Chinese investors should avoid Britain's rotten egg rail project
After factoring in perceived gains and high costs against the envisaged benefits, getting on board high-speed railway may not be a good idea
According to reports last week, Chinese state companies are eager to invest in Britain's planned HS2 high-speed railway from London to Birmingham, and beyond to Manchester and Leeds.
They would be better advised to find another use for their capital. Although construction work has yet to start, HS2 shows all the signs of a classic British cock-up in the making.
One former government adviser says the arguments for building the new line smell so bad, it should called not HS2 but H2S, after the chemical formula for hydrogen sulphide, the poisonous compound that gives rotten eggs their characteristic foul stink.
Enthusiasts for the project rightly point out that Britain's existing rail network, built in the first half of the 19th century, is struggling to handle the demands now placed on it.
Even the fastest trains travel at no more than 200km/h, much the same as 40 years ago. Meanwhile at peak times overcrowding is reaching "intolerable" levels.
With passenger demand projected to increase by 2 per cent a year over the next 30 years, the existing system just won't be able to cope, say HS2's backers.
What's needed, the British government believes, is an entirely new, purpose built 350km/h high speed passenger line to reduce journey times and ease overcrowding.
This will not come cheap. The latest official estimate puts the cost at just over £50 billion (HK$639 billion).
The project's backers insist the expenditure will be worthwhile. The government estimates that over the next 35 years the new line will generate £1.40 in economic benefits for each £1 invested.
Unfortunately, there are a few problems with its methodology. First there is the cost side of the equation. Research by the World Bank suggests that officials typically understate the expense of big rail projects by 30 per cent, which explains why some government advisers are now talking about a price tag for HS2 in excess of £70 billion.
Then there are indications that the project's backers may have massively overstated HS2's likely benefits.
The government's original projections of the increase in productivity resulting from reduced journey times assumed that rail passengers are entirely unproductive while travelling.
The assumption was nonsense. With modern technology, working on a train is easy - provided of course it is not so crowded you can't get out your tablet. In any case, if it was lost productivity the government was concerned about, then instead of sinking tens of billions of pounds on a new line to knock 23 minutes off the best time between London and Birmingham, officials would be better off spending a few million to equip existing trains with fast and reliable Wi-fi connections.
Next there are questions over HS2's likely future revenues. Not only are the government's projections based on a doubling of traffic over the next 30 years, but they expect rail fares to rise at an annual rate of 1 percentage point faster than consumer inflation for the entire period.
That's an increase Britain's long-suffering rail passengers may be unwilling to accept. If fares only rise in line with inflation, the project will sustain heavy losses and fail ever to repay its capital costs.
Finally, there is the point that the project's two stated objectives - cutting journey times and relieving overcrowding - are contradictory.
Kinetic energy is proportional to the square of velocity. As a result, if you double a train's speed, you multiply its required stopping distance by four.
Running at 350km/h, HS2's trains will take roughly 5km to perform an emergency stop. Such an abrupt deceleration, however, would inflict considerable damage on the trains' breaking mechanisms and prove a distinctly unnerving experience for their passengers.
If you allow for more gentle braking over double the distance, and double that distance again to give you a comfortable margin of error, then you must keep at least 20km between your 350km/h trains in order to run a safe network. At most that means you can run 17 trains an hour.
Reduce their speed to 200km/h, however, then you only need to separate each train by 6.5km/h, which means you can operate 30 services an hour.
In other words, if HS2 is really intended to relieve congestion, its trains will run no faster than the existing services, which means there will be no benefits from reduced journey times.
So unless China's investors want to end up with rotten egg on their faces, they would be well advised to give HS2 a miss.