Q91 Chair: Which examples? HS2?
Philip Rutnam: I was going to mention HS2 'Y' network, for example, but we can come back to that at another time as that is not the only example. It is a very large project, which has lots of benefits in terms of reducing crowding-
Chair: I understand that.
Philip Rutnam: The way that the appraisal methodology works, those benefits do not necessarily come out as very large, it seems to me. The other point is that the 1.4 that is quoted in the Report excludes-in line with the methodology handed down from the Treasury-the £1.3 billion of benefits that we foresee in terms of the wider economic impact from the project. That is that the project is expected to lead to higher productivity in the economy and it is expected to make labour markets work a little bit better. All those things are, of course, at the margin but it affects so many people.
Q92 Chair: Do you mean that because people get to work on time they will deliver more productivity? In layman's terms.
Philip Rutnam: It is well documented-bringing things closer together.
Q93 Chair: Okay, I hear that. It is an interesting issue. Do we take a punt, or do it basically because it is an overcrowded line? We all know that, so do we decide that it is desperately overcrowded, so we are going to invest here? Or do we do a serious cost-benefit? I just want us to be open. Are we saying this is because it is overcrowded; we are going to do it anyway because of the overcrowding? Or are we are pretending there is a cost-benefit ratio that works? The reason I ask the question is that most of the benefit comes from the value you place on people's time. We had a very interesting discussion when we looked at HS2 and will no doubt have it when we come back to HS2, on how you value commuters' time as being less valuable than that of inter-city travellers. I don't think you were the Perm Sec at the time; I don't think any of you gave evidence at that. I remember being slightly gobsmacked.
If you live in Surrey and commute into London your time was worth something like £8 an hour. Whereas, if you went from London to Birmingham it was four or five times that amount in the methodology.
Philip Rutnam: I think the distinction is between those who are seen as business travellers and those commuting or those on leisure travel.
Q94 Chair: What is a business traveller? You are a business traveller from Godalming in Surrey.
Philip Rutnam: I'm afraid I don't have the figures in my head.
Chair: They are very different.
Philip Rutnam: The value attributed by the methodology to time that is saved on business travel-that is, where people are travelling for work- is greater than if they are commuting or going on a day trip.
Q95 Chair: It's scary if you have not changed it. Are we talking about commuter time here or business time?
Philip Rutnam: There is a mix. There are business travellers here, commuters and some leisure. I think they are all in there.
Michael Hurn: By far the majority would be commuter, though.
Chair: Commuter time, so cheapo, cheapo.
Michael Hurn: Because of the nature of the railway.
Chair: When people get to work, they are not very-
Michael Hurn: I would also add that the growth assumptions in the appraisal are relatively modest. For example, demand is capped at 2031. Off-peak growth is also very modest. Some of the assumptions-
Q96 Chair: I was going to ask you that. Given that this project started 30 years ago, are we now building something that is already redundant by the time it is open, in terms of demand and overcrowding?
Michael Hurn: Certainly, the station designs are very much planned for the longer term. They have a lot of demand growth built into them in terms of robustness for future growth and capability. Take London Bridge, for example. A very large concourse is going to be rebuilt for the station; it is almost the size of Wembley stadium. There are escalator provisions, lift access, open circulation space. That is planned for very long-term demand growth, recognising that these are once-in-a-generation projects. They need to withstand.
Q97 Chair: It has taken you a generation to build it. You decided this in 1989 for now. We are now building it for the next 30 years.
Michael Hurn: They need to withstand long-term demand growth. That is right through.
David Higgins: In the three-hour morning peak there are 42,000 going through today. When it opens, 105,000 will be in the three-hour peak. That growth is going to come. That is more than a doubling, with 100,000 through there. You will remember that during the Olympics we had to shut down parts of London Bridge because we were concerned from a safety point of view. We could not allow the public to come in and go from London Bridge to Greenwich, just because of safety requirements. If we did not rebuild London Bridge now, that would very soon start to occur all the time in peak periods in years to come.
Q98 Chair: I was going to ask about London Bridge. So you are pretty confident that this will be sufficient for the next 25 or 30 years. That would be your view.
David Higgins: Absolutely.
Q99 Chair: On London Bridge specifically-because it is one of the areas where you cut your plans to meet the financial constraints of the project-how much did you save by cutting?
Michael Hurn: Back in 2010, we had a £600 million cost overrun on the project as a whole.
Q100 Chair: How much did you save by cutting what you were going to do at London Bridge?
Michael Hurn: We saved several hundred million pounds.