Mobile tech destroys the case for the HS2 £multi-beellion train set

Valuing business' travellers time - a false economy

Anecdotally, I've heard many a time that people find working on a train to be more productive than being somewhere: you can just get on with it without having to deal with the usual office interruptions. Something which, if true, would make the value of a reduction in travel times a negative.

Of course, we don't need to go that far, but the problem of the valuation of business travellers' time is at the heart of the HS2 case, whether for or against. Today the National Audit Office has released a report on it. (PDF)

The fun stuff starts at para 2.10, on page 19. In para 2.20 we get the following:

The Department’s methodology uses a simplifying assumption that time spent travelling is unproductive and business travellers will use all the time saved from faster journeys to work. While this approach is used in appraisals in other countries, it has been challenged by opponents of the High Speed 2 programme on the basis that it is unrealistic for rail travel ...

Research commissioned by the Department suggests that business travellers do work on trains for at least part of their journeys, and a proportion of the time saved from faster journeys may be used for leisure purposes. Taken alone, these findings would have the effect of reducing assessed time-saving benefits. On the other hand, the Department argues that if business travellers work on trains then reducing crowding would allow them to do more work – a benefit that is not currently assessed – and, in the long run, business travellers will use time saved from faster journeys to work.

That's what's known as changing your argument (and your evidence) after you've been found out. And yes, the essential problem really is as I've described. The value of business passengers' time is based upon surveys done in 1998-2000 or so: that is, before the introduction of all this shiny-shiny that you IT guys produce really became fully usable in a mobile environment.

And yes, this really is £12bn-odd of the so called benefits of this scheme. Write that number down to zero, as arguably one should, and it's extraordinarily difficult to see that there are any net benefits in building this particular train set.

Sure, freight congestion might be removed, commuter times might decrease, lots more people might travel, but the benefits don't seem to be enough to cover the costs of the project. We move into the “do not build” space rather than the build one. The politicians will have to go and spend £20k with Messrs. Hornby to build a model train set instead of £12bn of our cash on the fullsize version.

While the NAO report is interesting, the real problem is that none of this is new information. Andrew Gilligan wrote, back in December:

Earlier this year, The Sunday Telegraph revealed a report, suppressed by Department for Transport officials, which undermined a major plank of HS2’s business case.

Ministers have argued that less time spent on trains would benefit the economy by increasing time available for productive work. But the report said such benefits were largely “illusory,” since Wi-Fi, laptops and smartphones have made long-distance train carriages an extension of the office.

Or George Monbiot fully three years ago:

Almost all of it is money deemed to have been saved by reducing travel times. Business customers, it says, will save £17.6bn by getting there faster; leisure customers £11.1bn. Nowhere in the documents are these figures explained or justified. I spent the whole of Monday pressing the Department for Transport, asking for an explanation of how it converted time into money. The department spent eight hours of frantic searching to discover, just before 5pm, that it did indeed have a model, which it described as “frightfully complicated”.

By then my copy deadline was almost up, so I cannot tell you whether or not its consultants accounted for the fact that business travellers can work on the train, sometimes as productively as they can in the office.

And of course there have been people like me screaming in various places about this for years now.

I have to admit that I use that Monbiot piece as my clinching argument in discussions at times. George may well be a National Living Treasure to some but no one's ever going to accuse him of a deep and detailed knowledge of economics. If even George, three years ago, could see through the economic case for HS2, then we can be certain that it really is a total dog's breakfast.

There is also a much wider point to be made. I think we all agree that Google's driverless cars are going to be on the roads soon enough. Or if not Google's, then someone else's driverless cars. At which point we'll face exactly the same point over whether to build new roads or not: both scenarios, train and car, will use the same justification.

Time spent behind a car wheel right now really is dead time. Building roads to get people from A to B faster is indeed an economic benefit, then, unlike the building of train sets. But when the robot is driving the car and the passenger is fully linked up with the vehicular mobile comms then that time is no longer dead, is it? Which leaves us with the quite delicious thought that robot cars will reduce the economic case for building more roads. That isn't how anyone is thinking as yet, but it just might be, not too long from now. ®