The first high-speed line France was opened in 1981 between Paris and Lyon (450 km). Since then, the high-speed network has developed radiating out from Paris (ITF, 2014[88]). SNCF Réseau, the infrastructure manager of the French railway system, operates 28 183 km of lines in service throughout all of France, of which 9% are HSR (Autorité de Régulation des Activités Ferroviaires et Routières, 2018[102]). France has the second-largest railway network in Europe, after Germany (Autorité de Régulation des Activités Ferroviaires et Routières, 2018[102]).
Supporting Better Decision‑Making in Transport Infrastructure in Spain
Infrastructure Governance Review
Rail infrastructure in France
Infrastructure governance in France
Institutional framework for transport infrastructure governance in France
The Ministry of Finance and Ministry of Transport define the network’s general directions, makes decisions on major works, and participates in the financing of projects and the renovation of the network. The strategic orientations are decided on the basis of the opinions issued by railway actors (via the Committee of Network Operators COOPERE), ART and a railway committee comprising experts.
The High Committee for the Rail Transport System (Haut Comité du système de transport ferroviaire) is responsible for informing the Government and the Parliament on the situation of the national rail infrastructure, its planning or foreseeable developments. It issues opinions taking into account legal, financial, economic, social and environmental aspects in order to propose or assess the main directions of the national strategy in the rail sector. It counts 37 representatives of the main players in the national rail transport system and is chaired by the Minister responsible for Transport (Commissariat Général à l'égalité des territoires, 2016[103]).
The French Agency for Transport Infrastructures Funding (Agence de Financement des Infrastructures de Transport de France, AFITF), created in 2004 is co-managed by the Ministry of Budget and the Ministry of Ecological Transition and takes the annual decisions regarding State financial participation in major projects. This fund is financed by earmarked resources divided into several types of taxes and contributions: the regional development tax, the national royalty (redevance domaniale), the product of radar fines, the internal consumption tax on energy products (TICPE) and the exceptional voluntary contribution of highways concessionary companies.
AFITF is a national public administrative entity with legal personality and financial autonomy (Agence de financement des infrastructures de transport de France, 2020[104]). The votes related to the budget of the Agency are subject to approval from the Minister of Transport and the Minister responsible for Budget. The creation of an Agency that is legally distinct from State budget to bring public funding to infrastructure projects had several objectives including to overcome the uncertainties of the annual budget for projects that require a multi-year approach and thus ensure the necessary continuity of long-term infrastructure funding through the allocation of sustainable resources.
Indeed, AFITF provides funding instruments with a 25-year horizon to the major transport infrastructure projects which had been decided a year earlier by an inter-ministerial committee for territorial planning and development (CIADT). This mission was extended to the financing of the plan and project contracts signed between the State and the Regions and to all the infrastructure projects considered in the Grenelle de l’Environnement programming law (Agence de financement des infrastructures de transport de France, 2020[105]).
In 2015, the French National Railway Undertaking (SNCF) and the Infrastructure Manager, Réseau Ferré de France1, were restructured into the SNCF Group2 and renamed respectively SNCF Mobilités and SNCF Réseau. SNCF Réseau is the ultimate owner and manager of the French railway network, ensuring a national perspective in network development and management.
The Transport Regulation Authority (Autorité de Régulation des Transports, ART) is an independent public authority created in 2009. It oversees the progressive opening to competition of the railway market. It guarantees that all operators have fair access to the French national rail network. The Regulator is in charge of monitoring and incentivising performance of rail infrastructure managers. It regulates the infrastructure tariffsand guarantees that access conditions are non-discriminatory and transparent. In addition ART monitor the financial trajectory of SNCF Réseau by issuing opinions about the proposed annual budget of SNCF Réseau, but also about the performance contract between the French State and SNCF Réseau and about the State subsidies granted to SNCF Réseau for investments exceeding EUR 200 million (Autorité de Régulation des Activités Ferroviaires et Routières, 2018[98]).
The French administrative regions have been entrusted with an increasing number of responsibilities related to public transport over the last years. The 13 Regional Directorates for the Environment, Planning and Housing (Directions Régionales de l'Environnement, de l'Aménagement et du Logement, DREAL) are decentralised State bodies placed under the Ministry of Ecological Transition. They ensure the monitoring, programming and financing of railway network development operations in the framework of State-Region multi-annual plan contracts (contrat pluriannuel entre l’Etat et la Région, CPER) and of major projects (Préfecture et les services de l’État en région Auvergne-Rhône-Alpes, 2015[106]; Parlement Français, 2000[107]).The CPER, which includes a mobility area, formalise the interaction between the State and the Region. The objectives of these contracts are the financial programming of actions considered to be priorities for regional planning and for the economic development of regional territory (Commissariat Général à l'égalité des territoires, 2017[108]). CPER do not include HSR investment projects. Their scope is mostly regional rail infrastructure although some investments included in the State-Regions plans may concern maintenance facilities or stations that may partially been used for high-speed train services.
Long-term strategic infrastructure plan
Long term infrastructure planning to ensure coherent development of transport networks over the long term and establish priorities for modernisation and extension (OECD/ITF, 2017[109])is a long tradition in France. In 1982, the LOTI law (Parlement Francais, 1982[110]) set the requirement to establish infrastructure master plans (schéma directeurs) at the State level in collaboration with regional authorities. The primary purpose of the master plan was to assess needs with sufficient lead time for the scale of investment involved. The first master plan for high-speed rail developed in 1991 was very ambitious, including a total of 3 442 km of high-speed lines (Gouvernement Francais, 1992[111]).
Several infrastructure master plans were adopted since then. For instance, the national transport infrastructure scheme (schéma national des infrastructures de transport, SNIT) established in 2011 was only a general orientation document defining the framework for State action in the field of transport infrastructure for the next twenty to thirty years. It was further criticised for not being sustainable. The ad hoc “Mobility 21” committee was mandated to create a national sustainable mobility scheme, without binding legal force. The committee was dissolved once its report was submitted and therefore could not follow up on its recommendations. In 2018 the Government created an Infrastructure Guidance Council (Conseil d’Orientation des Infrastructures), which issues a report providing three strategic scenarios for the development of transport infrastructure in France for the next 20 years.
Introduced by the 2014 Railway Reform Act, the ‘performance contract’ concluded between SNCF Réseau and French government (signed by Ministry of Finance and Ministry of Transport) serves as a strategic infrastructure plan for railways, along with a strategic report that is used to build this contract. It is signed for a period of 10 years (and reviewed every 3 years) and sets out the priorities of the State in terms of management and development of the network. It includes some objectives of productivity, quality and security to be achieved by SNCF Réseau, while following a financial trajectory aimed at overcoming the railway debt. The ‘performance contract’ also define the budget both for infrastructure investment and for maintenance in the railway sector. Those definitions come after an inter-ministerial arbitration process.
