Great Western Coffee Shop

From Christian Wolmar in a letter to The Times (https://www.christianwolmar.co.uk/2020/07/letter-to-the-times-cut-the-bureaucracy-open-the-lines-now/)

There is nothing wrong with back-of-envelope calculations provided that they are done with care and integrity; avoiding biased assumptions as much as possible.

Unfortunately there's more than a hint of bias in Mr Wolmar's reference to the Borders Railway, as he could have chosen a number of reopenings that have not achieved the forecast demand.

While professional consultants should rightly be criticised if they use "wrongly-argued business cases", it is unfortunately true that scheme promoters are also prone to shaky assumptions and logic.

(I don't think I'm going to have many friends on this forum if I keep doing this).

Agreed on both points.

The enthusiasm for a case from an early-stage promoter can give it an optimism bias and can ignore elephants in the room.  And optimism bias and elephants can compound and breed.  Sadly, it's in human nature for someone who comes up with a good idea to turn a question from "Is this a good idea?" to "this is a good idea!" without actually addressing the question.

I have seen a number of ideas floating around of late which I scratch my head at and think "I can't see there being a case there" but  (and it's a big but) I don't have the background data and local knowledge.  Surprises happen; if I had been forced to comment on the Welsh Highland Railway 50 years ago, I would probably used words like "I can't see it happening ...." and having - as it has turned out - a faulty crystal ball.

There are quality ideas out developed on envelopes, fag packets, whiteboards.   And there are also ideas on those same media which are not only not worth the media they are written on, but are doing a dis-service to the quality developed ideas and there is a need to evaluate / sort out the wheat from the chaff.

However - I agree with much that's written suggesting that the evaluation and sorting out is done in an overkill manner - the hurdles are systems that are more complex, take longer, and cost far more than is necessary or good for the final outcome.  Think of a current example such as reopening a passenger train service to Portishead and ask "is it best overall investment to report and enquire to this degree and though these cycles?"

The GRIP process a process the ORR expects NR to work to, and yes it is bureaucratic but the railways is a complex environment to engineer within, complex legislation, regulations, performance criteria place on it by the investor, but no where near as bureaucratic as the DfT processes when they direct fund a project

GRIP is a pain in the  :o (neck  ;D ) but it would need to be replaced with something else, it does take a project from conception to completion, some stages work better than others

Consultants tend to deliver what the client expects.
from https://road.cc/content/news/cycling-live-blog-july-07-2020-275229 (https://road.cc/content/news/cycling-live-blog-july-07-2020-275229).

from https://spice-spotlight.scot/2020/02/18/the-a9-dualling-project-crucial-for-scotland/ (https://spice-spotlight.scot/2020/02/18/the-a9-dualling-project-crucial-for-scotland/)

Installing tickets gates at Bradford on avon Trowbridge and Westbury MIGHT help pay for the new Devizies Parkway.

There seem to be two general sources of frustration with GRIP: the monetary value assessment, and the number of stages a project has to be taken through with no way of saying "Case proved! Jump the next stage, call in the diggers!"

It's right to question these things, though it's always good to cite examples! Which reopenings were you thinking of?

The two biggest ones I can think of are the Borders Railway and Ebbw Vale, both of which have been far more successful than the professional consultants anticipated. This has led to constraints where value engineering based on anticipated loadings has rapidly become an obstacle to further expansion.

Eurostar was much lower than initial predictions, as was Midland Metro, though I think the general trend is for expected numbers at new lines and stations to be handsomely beaten.

Would it be a cheap shot to point out that Eurostar was not a re-opening? Probably; for many schemes so much re-engineering is required to meet modern standards that we might as well consider it to be a new railway.

This report (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/370122/Review_of_HS1_demand_forecasts.pdf), which I'll admit I only scanned over, may make interesting reading for someone with time on their hands. It looks and the demand forecasts for HS1 and attempts to assess why they were so wide of the mark. 'For all sorts of reasons' seems to be the answer!

I haven't found anything on the Midlands Metro - how far out were the forecasts for this? I note that they are still expanding this (https://www.newcivilengineer.com/latest/work-begins-on-450m-west-midlands-metro-extension-24-02-2020/), so presumably they weren't too disappointed with it...

It was forecasted at 20 million a year, but stalled for many years at 5 million after opening.  It only started picking up (as you would expect) when the terminus moved to New Street, and with many extensions and new lines planned, hopefully it will climb to 20 million eventually?

