT.  It is a good and concise analysis, but it is a pity that Kay did not mention that the external costs and benefits of infrastructure schemes eventually turn up in land values. We would suggest that there is a need to refine the technques to evaluate these and develop forecasting tools. In principle this should not be difficult using multi-factorial regression analysis.

Part of the controversy surrounding HS2 has arisen because the project was evaluated using the accepted yardstick based on time saved. This makes too many assumptions to be reliable. The opposition to HS2 seized on this, criticising the proposal on the grounds that it was assumed that time spend in trains is completely wasted. In reality, if the journey can be made seated and in reasonable comfort, time on trains can be spend productively. A forecast in the change in aggregate land values would automatically take into account all such considerations, as they measure what people are willing to pay for them.

Most of the argument for HS2 is on the need for increased capacity. But even the opposition has largely missed the critical point that the cost of building, equipping and operating a high speed railway is proportional to at least the square of the running speeds. That is a consequence of the laws of physics, as applied in an engineering context.

At a conservative estimate the cost of a 200 mph railway be double that of a 100 mph one. Advocates of HS2 would have us believe that as we need extra capacity which can only be provided by building a new railway (true), it might as well be a high speed one as it will only cost a teeny-weeny bit more (false).

The optimum speed for inter-city trains in Britain is between 100 mph and 130 mph.

Faster than that leads to diminishing returns.