Two months prior to its official publication, ART receives the draft of the performance contract and issues a non-binding opinion. ART also issues non-binding opinion on the implementation of the contract each year3. In 2017, ART underlined major drawbacks among which the absence of credible commitments from both contracting parties, thus depriving the railway sector of a long-term vision - particularly vital in the prospect of the opening of the domestic market to competition (Autorité de Régulation des Activités Ferroviaires et Routières, 2017[87]).
Assessment and identification of the transport infrastructure needs
While SNCF Réseau is obviously well-placed to identify the transport infrastructure needs, key stakeholders from the railway sector (including local stakeholders, consumers, and network operators) have also the opportunity to report their needs (notably in the context of consultations led by SNCF Réseau on the performance contract)4.
The Committee of network operators COOPERE gathers clients and institutional partners around a shared objective of optimising the usage of the national railway network. The members of COOPERE have set up several working groups on various topics such as traffic prioritisation, upstream work, capacity programming, performance indicators and others5. This Committee is actively involved in helping to identify transport infrastructure needs.
Process to approve an infrastructure investment project in the railway sector
The creation of rail transport infrastructure is a long and complex process in France. Law requires the completion of several mandatory steps intended to define the project, check its relevance, ensure its acceptability, raise funding, etc (Sénat, Commission des Finances, 2016[97]).Typically, these different steps could be summarised as follow:
Preliminary assessment of the relevance of a project: identification of issues with respect to passenger transports and flows of traffics, type of infrastructure likely to best address these issues; assessment of the feasibility of the envisaged infrastructure.
Four months of public consultation, organised by the National Commission for the Public Debate (Commission Nationale du Débat Public, CNDP) giving place to a balance sheet and a report.
The project owner carries out pre-project studies (including impact assessment and socio-economic evaluation) to determine the cost of the project, as well as its technical, economic and environmental characteristics.
For the projects having started after December 2013, financed by the State and above EUR 100 million, the French legislator entrusted the General Commission for Investment (CGI) with the mission of carrying out a second independent the socio-economic evaluation (Sénat, Commission des Finances, 2016[97]).
When the project is of sufficient magnitude, a public inquiry is conducted, during which all the studies are made available for consultation to stakeholders (See France case study 2).
Once the public inquiry has been completed, the competent authority (Prime Minister for projects of national scope) may declare the project of public interest.
ART issue a non-binding opinion for all railway investment above EUR 200 million (Autorité de Régulation des Activités Ferroviaires et Routières, 2018[98]). The Regulator focuses its analysis on the financial impact of the project on SNCF Réseau and therefore act as the watchdog of the economic balance of the infrastructure manager.
France case study 1: Control of the declarations of public interest and the Poitiers-Limoges high-speed line
A very important stage in the planning and delivery of new transport infrastructure in France is securing the “declaration of public interest” (OECD/ITF, 2017[109]). In order to secure a DUP for a project, its socio-economic profitability needs to be assessed by conducting a cost-benefit analysis (CBA) developed by the Ministry of Transport. In addition, the project has to be consulted on with different stakeholders.
In matters of declaration of public interest, the French Council of State (Conseil d’Etat, highest administrative court in France) is in charge of controlling both the regularity of the procedure and the concept of public interest itself.
On the basis of the file submitted to public inquiry, the assessment by the administrative judge of the public interest of the expropriation operation consists of an independent control of the cost-benefit assessment in three stages:
check that the operation comports a goal of general interest,
check whether expropriation is necessary to carry out the operation, and finally,
check that the advantages of the operation outweigh its disadvantages, taking into account all of the public and private interests at stake.
In 2015 several associations and local authorities (municipalities, communities of municipalities or agglomeration, departments) have asked for the cancellation of the decree of 10 January 2015 by which the Prime Minister formalised the construction of the Poitiers-Limoges high-speed line. In a decision issued 15 April 2016 (Conseil d'État, 2016[112]), the Council of State granted this request of cancellation, on the basis of procedural ground and due to the insufficient public utility of the project. In its decision, the Council of State recalled the obligation to attach an economic and social evaluation to the file submitted to public inquiry to carry out large infrastructure projects.6
France case study 2: stakeholder engagement for major transport infrastructure investments
France has developed a consultation process for major transport infrastructure investments following problems with the acceptability of motorway projects and later high-speed rail lines7. Stakeholder engagement is mandatory for any transport infrastructure project with a budget from EUR 300 million or a length of more than 40 km. stakeholder engagement tends to add one year to project completion, but the ownership and quality of the projects is improved.
The extensions to the Atlantic high-speed rail line provides a good illustration of stakeholder consultations in France. The Tours-Bordeaux project involved 150 public meetings to provide information on the project from its very earliest stages and 2 000 stakeholder consultations. 500 visits to four construction sites were organised, principally for local residents, with nearly 20 000 people attending over a period of three years. Consultations resulted in modifications to the route of the line and improvements to roads in the neighbourhood of the line. They also resulted in 10% of the construction jobs on the project being reserved to local people on job creation programs and 10% of the value of construction contracts being sub-contracted to local suppliers. Stakeholder consultations also resulted in agreements on environmental protection, avoiding sensitive sites, and creating natural environments close to the line in compensation for comparable sites disturbed or destroyed. Local elected politicians have a strong role in promoting the strategic case for the project.
France case study 3: the “Golden rule”
The 2014 Railway Act and the subsequent 2017 decree prevent SNCF Réseau from investing in new rail infrastructure if it implies an increase of its level of indebtedness beyond a certain financial threshold. More precisely, if the funding of a development project by SNCF Réseau results in a ratio (MOP/debt) superior to 18, the project cannot be financed by the infrastructure manager but has to be funded from the State budget. This rule is known as the “golden rule”. The “golden rule” would apply only to “development investments”, ie to the “creation of new lines in new layout” and to their connection to the existing network (Ramspacher, 2017[113]), which, in turn, exclude the projects concerning the renewal and the maintenance of lines. In 2016, the adoption of an amendment establishing a derogation from this golden rule to authorise SNCF Réseau's financial participation in the establishment of the "Charles-de-Gaulle Express" raised harsh criticism (Sénat, 2016[114]).
France case study 4: from traditional public financing to Public Private Partnerships
The financing of the French HSR network has evolved from a traditional full public financing model (public tender) to a liberalised model that includes two different types of PPPs. The initial French TGV lines were financed mainly by SNCF debt. From 1997, all debt related to existing HSR lines was transferred to the newly established infrastructure manager, RFF (around EUR 20 billion in 1997, accounting for about 60% of SNCFs debt) while SNCF focused on the operation of these lines.France was the first country in Europe to use the Public-Private Partnership (PPP) model to finance high speed rail (HSR) investment. In 2004, a new legislation created a legal framework for Public Private Partnerships8. In 20069, modifications to the existing legislation allowed the railway infrastructure manager to enter into PPPs and contribute financially to the projects. Two main PPP models have since been adopted in French HSR: partnership and concession10. Four public-private partnerships have been concluded and launched between 2010 and 2012, including Liséa (Vinci Group), for the construction of the South Europe-Atlantic high-speed railway line (LGV SEA); Ere (Eiffage Group), for the construction of the LGV high-speed Brittany-Loire line; and Oc’Via (Bouygues Group), for the construction of the Nîmes-Montpellier bypass. France has the largest PPP program in Europe, accounting for about 57% of the total PPP investment in HSR across all European countries (European Court of Auditors, 2018[75]).