There's an interesting article here:  http://www.britishtramsonline.co.uk/midlandfarewell.html

According to Richard Faulkner and Chris Austin's 'Holding the Line', the top ten passenger re-openings by mileage are:

Nottingham-Mansfield-Worksop	28.7mi	1993-1998
Airdrie-Bathgate-Edinburgh	23.7mi	1986-2011
Ladybank-Perth	20mi	1975
Barry-Bridgend	19mi	2005
Ebbw Vale-Cardiff	18.1mi	2008
Crediton-Okehampton (Sundays only)	18mi	1997
Peterborough-Spalding	15mi	1996
Middlesbrough-Northallerton	14.3mi	1996
Wallsall-Rugeley	14mi	1989-1998
Barassie-Kilmarnock	13.3mi	1969

To this we can add 29.3mi of the Borders Railway.

Most of these involved re-introducing passenger services to freight lines. I can't help noticing that England seems rather under-represented in this league table!

How many of these, though meet Trowres' criterion of not having 'achieved the forecast demand'?

I was thinking more of this report than of any particular reopening:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/3932/demand-forecasting-report.pdf (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/3932/demand-forecasting-report.pdf)

However it does say of Ebbw Vale:

So, 780 ex-steelworkers; many looking for new jobs - and a service introduced to a more attractive destination (sorry, Newport!) than envisaged by the forecast?

As I have said before, the Benefit/Cost ratio is determined by writing the answer you want on a piece of paper, then giving that, plus £10 million, to some consultants to work backwards from, until they establish the right question. It becomes a tool to use to be able to go ahead with something - Borders - or not go ahead, as in the Bristol area tram system. In that respect, it is a political thing, deciding whether to do something or not, leading to GRIP, which decides how.

GRIP isn't political, because if Boris Johnson and Rishi Sunak announce a new railway tomorrow, they know there will have been at least three more Prime Ministers and Chancellors before the first train runs. They know also that the way things work, the opposition party that fiercely opposes the new railway plan could easily be the government party taking the credit when it comes to fruition, as happened with the Edinburgh trams. So there is more political capital to be had in making short-term decisions, leaving the inconvenient jobs like Hinkley C, Heathrow's third runway or HS2 for someone else. But ET is right - there would have to be something instead of GRIP, and it could be worse.

Bearing in mind that most of the projects will have had more than one demand forecast and some were quite a long time ago, that isn't going to be an easy question to answer. The report I quoted earlier listed 23 stations studied (i.e. for which they could find the forecasting reports!) of which 10 had outcome passenger numbers below forecast. Of the 23, nine were within +/- 20% ... demand forecasting is difficult! I would suggest, however, that the spread of figures given falls far short of supporting the idea that schemes always turn out better than forecast.

You can look ahead to all sorts of number

Your forecast
Your target
What is necessary level for it to "work"

and you can do so over all sorts of time periods and measure the numbers in all sorts of different ways

Ticket sales
Passenger numbers (not the same thing?)
Income from the service
Income from ticket sales that use the service as part of the journey
Benefits to the local community

You can also employ cheerleaders in the style of Muhammad Saeed al-Sahhaf (https://en.wikipedia.org/wiki/Muhammad_Saeed_al-Sahhaf#:~:text=He%20was%20nicknamed%20%22Comical%20Ali%22%20%28a%20wordplay%20allusion,in%20Italy%20similarly%20nicknamed%20him%20%22Al%C3%AC%20il%20Comico%22.) to big up the service once it is running. Bristol's MetroBust's propaganda department has been known to get all sniffy whenever the success of the Severn Beach line is mentioned, and continued to extol the success of its £60 million-plus busway, even when it wasn't open.

Thanks; the report makes interesting reading!

Of the 10 stations that didn't achieve their demand forecasts, the worst appears to be Newcraighall at 60% below par. Of the 13 that exceeded them, the best was Ebbw Vale Parkway at 450% over par. So whilst it's not true to say that new stations always do better than anticipated, the bell curve looks like it is centred to the right of 0%.

To check this (please bear with me and my 'O' Level standard maths) I took a simple average of the percentages in Fig.3.2: taken as a whole the reopening schemes in the report did 33% better than forecast.

Maybe that's a crude measure; percentages can be misleading. So I added up the total number of passengers forecast for all the schemes, and the actual numbers:

((5443769/5126661)*100)-100 = 6.2%

So it seems to me that whichever way you cut it, re-openings tend to do better than forecast. But I will try to avoid sloppy use of words like 'always' in future!

_{Edit: Corrected sum - RS}

Aylesbury Vale Parkway is an interesting one as it opened early in June 2009 rather than planned in 2010.  The report does gives some detail, but as it was being built to provide a station for several large house build projects nearby and it opened before most of those had been built.  The recession led to long delays on some phases of those estates, some of which have only recently been completed and usage has been strongly increasing since 2010.  That perhaps explains that one?

One thing it highlight is how difficult even those with appropriate background find it to forecast how a new station will do.  Figures can be wildly out!


