Road versus rail: Facts sheet No 12: Costs of conversion and rates of return
Wp ref. Foebaab/email/rret
This note shows that (a) the first year rates of return from railway
conversion would be overwhelming and (b) that the cost of converting the
entire rail network would be less than £12 billion or about one sixth the
present cost of the rail modernisation programme.
A contract let by the then Department of the Environment (Contact DG 466/3)
culminated in the Hall Smith report Better Use of Railways. The second
edition was published in 1976 - a long time ago. That report attracted
vitriolic but baseless criticism, much as I have in this discussion forum.
There is then the companion volume Comments and Rejoinders in which the
critics appear, for the most part and at the politest, in a very poor light.
The main report examined the potential for converting six railway lines to
motor roads in and around London. The conclusion was that conversion would
yield first year rates of return in the range 100 to 500% (except in one
case where the return was infinite because the value of scrap and spare land
exceeded the cost of the conversion). Those very high rates of return are
hardly surprising in view of my analysis which shows rail 3 to 4 times as
expensive as, and with one quarter the capacity of, a road.
In any event I updated that report for the Public Inquiry into the WCMLM, by
factoring the time and accidents savings valuations according to their
modern equivalents and by factoring the costs by the Road Construction
Prices index. That analysis showed that benefits would rise in real terms
but that costs would fall, so strengthening the conclusions.
Comments and Rejoinders provides a useful cost summary which compares the
all in study costs of conversion with 5 actual schemes as follows where all
prices are per sq. metre and are at the price base 1973 base.
Actual Conversions: Edinburgh £10.95. Southport £ 3.73, Radnor CC 1970
£2.49, Radnor CC 1969 £2.94, Radnor CC 1968 £3.35 (Motorway Construction
standards would add about £3 per sq. metre to these costs.
Study Estimates: had the range £8.21 to £19.40 per sq. metre, implying
straight away that the study estimates were, if anything, too high.
For the WCMLM Inquiry I converted the study estimates to 1999 equivalents
using the Road Construction Price index. The range is £43-102 per sq.
metre, including all ancillary works etc. The mid range value is £72.5.
Applying that to the 32,000 km of rail network and assuming a generous 5
metre lane width yields £12 billion. Additionally I pointed out to the
Inquiry that at Southport a conversion of a railway to a 7.3 metre road in
open country was carried out for £19 per sq. metre at 1991 prices,
equivalent to £25 per sq. metre at 1999 prices, suggesting my £75 is too
high by perhaps a factor of 2. In any event the £12 billion is dwarfed by
the £70 billion now required for rail modernisation but the expenditure
would provide a track with 4 times the capacity of the rail system.
As to conversion strategy, first remember that they can lay a mile of road
surfacing in a day.
The strategy would be to stockpile materials and plant at 5 to 10 mile
intervals for a particular route. Then on Death of Rail Day the tracks
would off and replaced by a road surface in a matter of weeks. During that
period special traffic orders would be in place to enable buses, previously
procured etc. to operate reasonably in urban areas. On completion the lucky
passengers would all have seats at one third the cost etc. etc. We would
then move onto the next route. That is of course a simplification but full
project planning is beyond the scope of a discussion forum - its the winning
over of minds that takes decades.
Paul Withrington May 22nd 2002