France case study 5: HSR LISEA
The high-speed train line covering Tours-Bordeaux was financed by PPP between SNCF Réseau and LISEA (Vinci group). Signed in 2011, this was the first railway concession contract in France. A 303-kilometre HSR line connecting Tours and Bordeaux, the LGV Sud Europe Atlantique (SEA) was the largest Greenfield HSR project in Europe, with an estimated cost of EUR 7.8 billion, reducing the travel time between Paris and Bordeaux from 3 hours to 2h05.
With the improved accessibility, this line carried about 20 million passengers over the year 2018. In the concession model, the private sector investor collects access charges from railway operators who use the infrastructure asset. These access charges pay for the operational costs of the line, in addition to providing for a return on the private investment. Since access fees are rarely enough to provide a return on the whole investment, RFF (now SNCF Réseau), regional authorities and the national government must fund part of the investment. In this concession model, on the one hand, the concessionaire takes on the risks of project construction, financing, and operation, and on the other hand, LISEA, the concessionaire, depreciated its investments via charges paid directly by rail operators who use the line.
Rail infrastructure in Germany
Germany’s first high-speed lines, served by “Intercity Express” (ICE) trains, opened in the early 1990s. The Railway Reform (Bahnreform) came into effect on 1 January 1994, when the State railways Deutsche Bundesbahn and Deutsche Reichsbahn were reunited to form the current German Railway Corporation, DB.
The HSR network extends over 4 000 km. Trains can reach maximum speeds of 300 km/h (ECA, 2018). In Germany, high-speed rail accounts for one-third of all rail passenger traffic (in passenger-kilometres). Even though Germany has built a few long HSR sections, the latter are more integrated into the conventional rail system than in other European countries such as Spain.
At the infrastructure level, DB Netz is the main infrastructure manager. At the service level, Deutsche Bahn lost its monopoly status in 1996. Following the liberalisation of the German railway market, DB railway undertakings faced ever-growing competition from other railway undertakings in the following years. Its share in short distance passenger railway market has dropped to 74% (for the year 2017), and in the rail freight market it dropped to 49% (for the year 2018). Five types of railway undertakings exist in Germany: federally owned railway undertakings, privately held railway undertakings, railway undertakings owned by Germany’s federal states or local authorities, and incumbent railway companies from other EU member states, either directly or through subsidiaries as well as non-incumbent foreign rail freight companies. As of October 2017, there were 448 railway operators registered in Germany, of which about 30 are long-distance operators.
Infrastructure governance in Germany
Institutional framework for transport infrastructure governance in Germany
In Germany, transport infrastructure budget is attached to the federal budget. The Federation is responsible for upgrade and replacement investment of the network of Federal railways11. Maintenance is made by the infrastructure manager (Federal Ministry of Justice and Consumer Protection, 1993[115]).The federal states, as per statutory requirements, are responsible for local public transport.
The Federation provides funds12 to the federal states and local authorities that decides on the use of these funds.
The Railways Directorate-General within the Ministry of Transport and Digital Infrastructure (BMVI) is responsible for all issues relating to rail transport. It addresses political, legal and technical questions related to the railways and develops the regulatory framework for rail passenger transport and for investment in rail infrastructure. The decision-making process for the investment framework is developed and co-ordinated within the Railways Directorate-General.
BMVI develops strategic policies to ensure that federal transport infrastructure planning is demand-responsive and projects are delivered on budget, on schedule, with comprehensive stakeholders participation, and taking into account environmental impact (Federal Ministry of Transport and Digital Infrastructure, 2020[116]).
The Railway Regulator (Bundesnetzagentur) supervises non-discriminatory access to rail infrastructure, non-discriminatory charges for its use, the compliance with statutory pricing principles and price levels (Federal Railway Authority, 2020[92]). The Railway Regulator further monitors the German railway market (Federal Network Agency, 2013[117]).
The Federal Railway Authority is the German supervisory, licensing and safety authority for railways and railway undertakings. Over two-third of all railway undertakings in Germany are subject to supervision by the Federal Railway Authority. Some regional railways are supervised by the federal states, although in many cases the latter exercise the option of transferring this supervision to the Federal Railway Authority. The Federal Railway Authority is an independent German higher federal authority and is part of the Federal Transport Administration. It is subject to supervisory and legal control by the Federal Ministry of Transport and Digital Infrastructure.
The Landers are involved at several stage of the investment decision-making process. The Conference of the Lander Ministries of transport (Verkehrsministerkonferenz, VMK) and the Federal Council13 address various federal level railway-related topics. They are also involved in the drafting of the long-term strategic infrastructure planning e.g. in the Federal Transport Infrastructure Plan (FTIP). Additionally, the Landers have specific budgets provided by the federal state that they can use for co-financing, supporting, completing or expanding projects. A “co-operation” law14 provides a detailed framework for co-ordination between the Federal Authorities and the Landers.
Long-term strategic infrastructure plan
The 2030 Federal Transport Infrastructure Plan (FTIP 2030) is the Federal Government’s most important transport infrastructure planning tool that lays the transport policy orientations for the next 10 to 15 years (Federal Ministry of Transport and Digital Infrastructure, 2020[118]). This plan addresses both the existing networks as well as upgrading and new construction projects for the road, rail and waterway modes.
Between 2015 and 2019 the Federation made available an average of EUR 3.9 billion per year to the federal railway infrastructure companies (DB Netz AG, DB Station & Service AG and DB Energie GmbH) based on a performance and financing agreement for service and financing (LuFV II). The funds are provided in the form of non-repayable construction cost subsidies. In return, the federal railway infrastructure companies pay for the maintenance of the rail network with own financial means. Performance is assessed annually in an annual infrastructure report that check, including key quality indicators such as minimum maintenance and investment volume. The Federal Railway Authority and the infrastructure auditor of the Federation are in charge of assessing the infrastructure report (Federal Railway Authority, 2020[119]). The third performance and financing agreement (LuFV III) enters into force in 2020 and have a duration of 10 years.
Assessment and identification of the transport infrastructure needs
The structural replacement investment of the existing networks and the removal of bottlenecks on the major transport arteries and at important transport hubs are at the core of the FTIP 2030. About EUR 141.6 billion of the plan’s total funding (EUR 269.6 billion) will be invested in the structural maintenance of the existing networks in the period. Around EUR 98.3 billion are earmarked for upgrading and new construction projects.
The legal and technical framework in Germany is very detailed and complex. The projects which were appraised in the new Federal Transport Infrastructure Plan were subjected to a benefit-cost analysis and to an additional assessment in terms of environmental and nature conservation, spatial planning and urban development. On this basis, they were classified into various priority categories.
