Today brings yet another example of how the legendarily foul mouthed Paul Dacre has decided to go after the HS2 project, as Simon Jenkins’ Guardian Comment is Free piece has been reproduced in the Mail Online RightMinds section. But the reproduction has not been an exact copy of the original: a significant mistake on Benefit/Cost Ratio (BCR) has somehow crept in.
Jenkins’ Guardian piece asserts that the BCR “plummeted” last year from 3.24 to 1.6, although it did not. The BCR for the “Y Network”, which is what has just been approved by Transport Secretary Justine Greening, is 2.6, although different discount rates could see it rise well beyond 3. But even the former figure means an outlay of £30 billion would bring total benefits of £78 billion.
Moreover, the figures were arrived at using a methodology that is innately conservative: when the Jubilee Line Extension (JLE) was first assessed, it showed a BCR of 0.95, meaning that the project’s total benefits would not cover its cost. However, after completion, the BCR was re-assessed and found to be 1.75, which made it far more worthwhile.
But when the Jenkins article was reprinted in the Mail, the BCR assertion had been changed, the wording being “the benefit/cost ratio plummeted to 1.6, meaning that for every £6 spent on the project, only £1 would be gained in economic terms. Such a poor rate of return is normally enough to kill any project”. This is the most basic of mathematics fail.
If the BCR was indeed 1.6, then for each £1 spent, the benefit is £1.60. That’s a very serious misinterpretation. And, if this would “normally ... kill any project”, it fails to explain the JLE being approved with a far worse BCR. Crossrail, which Jenkins has also consistently opposed, has an estimated BCR ranging from 1.87 to 2.55, the latter using Transport for London (TfL) specific methodology.
These numbers are lower than those routinely required for road projects, and this is often cited by opponents of rail developments, but the latter will enjoy the additional direct benefit of fare revenue. Jenkins does not mention this, although he does assert that HS2 “must charge high fares”. It’s strange that someone writing with such conviction apparently cannot make the connection.
Simon Jenkins is known for his opposition to rail projects, so the lifting of his Guardian piece by Mail Online is no surprise, given that, as I’ve already noted, the Dacre press is taking an anti-HS2 line. But the apparent creative re-writing of the text to include a blatantly misleading interpretation of BCRs is totally out of order, and this blog will from hereon in be paying even closer attention to the Mail’s attack.