Is the EWR Central Section a Boondoggle? A Sanity Check on its Business Case.

Whatever you think of the Nobel prize winning economist Milton Friedman, he did make some really interesting points. For example, he proposed that spending should be categorized according to a 2 by 2 box as follows^[1]:

You are the Spender	On Whom Spent	On Whom Spent
Whose Money	You	Someone Else
Yours	1	2
Someone else’s	3	4

He then goes on to give many examples of how category 1 spending is often performed much more efficiently than the other categories especially category 4. Category 4 spending can often result in a Boondoggle. This is defined by Wikipedia as “a project that is considered a waste of both time and money, yet is often continued due to extraneous policy or political motivations.”

The East West Railway Central Section (EWR CS) is definitely category 4 spending. Let’s see what we might think of it, if it were category 1.

The estimated total cost of the EWR CS rose from £1.9Bn^[2] for option A in the January 2019 consultation to £5.6Bn^[3] for the chosen option E in January 2020. That’s an increase of 295%. Little or no explanation of this increase is given in the EWR Preferred Option Report and shame on me for not questioning it. But hey, it’s someone else’s money, right?

Well, the government either pays for it out of taxation in which case we all pay for it now, or adds to the peacetime record £2 trillion public debt and our children or grandchildren pay for it. Another option is that we have a period of high inflation in which case, well we all pay for it. There is no escape from the cost and, since south Cambridgeshire is quite a wealthy area, we can expect to pay more than pro-rata of the UK population.

How much do we pay each? Well, there are public works going on all over the UK, so let’s generously attribute this to the to the population of the Oxford Cambridge Arc which is currently 3.7 million people. Let’s further assume that only half of these live in the Bedford to Cambridge section. Taking an average of 2.5 people per household then we are looking at a bill of 2 x 2.5 x 5.6e9 / 3.7e6 = £7,568 per household. Ouch! If you had the choice, would your household spend this on the railway?

The railway is being optimised for long distance trips rather than lots of stations to support commuting. I have been in the Cambridge area since the 1980s and I have been to beautiful Oxford 3 times, once by bus, once on the way back from a holiday in Wales and once by car. Milton Keynes, well, I’ve been to Ikea, but I needed to take the car to bring back the furniture. Bedford, Bicester, St. Neots, Aylesbury etc, sorry never been there.

I have worked in the Cambridge Tech sector for decades, travelled all around the world, but latterly found that much of the collaboration was by digital means. Am I typical? Well let’s look at the 2014 Atkins report which was one of the early studies underlying the East West Railway. Under the section “evidence-based conclusions” we find: 

“Poor east-west orbital connectivity in is apparent in long journey times by both rail and car and is also reflected in the very low demand at present between locations on this arc;”

This is a curious statement. They found evidence for poor demand and assumed that if they built an expressway and an east west railway then demand would grow. Probably true, but would it grow enough to pay for the costs? Atkins are a large consulting company are they at all conflicted in making an assessment for the case for the East West Railway? Anyway, it looks like a high-risk assumption to me. But hey, it’s not my money, right?

Even a back of fag packet calculation shows there’s a problem.

From https://cambridgeshireinsight.org.uk/economy/ there are very roughly 250,000 people in Cambridgeshire and Peterborough in classes of occupation who may be considered to do a lot of business travel (managers, directors and senior officials, professional occupations, assoc. prof. and tech occupations, sales and customer services from Occupation Type table).

Very generously, guess that 10% of these people would travel to Oxford or Milton Keynes etc once a month on average. This equates to a total of 25,000 trips per month (each way). 

Number of trains per month at say 4 trains an hour for 8 hours each way = 4x8x30 = 960, say 1,000 trains per month

Number of business people per train = 25.

OK there are some people travelling for leisure and other reasons as well and it doesn’t allow for potential growth over 100 years, but given that an 8-car train can take about 400 people and even if the demand calculations are out by a factor of 2, there is still a problem for such a line. 

At the very least the EWR CS should be delayed until the demand is properly estimated and publicised in a more stable economic climate (post pandemic and post Brexit).

Another piece of evidence can be found in this diagram in the National Infrastructure Commission report on the Oxford Cambridge Arc.

This diagram shows the strong demand for commuting around all the cities in the Arc. It does not demonstrate demand for travel from end to end. Meeting commuter demand is linked to supporting housing growth which is an objective of the NIC report for the development of the Arc. 

There are cheaper ways to meet commuter demand than a heavy railway such as the EWR CS. What about busways, trams and a local light railway such as the proposed Cambridge Metro?

So that you can see the disconnect in thinking here, let’s have a look at what the EWR Co.’s route option report says about the business case for the Option E decision.

“1.19  EWR Co’s analysis has concluded that when looking across these five key criteria Route E is most likely to deliver against the strategic objectives for EWR and provide the best overall value for money from government’s investment in the railway.”

There is an imagination failure. Where is the comparison with the counterfactual, do nothing assumption? Where is the comparison with other solutions to meet the need to support commuters/housing development?

Given the current (lack of) evidence presented for the EWR CS by government, it looks like a Boondoggle to me and I’d rather my £7,568 was spent on something else.

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^[1] Milton Friedman “Free to Choose” 1980, p.146

^[2] EWR Bedford to Cambridge Route Option Consultation Technical Report January 2019 §9.1, Table 3, p.40

^[3] EWR Bedford to Cambridge Preferred Route Option Report January 2020  §15.13, Table 15.4, p.100