A methodology manual of the 2030 Federal Transport Infrastructure Plan provide guidance about the evaluation process, criteria, methodology, priority categorisation and assessment (Federal Ministry of Transport and Digital Infrastructure, 2017[120]). It contains explanations regarding the underlying principles of the appraisal procedure. Besides general aspects, such as the rationale and procedure of federal transport infrastructure planning, the target system and the basic structure of the appraisal procedure are described.
The funding procedure for new rail infrastructure projects is as follows:
The federal railway infrastructure companies plan the infrastructure projects. The Federal Railway Authority acts as a gatekeeper to ensure that economic goals are met.
The railway infrastructure companies file an application for the conclusion of a funding agreement with the Federal Railway Authority. The Federal Railway Authority reviews this application on the basis of operational and technical/economic criteria. At the same time, the procedure to obtain planning permission can be initiated. For new construction rail investment and for upgrading projects the priorities are fixed in the respective law (Bundesschienenwegeausbaugesetz). The projects generally originate from the infrastructure planning outlined in the FTIP 2030. The Federal Railway Authority ensures that the processing and the federal funding are efficient (Federal Ministry of Transport and Digital Infrastructure, 2017[121]).
The federal railway infrastructure companies shall submit an application to the Federal Railway Authority to receive railway infrastructure financing for individual projects (Federal Ministry of Transport and Digital Infrastructure, 2017[121]). The application shall contain specific documents, specified in the contractual agreement15:
a general description of the project (target definition, planning, aim of the project, location in the network, etc.).
an analysis of the actual and target status, infrastructure and speed data, train numbers and evidence of the performance and operational quality, presentation of alternatives, economic appraisal, etc.
a description of the current and future traffic situation, statements on actual operating quality and performance of the actual infrastructure as well as suggestions for the design of the infrastructure
an evaluation of an intermediate result
a comprehensive planning book containing:
an explanatory report explaining economic efficiency of the project
project variants considerations
costs breakdown of the project
detailed planning of the project
results from public consultation
After reception, the Federal Railway Authority sends its opinion on the application, along with the documents it has reviewed, to the Federal Ministry of Transport and Digital Infrastructure.
A funding agreement is concluded between the railway infrastructure company and the Federal Government in which the Federal Government over a specific period (Federal Ministry of Transport and Infrastructure, 2020[122]). Taking into account their economic sustainability, the railway infrastructure companies may pay a share of the project costs.
The railway infrastructure companies is accountable to the Federal Railway Office. They send activity reports concerning the use made of federal funds.16
The Federal Railway Authority conducts random audits to verify the accuracy of the reports.
In addition, the German Supreme Audit Institution (Bundesrechnungshof) is competent to conduct ex-post audit.
Germany case study 1: Clear financial prospects 2030 Federal Transport Infrastructure Plan (FTIP)
One of the main objective of the FTIP is to achieve a realistic and fundable overall strategy for the structural maintenance and construction of German infrastructure. The record level of funding are available from the investment ramp-up, and the German Authorities put an emphasis on synchronising the funds to be invested and the projects in a way to allow for the implementation of all first priority projects within the timeframe set for the FTIP 2030.
Germany case study 2: Structural maintenance and replacement take precedence over upgrading and new construction (all modes of transports)
Of the funds from the new FTIP, EUR 141.6 billion will be invested in structural maintenance and replacement. This is around EUR 60 billion (EUR 58.9 billion) and thus approx. 71% more than the funds which were available under the FTIP 2003 (EUR 82.7 billion for structural maintenance and replacement). The overall picture shows a record share of 69% for structural maintenance/replacement. (For comparison: 56% in the FTIP 2003) (Federal Ministry of Transport and Digital Infrastructure, 2020[118]).
Germany case study 3: Clear prioritisation
Germany is strengthening the major transport arteries and hubs – thereby enhancing the capacity of the entire network. At the same time, Germany is investing in important projects for the development of the regions. For this reason, in the road sector, 75% of the investment in upgrading and new construction go into projects with significant impacts on a large area and 25% go into regional development measures. Across all modes of transport, Germany is investing 87% in projects with significant impacts on large areas.
Germany case study 4: Large public consultation in transport infrastructure planning
The FTIP 2030 is the first Federal Transport Infrastructure Plan which was drawn up and developed with active public participation. During a period of six weeks (from 21 March until 2 May 2016), the people in our country were given the opportunity to submit written comments on the Draft FTIP 2030 in a participation procedure involving the authorities and the public (Federal Ministry of Transport and Digital Infrastructure, 2016[123]).
Approximately 39 000 opinions were provided to the draft FTIP 2030 to the Ministry of Transport and Digital. Around 18 400 opinions were provided electronically via an online form. The other input came via mail. The federal states, members of parliament, the Federal Government itself, railway infrastructure companies, members of the public, trade associations and other stakeholders submitted over 2 000 concrete project ideas for appraisal in the FTIP 2030. Of these, federal railways accounted for around 400.
In the setup the public were, for the first time, able to provide comments on the draft basic approach of the new FTIP during a much widened public participation exercise prior to publication of the revised basic approach (Federal Ministry of Transport and Digital Infrastructure, 2020[118]). Over a period of six weeks, all interested parties were able to provide comments on the Draft FTIP electronically and in writing. After the participation of the authorities and the public was concluded, the Federal Ministry of Transport and Digital Infrastructure revised the FTIP draft on the basis of the evaluated comments. The report on the participation of the authorities and the public in the Draft FTIP 2030 includes a consolidated documentation of how the submitted comments were handled.
Germany case study 5: German Unity Transport Project 8, upgraded and new lines between Nuremberg and Berlin
The German Unity Transport Project 8 in the Transport Investment Plan is an example of a railway investment project that was delivered under the expectations established at the time of the investment decision (German Unity Transport Project 8, 2017[124]). High-speed trains can travel on the new line – at up to 300 km/h. Passengers can travel between Berlin and Munich in record times, from city to city. Trains have become a real alternative to travelling by car or plane. The upgraded and the new lines Nuremberg–Erfurt–Leipzig/Halle–Berlin are operating with great success. The demand is extensively higher than expected (German Unity Transport Project 8, 2018[125]).
The new high-speed route also has a European dimension: the line between Nuremberg and Berlin is an important section of the Trans-European Transport Networks (TEN-T). The line is one of the nine rail transport core network corridors, namely the Scandinavia–Mediterranean corridor, which nuns from the eastern border of Finland down to Sicily. Now that the Nuremberg–Berlin gap is closed, it will in future be possible to travel beyond national borders from southern to northern Europe without switching locomotives, making a stop or changing the train control system.
The upgraded and new line Nuremberg–Erfurt (VDE 8.1) through the Thuringian Forest shortens the journey time between southern and eastern major cities significantly – by up to 1 hour and 40 minutes. The new line Erfurt–Leipzig/Halle (VDE 8.2) enables fast journeys between East and West. For example, it cuts about half an hour off the journey time between Dresden and Frankfurt. When service started on the upgraded line (VDE 8.3) the journey time between Leipzig/Halle and Berlin was already halved to approximately one hour. Given the size and complexity of the project, the project output in terms of demand is highly successful (German Unity Transport Project 8, 2017[124]). Even though certain developments/restriction during the construction process could not be anticipated.