Now that is a very interesting case.  When significant estate of new houses is built, there's often a pull towards getting a bus service in early so that people can use it from first occupancy, and a pull towards getting in late to reduce the early carriage of fresh air.  Best approach (IMHO) is to get the bus / train early so that people use it as they move in and don't buy a second car due to the (early) lack of public transport, which then has to compete for the market it's come to late. On that basis, thank goodness for Aylesbury Vale Parkway opening early. 

This is an argument FoSBR put to WECA with regard to Henbury. Fell on deaf ears, sadly; WECA say the BCR doesn't stack up until the houses are built.

Was there ever a better demonstration of the classic chicken and egg? Wherever the final agreed site of Henbury station is to be, it will sit sit somewhere close to one of the two worst traffic bottlenecks on routes into Bristol, and will see use from Day One. The opportunity exists at the moment to spur something off towards the obsolescent Mall without having loads of houses either side, which makes too much sense for WECA. As well as that, an initial service from Henbury could service Ashley Down, possibly Horfield / Lockleaze too, with some form of alternate stations pattern at Stapleton Road and Lawrence Hill to complement the Severn Beach line. Also, having a transport link in place could spur the builders into action in a way that the possibility of a replacement bus route next year, should First Bus survive that long, would not.. I thought WECA was supposed to be enabling things like that.

Responding to RS again:

Well, demand can't go below -100%, but it surely can go above +100%, so there is an inbuilt tendency for the arithmetic mean to be positive. However, I think your second approach is fair. Now, put that 6.2% in the context of the following statement from the 2010 report:

Now, I have two questions (neither of which would be easy to answer, but as a line of argument they might work):

1. Of the station proposals that were assessed and didn'tachieve the required BCR, how many were close enough that (say) a 20% better demand outcome would have flipped the business case to "GO"?

2. If the Wolmar approach was followed, how many of those otherwise rejected schemes would go on to be economic flops?

Having apparently become an advocate of forecasting, I think a further question is needed:
3. How much expenditure is justified on forecasting, as a percentage of the expected scheme cost?

I am not even attempting to answer that one tonight!

 :o  ???  ::)

As a capital project, the BCR is presumably evaluated over a 60-year period. Even allowing for the discounting applied to future costs and revenue, this makes it sound as if the BCR is balanced on a knife edge. (2.00001 ?).

One might enquire if the demand modelling encapsulates the higher uptake of public transport if it is provided before travel habits of new housing dwellers become established.

Since the BCR is based on discounted* costs and benefits and all the capital costs are are presumably at the start of the project, immediate benefits will have more impact on BCR than benefits in the future.  So a delay in housing will cause a delay in benefits.  However, given the parlous state of economy I wonder if a realistic discount rate (I know the treasury sets one) is being used.  If the sort of discount rate being used for calculating annuities for pensions at the moment were used the BCR might look a whole lot better.

* Discounting reduces the value of future costs and benefits in the future by a factor.  So the initial costs and benefits are not reduced the first year costs and benefits are reduced by dividing by 1 + the discount rate.  The second year costs and are reduced by dividing by the square of 1+ the discount rate etc.  So the smaller the discount rate the less the impact. 

It appears that the treasury discount rate is still at 3.5% (so 1 + discount rate is 1.035) which was set in 2003.  Much has changed in the world since 2003 DB pension valuations are typically done on a rate around 0.5% to 1% above 20 year gilt rates which are between 0% and 0.5% at the moment!  So arguably the discount rate for should be between 0.5% and 1.5%.  That would dramatically change the BCR for many schemes.

A very good point. I worked out that percentage on my way to deriving the more meaningful figure based on actual numbers, but it would probably have strengthened my argument had I not mentioned it!


If I've read this report (https://democracy.bristol.gov.uk/documents/s32875/MetroWest%20Phase%202%20Decision%20Pathway%20Report%20v19.pdf) correctly, the BCR for MetroWest 2 (which includes Henbury) is 1.88: 'Moderate Value for Money'. But the report goes on to say:


I note that of the capital cost of £54.163 million, the S106 contribution is £2.3 million plus land.

If you go for the median rather that the mean, you rise from 6.2% over to 7% over.  23 stations listed, and sorted by growth percentage, that 7% over target is in the middle.

It would be interesting to see how the growth forecasts vs reality for stations opened in the last yen years stack up.  Forecast modelling should become more accurate over time.

For errors of timing that's what I'd expect - the world is often slow to do what's predicted, especially (though not only) where railways are involved. But for other errors, I'd expect rather that they would grow with time, as the world changes in ways never foreseen and often not foreseeable.

On that basis Reading Green Park will be dead on arrival.

The forward cost of rail provision I expect means that there is little chance ever of it being provided before the demand is there from a substantial established new major development.  Perhaps a new station (or re-opening one) on an existing line is realistic but the forward cost of new or reopened rail, if funded by planning obligation payments or CIL would kill any private housing development even on a very  large scale.