Germany case study 6: “Stuttgart 21” station: Cost overruns, construction delays and delayed entry into service
When comparing the extent of cost overruns and delays among in Europe, the German lines had the highest cost overruns. In particular, the cost overrun of the Stuttgart-Munich line reached 622.1 %. The highest project cost overrun was 83 %, for the “Stuttgart 21” station, which received EUR 726.6 million in grants from the EU. For this project, because of unrealistic initial cost estimates for tunnelling in a densely populated city centre, and insufficient assessments of geological, environmental and local community cultural heritage aspects, construction costs have soared. The total construction costs of EUR 4.5 billion estimated in 2003 has been increased to EUR 6.5 billion in 2013 and to EUR 8.2 billion (latest estimate available in January 2018). This means that there is a difference of EUR 3.7 billion from the original agreement. So far, all funding partners have refused to cover more than the costs set in the original funding agreement. There will also be a significant delay in completing the works for this station, as it was originally planned that the construction works would be completed by 2008. The start was already delayed from 2001 to 2009, and current estimations are that the works will be completed by 2025 (European Court of Auditors, 2018[79]).
Note: All figures are expressed in nominal terms
Rail infrastructure in Italy
Italy’s infrastructure development can be characterised in two phases. During the 1960s and 1970s, the country developed its road transport network by building highways and some higher-speed railway lines along the main north-south and east-west axes. In the 1990s, devolution of powers to sub-national authorities shifted the responsibility for developing provincial road networks, developing regional and metropolitan rail services, and overseeing port infrastructure away from the State.
The adoption of modern high-speed rail technologies in the 1990s went ahead under the policy goal of linking the country’s most populous and productive cities along those same axes that had seen the development of road infrastructure. The backbone of the Italian’s HSR network is complete: today, it extends over 1 000 km, compared to 16 500 km of conventional railway lines. Trains can reach maximum speeds of 300 km/hr and have substantially reduced journey times between the major cities.
Two aspects of the initial plans for HSR did not go as envisaged. While initially planned as a network separate from the existing lines, a number of interconnections were introduced over time to also allow passenger and freight trains with different technical specifications. Secondly, a new company was created with plans to attract private capital. However, project financing did not take off and the State ended up buying back 100% of the shares (Beria and Bertolin, 2019[126])
On the contrary, a widely-cited success story is the opening to competition of HSR services. In 2012, private operator NTV entered the market and promoted a virtuous cycle of lower fares, higher quality and greater competitiveness of railway services vis-à-vis air transport, particularly along the Milan-Rome corridor (ITF, 2014[88]; Bergantino, Capozza and Capurso, 2015[127]). The market share of NTV has increased over the years and now it stands in the interval 25-30% tr-km on the main traffic lines; NTV impact on the incumbent’s services and managerial practices has been notable17.
Infrastructure governance in Italy
Successive Italian governments have recently reformed the country’s approach to infrastructure governance, including in the railway sector. Long-term infrastructure planning was institutionalised in the early 2000s when the Legge Obiettivo attributed planning, budgeting and approval of infrastructure projects to the CIPE (Interministerial Committee for Economic Planning, chaired by the Presidency of the Council of Ministers and bringing together the Ministries of Finance, Infrastructure and Transport, Economic Development and the Environment) (CIPE, 2018[128]).
The latest plan was published in 2017. Connettere l’Italia contains four strategic priorities up to 2030 and a short list of 108 priority projects for the 2018-2020 period. Prepared by the Ministry of Infrastructure and Transport, it was presented as an Annex to the 2017 Annual Budget Law and was approved by Parliament (Ministry of Economy and Finance, 2017[129]). In addition, the Environment Committee of the Chamber of Deputees must receive an annual report on the extent to which the plan is being executed. In a document called Planning and Execution (House of Representatives, 2018[130]). This annual update sees the participation of the national anti-corruption authority (ANAC), which received the mandate to oversee all public procurement contracts.
The Ministry of Infrastructure and Transport has a long-term investment planning and performance agreements with both the infrastructure manager of road (ANAS) and railway (RFI) infrastructure. In the railway sector, these agreements known as Contratto di Programma date back to 1987. In the latest agreement (Ministry of Infrastructure and Transport, 2017[131]), covering the period 2017-2021, one part is dedicated to services performance and one part to infrastructure investment. The latter contains a list of priority projects, projected financial needs and sources, and a performance system whereby delays and costs overruns by RFI trigger financial penalties. RFI needs to report to the Ministry in April every year on the implementation of the agreement.
The Ministry also issues guidelines for investment appraisal of public infrastructure (Ministry of Infrastructure and Transport, 2017[132]). The methodology applies to all projects, with a distinction for projects below and above EUR 10 million. Different options are available, from needs assessment to cost-benefit analysis. Guidelines also exist for ex-post evaluation. However, the economic parameters (e.g. discount rate) for practitioners to use in the CBA analysis are not frequently updated and there is no guidance on external costs. This is one of the challenges faced by the expert working group set up in 2018 (see Case Study below).
Based on the existing methodology, the Ministry has undertaken a more high-level approach to assess some of the planned investment in railways. This is a good practice highlighted by the European Court of Auditors (2018). For instance, the Ministry compared the travel time between Venice and Trieste both by upgrading the existing railway line (with a design speed of 200 km/h) and by building a new 300 km/h HSR line. The analysis showed that savings of EUR 570 million per minute were possible with the upgrading option. This only made the journey time 10 minutes slower than with HSR.
Italy case study 1: the Turin-Lyon HSR link
The political consensus around the need to develop HSR infrastructure has remained intact for decades. Over time, two factors have contributed to the rise in scepticism around large infrastructure projects: the emergence of corruption scandals and the budget constraints imposed across economic sectors over the period 2009-2015. Partially in response to those criticisms, the government introduced new safeguards in the decision-making process as described above (e.g. compulsory assessment of all new large projects using cost-benefit analysis, creation of supervisory authorities).
Notwithstanding these measures, opposition to further spending in infrastructure entered the political debate with the rise of the Five Star Movement (M5S). The first M5S members of parliament were elected in 2013 and joined the opposition despite receiving 25% of the vote. Running again in 2018, the party promised to block the ongoing works for the proposed HSR connection between Turin and Lyon (Di Maio, 2019[133]). As the M5S and the pro-HSR Lega entered into a coalition agreement, the final compromise was to “undergo a complete revision of the project”.
In practice, this resulted in the Ministry of Transport setting up an expert panel to undertake new cost-benefit assessments of all large proposed investment projects in 2018. For the sake of transparency, all panel reports would be published on the Ministry’s website. The panel included well-known academic experts in the field of transport economics and engineering.
The first report published in December 2018 assessed the socio-economic impacts of Terzo Valico (new railway infrastructure between Milan and Genoa), concluding that only in one optimistic scenario the investment would be worth pursuing. The experts then submitted their report on the HSR Turin-Lyon to the Ministry in February 2019. The report concluded that none of the proposed engineering solutions would yield a positive cost-benefit ratio and therefore recommended not to pursue the investment. Their calculations estimated a negative net present value of over EUR 8 billion for the project in the base case.
The report’s publication gave rise to a heated public discussion. For the first time, the terms of the debate shifted from whether HSR is useful in itself to whether the analysis had relied on appropriate demand forecasts, cost estimates, environmental parameters, etc. The authors of the report appeared on television debates, published articles in the national press and contributed to educate the wider public. Citizens on both camps organised street demonstrations and local debates.
Eventually, the government’s coalition partners clashed on the topic, including in a parliamentary vote during which the M5S tabled a motion instructing the government to renege on the existing Italian-French international agreement. The motion was defeated but the division on HSR caused wider rifts in the coalition, with the government eventually collapsing in August 2019. Days before, the Prime Minister had announced that Italy was to go ahead with its share of the investment, because of the high penalty costs for contracts already entered into with contractors, and thanks to increased co-financing by the EU.
One of the lessons emerging from the Italian experience is that introducing a requirement for ex-ante cost-benefit analysis does not magically solve the methodological and institutional issues linked to decision-making in infrastructure. Most notably, the Ministry does not provide a coherent methodological framework for all CBAs. In the absence of a minimum common denominator, each technical analysis requires some value judgement by its authors and can be more easily criticised.
Besides, the use of CBAs for projects already approved and partly built may confuse the public on the purpose of this assessment. A separate framework for ongoing monitoring and ex-post analysis would clarify the role of each methodology in the infrastructure cycle. A lack of stakeholder consultation processes to run in parallel with technical analyses is also worth noting. However, a marked improvement in transparency and the greater focus of the national debate on technical questions emerged from greater reliance on expert advice and public disclosure of their analysis.
Rail infrastructure in the UK
The national railway network in the UK today is one of the most intensively used in Europe. Network geography still reflects many of the original lines serving primarily commuter flows into and passenger flows between the major cities. Railway infrastructure is managed by the publicly-owned infrastructure provider Network Rail, following a short-lived attempt to privatise infrastructure in the 1990s. The first (and to date, only) HSR line in the UK is High-Speed 1 (HS1) connecting London to the Channel Tunnel, which in turn links the UK to France, opened in 2007. Plans to build a second line (HS2) between London, Birmingham and the north of England are being developed by a separate arms’ length body, HS2 Ltd (see Case study).
Great Britain’s former incumbent passenger operator was subdivided in the mid-1990s into a number of franchised operators, now managed mainly by the private sector. Operators compete for franchises, tendered out by the Department for Transport (DfT), and the winner typically runs services for 5-15 years. Service level requirements are specified by national, regional and metropolitan governments. A number of open access operators compete side-by-side with franchisees, but their market share is very small.
Infrastructure governance in the UK
Institutional framework for transport infrastructure governance in the UK
Ultimately, the Department for Transport is accountable for the sponsorship of the infrastructure projects it is funding (excluding projects that are grant funded). However, the execution of these projects is delegated to the Department’s delivery bodies, with investment approval being given by the Department’s Tier 1 and Tier 2 investment boards.
The Department’s three major delivery bodies (Network Rail, Highways England, and HS2 Ltd) have delegated responsibility for the planning, prioritising, budgeting, delivering and monitoring of investment in infrastructure, but with oversight and contributions from teams within the Department. The Department tends to set a budget envelope for a project or programme, and then the delivery bodies will do the planning, prioritising, budgeting, and delivering of the scheme. There are various decision gateways for schemes, with the Department’s Board Investment Commercial Committee (BICC, the department’s tier 1 investment board) giving approval for schemes to progress between the three business case stages (Strategic Outline Business Case (SOBC: Decision to develop), Outline Business Case (OBC: Decision to design), and Full Business Case (FBC: Decision to construct)).
For local projects that are primarily funded by grant funding from the Department, Local Authorities are in charge of the planning, prioritising, budgeting, and delivery of the scheme. However, they are generally supported by teams within the Department, who seek to ensure that the schemes offer value for money, and are aligned with the Department’s objectives.
The three UK major delivery bodies have Memoranda of Understanding with the Department on ways of working and each ALB has a Department for Transport (DfT) sponsor team who work with them. As they are owned by the Department, they are ultimately accountable to the DfT Secretary of State, and there is a Shareholder team for each ALB within the Department’s Corporate Finance Directorate.
Long-term strategic infrastructure plan
In 2018 the National Infrastructure Commission published the first National Infrastructure Assessment for the United Kingdom which makes recommendations for how the identified infrastructure needs and priorities of the country should be addressed. The UK government will formally respond to the recommendations through a National Infrastructure Strategy to be published alongside the Budget in 2020. Prior to the NIA, infrastructure planning in the UK has historically been based on medium-term sectoral plans for specific sectors (e.g. energy, water, railways, and motorways). Within the transport sector there are separate five-year plans and funding settlements for the national rail and strategic road networks.
For strategic roads, the government published the first Road Investment Strategy (RIS 1), in December 2014 and updated it in March 2015 (RIS, 2015). This outlines a multi-year investment plan including over 100 major enhancement schemes (widening roads, investing in managed motorways, etc.), plus maintenance and renewals work. The RIS 1 requires Highways England, a government-owned strategic highways company managing the strategic road network, to focus equally on eight areas, including safety and efficiency, which back the strategic vision for the road network. A RIS 2 covering the five years starting in 2020 is being finalised (Department for Transport, 2018[134]).
For railway infrastructure, the DfT published its Strategic Vision for Rail In November 2017. The Williams Rail Review was established in September 2018 to look at the structure of the whole rail industry and the way passenger rail services are delivered. The review will make recommendations for reform that prioritise passengers’ and taxpayers’ interests (Department for Transport, 2019[135]).
The renewal and maintenance of the rail network infrastructure is managed in 5-year Control Periods within budgets set by the DfT. Network Rail’s performance in this regard is monitored by the Office for Rail and Road (ORR), the independent economic regulator. Each control period sets out the funding that Network Rail will receive and the outputs that it will have to deliver according to a specified delivery plan. By way of example, the current control period (CP6) runs from March 2019 to April 2024 and foresees a number of investment priorities (such as electrification and maintenance) based on overall funding availability for the whole period, as shown in the figure below. Starting from the current control period, however, enhancements are not included in that statement of outputs and are instead part of a pipeline which is updated over time.
The ORR plays an important role in the regulation of the railway industry by monitoring Network Rail’s performance, acting as the industry safety regulator and approving track, station and depot access agreements. This last role is crucial in enabling private investment as such investment requires an independent process for granting and then guaranteeing the ongoing rights of access, together with any moderation of competition provisions, on which the business case for that private investment relies. The ORR also reviews the government’s plans for enhancements (known as the High Level Output Specification), for reconciliation with the Statement of Funds Available in the light of the efficiency targets that it has set for Network Rail. The ORR ultimately approves the level of access charges that Network Rail can levy on operators for the same 5-year period. In addition, the ORR is tasked with monitoring the delivery of both the rail and strategic road five-year plans. A system of penalties and incentives applies. To ensure that it carries out its functions objectively and with a sufficient degree of expertise, the ORR benefits from political and administrative independence from the Ministry (DfT) as well as the infrastructure managers. The regulator is fully funded by industry levies, set by the Ministry upon proposals of the regulator.
Source: (Network Rail, 2019[136])
The relative stability and predictability of the UK’s approach to infrastructure planning and regulation by sector was nonetheless subject to criticism when it came to developing strategic, nationally significant infrastructure projects. The LSE Growth Commission (2013) first proposed to build a new institutional framework to govern infrastructure strategy, delivery and finance. Subsequently the Armitt Review considered which structures would be best to support long-term strategic decision-making and how to forge the necessary cross-party consensus to deliver those decisions. The Review concluded that a National Infrastructure Commission (NIC) could be established, with statutory independence.
The first NIC was established in 2015 with the remit of identifying the UK’s strategic infrastructure needs over the medium to long term and to propose solutions to the most pressing infrastructure issues. The mandate of the NIC also recognised the role of infrastructure in promoting sustainable economic growth, improve competitiveness and provide certainty for investors. The NIC is expected to provide impartial, expert advice. Its first chair, Lord Adonis, was expressly nominated from the opposition benches to promote cross-party buy-in.
The NIC reports to Parliament and publishes a National Infrastructure Assessment (NIA) as well as specific studies for significant infrastructure challenges. The first-ever NIA (2018) made recommendations for how the identified infrastructure needs and priorities of the country should be addressed, including on low carbon energy, digital technology, the future for the nation’s roads, encouraging growth of cities, tackling floods, and cutting waste. Government will respond formally to the recommendations made through a National Infrastructure Strategy to be published alongside the Budget in 2020. The NIC will then monitor the government’s progress in the delivery of their recommendations.
In addition, the Infrastructure and Projects Authority (IPA) was created in 2016. Reporting to the Cabinet Office and the Treasury jointly, the IPA works across government to support the delivery of major infrastructure projects. By pooling expertise in financing, delivery and assurance of major projects in a single unit, the UK hoped to capitalise on good practices across sectors and to improve the way in which government delivers projects and programmes. The IPA published the Transforming Infrastructure Performance plan to increase the effectiveness of infrastructure investment (Infrastructure and Projects Authority, 2017[137]). The plan responds to three strategic challenges (prioritising the right projects, improving productivity in delivery, and maximising the overall benefits of infrastructure investment) and puts forward an integrated change programme. The IPA is in charge of producing a National Infrastructure Delivery Plan every five years and an annual report on the Government Major Projects Portfolio. For 2018-2019, the IPA reported on 133 projects with a total Whole Life Cost (WLC) of GBP 442 billion, delivered by 16 departments and their arm’s-length bodies (Infrastructure and Projects Authority, 2020[138]).
Assessment and identification of the transport infrastructure needs and prioritisation of investment choice
At the local level, Local Authorities typically identify the need, and put a proposal for funding to the Department. For strategic roads and rail infrastructure, the need is identified by the owners of the Infrastructure (in this case, Highways England and Network Rail). There are times when the need is identified by a top-down process, as is the case for recommendations by the National Infrastructure Commission (although these are only recommendations).
Once an investment need is identified the strategic case of the Strategic Outline Business Case (SOBC, the first stage of the process) should consider the various options to meet the transport need. These processes are government wide. Although decisions are based across the 5 cases (see Table 6.2), cost benefit analysis and value for money is used in the economic case. Guidance issued by HM Treasury (the Green Book) provides an overall methodology as well as a list of inputs and parameters to guide the socio-economic assessment of proposed projects and programmes (HM Treasury, 2013[99]).Departmental guidance – in the case of transport, by the DfT – aligns with the Green Book (Department for Transport, 2017[139]).
Centres of Excellence provide independent reviews of each of the 5 cases in the business case. It is also considered good practice for models to be independently verified by an independent peer reviewer. Each economic case should provide an analytical assurance statement, this allows the analysts to describe the robustness of the analysis and the scope for challenge.
Each project sponsor needs to establish the impacts of a proposed project through a transport study. The outputs of the study must include:
Economic impacts: welfare benefits to business users and transport providers, reliability impacts, regeneration effects, and wider impacts such as productivity gains;
Environmental impacts on noise, air quality, greenhouse gases, landscapes, biodiversity and water;
Social impacts: similar to the economic impacts above, but with a focus on commuter and leisure users, as well as impacts on safety, security, accessibility, affordability and journey quality;
Public accounts impacts such as the cost to the overall transport budget for the government and potential indirect tax revenue (e.g. from greater labour productivity.
Source:: (HM Treasury, 2013[99])
Process to approve an infrastructure investment project in the railway sector
Since the beginning of Control Period 6 (2019-2024), all enhancements to the railway network are managed through the Rail Network Enhancement Pipeline. The governance for this pipeline is based around five decision gateways, which manage the development of a project and provide an opportunity to assess the value for money case, deliverability and affordability at each stage of business case development, which is set out below:
Decision to Initiate – first decision gateway which brings a scheme into the Pipeline and releases funding to develop a Strategic Outline Business Case;
Decision to Develop – second decision gateway to approve the SOBC and release funding to develop an OBC;
Decision to Design – third decision gateway to approve the OBC and release funding to develop an FBC;
Decision to Deliver – fourth decision gateway to approve the FBC and release funding for delivery of the infrastructure;
Decision to Deploy – final decision gateway where the infrastructure asset is approved and deployed.
This process was set out in the Rail Network Enhancement Pipeline (RNEP) publication which was published in March 2018 (Department for Transport, 2018[140]). The business case development is set out in a guidance note and the RNEP makes decisions based on business cases which are produced using the UK’s five case model approach to project appraisal (HM Treasury, 2018[141]). The RNEP process was established following reviews into the inefficient delivery of capital rail projects in previous control periods, and it is now the primary route to develop and deliver railway enhancements. The Pipeline governance also manages the funding allocation for Enhancements between 2019-2024, including the fixed annual profiles and aims to ensure maximum delivery for the funding allocation.
The primary variables considered are:
Priority – is the project a sufficient priority for this control period, or could it be delivered in the future? This prioritisation exercise is managed by both Network Rail and the Department for Transport.
Value for Money – does the project represent sufficient value for money for the tax payer?
Deliverability – can this project be delivered within the schedule set out, and can the supply chain provide sufficient assurance of effective delivery?
Affordability – is the project affordable within the overall funding envelope for this Control Period, and the fixed annual spend profiles?
A list of schemes currently in development was published in October 2019 and is available (Department for Transport, 2019[142]).
With respect to the budget for infrastructure investment and maintenance in the railway sector, the Secretary of State for the Department for Transport publishes the high level output specification (HLOS) and initial statement of funds available (SOFA) for control period 6 (April 2019 – 2024) (Department for Transport, 2017[143]).
Negotiated with HM Treasury, and reviewed by the Office of Rail and Road (ORR), Network Rail set out a plan for CP6 focusing on four key responsibilities: to run a safe, reliable, efficient and growing railway, with targets related to each responsibility (Network Rail, 2019[136]). The delivery of the plan is overseen by the Office of Rail and Road (Office of Rail and Road, 2018[144]).
UK case study 1: High Speed 2 (HS2)
The proposed high-speed rail link between London, Birmingham and the north of England and Scotland (known as HS2) is being developed and delivered by a separate arms’ length body, HS2 Ltd, using the normal five stage business case process. It has been argued (OECD/ITF, 2017[145]) that the shortcomings in decision-making demonstrated by the planning process behind HS2 led the government to set up the NIC with the aim of creating an institutional framework for continuity. Planning for HS2 has been characterised by some observers as lacking a process of structured deliberation (King and Crewe, 2013[146]).
The government’s strategic case for building HS2 relies on addressing capacity constraints on West Coast Main Line and on the transformational impact on northern cities arising from the agglomeration benefits that the shorter journey times arising from HS2 will enable. Beyond the immediate transport concerns, the gap in productivity and economic growth between the South-East and other parts of England was recognised in the strategic case. The Government were of the view that the Core Cities outside London needed to be better connected to thrive and achieve higher levels of growth and to close the gap with the South-East. The business case assessed the value for money of Phase 1 (London to Birmingham, due to open in 2026) in 2016 and Phase 2 (Birmingham to the north) in 2017 (Department for Transport, 2017[147]). These assessments relied on detailed modelling and forecasting analysis. Environmental impact assessments and stakeholder consultations were carried out in parallel.
Given the transformational nature of the project, the government created High-Speed 2 Limited (HS2 Ltd) in 2009 as an executive non-departmental public body, sponsored by the Department for Transport by way of grant-in-aid. The company is solely responsible for developing and promoting the UK’s new high speed rail network throughout the different phases of the project. It is headed by a Board comprising a Chair, two executives and four non-executive members. The Secretary of State for Transport appoints Board members and is ultimately accountable for the company’s work to Parliament. HS2 Ltd employs around 1 500 people.
Despite the cross-party consensus around the need for HS2, dissenting voices both within government and the opposition, as well as public campaigns such as STOP-HS2, have raised doubts about both the costs and the benefits of the project:
On the cost side, the initial funding envelop of GBP 55.7 billion for both Phases has now been recognised as unrealistic and there remains uncertainty as to the likely final cost of the total project. Both the DfT and HS2 Ltd have put forward ways to save some infrastructure costs, but the National Audit Office has challenged those. The House of Lords Economic Affairs Committee concluded in May 2019 “that the costs do not appear to be under control” and the scheme “needs a rethink”.
On the benefits side, the Government looked at several rail and other transport alternatives to address these issues. It took the view that the alternatives to HS2 did not address the long-term capacity challenge, nor did it provide a step change in north-south connectivity while delivering journey time savings for passengers. However, comparative analysis also suggested that lower cost alternative improvements on the West Coast Main Line could deliver sufficient capacity for between 20-25% of the cost of HS2 (HoC, 2019), albeit with significant disruption to existing passengers while the work was under way.
Phase 1 of the scheme has already received planning consent and is now awaiting a final investment decision. This is the formal decision to invest that will trigger the contractual process that instructs each Phase One supplier to move from design and development into construction.
In parallel, the government ordered a new review of the project, headed by the former chair of HS2 Ltd. The review is near completion and provides government with an independent review of the project, including options for cost reductions. In presenting the need for a review, the Transport Secretary said that “just because you've spent a lot of money on something does not mean you should plough more and more money into it” (BBC News, 2019[148]).
The prospect of building HS2 has also inspired regions and cities across the UK to develop complementary infrastructure projects (e.g. Northern Powerhouse Rail connecting cities in the North, Midlands Connect providing better public transport services across the Midlands), whose business cases assume successful completion of the high-speed rail networks and stations.
In parallel, some of the key benefits of HS2 in the public discourse have become its ability to promote regeneration and help close the productivity gap between northern and southern regions. Irrespective of the final decision on the network length, technology and overall speed of the new railway infrastructure, the scrutiny that the HS2 project has undergone in the UK highlights both the potential benefits and downsides of such a high threshold for infrastructure projects as set out by the British institutional framework. On the one hand, such scrutiny allows an in-depth understanding of value for money and ensures that alternatives are fully explored before giving the green light to such a project; on the other hand, it can lead to delays and, by delaying final commitment until the FBC stage, reduces certainty for both investors and other project sponsors whose investment depends on HS2 proceeding.
← 1. Law No. 97-135 effectively reorganised the French railway sector and created RFF, owner of the railway network, focusing on track improvement and development, network investment choices and financing.
← 2. The Act of 4 August 2014 created the new state-owned SNCF Group as of 2015. The Group’s components included SNCF Mobilités, which became responsible for all SNCF transport operations (both in France and internationally), and SNCF Réseau, which be-came responsible for managing France's national rail network.
← 3. Responses to the Survey from ART, 2019.
← 4. Responses to the Survey from ART, 2019.
← 5. Responses to the Survey from ART, 2019.
← 6. Articles L. 1511-1 et seq. of the transport code.
← 7. The approach was initially built around provisions of a 1993 law to protect landscapes and biodiversity (Loi Paysage). For a concrete example: https://www.lignenouvelle-provencecotedazur.fr/page/le-dispositif-dinformation-et-de-participation-du-public
← 8. The Legislation of 2004 (PPP law) created a central PPP unit (MAPPP), which became responsible for the preliminary evaluation of PPP projects.
← 9. Law No. 2006-10 of 5 January 2006 modified the constitutive law for RFF. RFF was re-quired to allow the participation of private parties in the construction, maintenance and operation of railway infrastructure. However, RFF would remain the ultimate owner of any infrastructure. SNCF remained in charge of the management of regulation and safety systems and the operational management of rail traffic.
← 10. The 6 December 2006 Decree clearly defined the roles and the obligations of RFF and its private sector partners.
← 11. Article 87(e) (4) of the Basic Law.
← 12. On the basis of the Regionalisation Act, Local Authority Transport Infrastructure Financing Act and Unbundling Act.
← 13. The Federal Council is the legislative body that represents the sixteen German Landers (federated States) of Germany at the national level. The legislative authority of the Bundesrat is subordinate to that of the Bundestag, but it nonetheless plays a vital legislative role. The federal government must present all its legislative initiatives first to the Bundesrat; and then to the Bundestag.
← 14. Gesetz über Finanzhilfen des Bundes zur Verbesserung der Verkehrsverhältnisse der Gemeinden (Gemeindeverkehrsfinanzierungsgesetz - GVFG)
← 15. For new rail investment projects and/or for extension project contractual basis and requirements are different for maintenance and renewals (see LuFV III).
← 16. Please note that for maintenance and renewal an Output control is done according to the contractual agreement in the performance and financing agreement LuFV III.
← 17. Information provided by ART, 2019.