The case against HS2

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The case against HS2

There is a vast number of articles both for and against HS2, each with plausible arguments and this is updated almost weekly.  Within the main political parties in the UK there now seems to be mixed views for and against, the country is polarised into pro, anti HS2 or the dont knows or cares.   A recent you gov poll placed it at 53% against, 27% for 20% undecided.

In researching this article it seemed to make sense to step back from this maelstrom of debate and look at the context of HS2, the needs and whether this particular solution meets those needs and importantly whether we are trying to solve the right problem?

The need is important as you no doubt have gathered because the nation has pretty much run out of money and has a very unbalanced economy based on financial services largely located in the South East. The costs for HS2 were originally £32b then jumped to £49b and some analysts are predicting it could go as high as £80b.  Whatever cost figure you take it’s pretty clear we (as a nation) need to invest shrewdly to derive the maximum benefit for both financial return and in rebalancing the nation’s prosperity move evenly across the country.

Let’s step back, looking at the context, as to how did HS2 come about?  Originally it was conceived in the dying days of the Brown administration and the Labour government wanted a big eye catching project to highlight to voters how that government was investing in the future of Britain.  As always in the world of politics “headline catchers” are the driver. Interestingly the main original architect, the labour spin doctor Peter Mandleson, is now calling the project an expensive mistake. Other political figures, the Institute of Directors and others have also spoken against. This is mainly about value for money and whether this is the best optimum investment to get the best outcome for our money?

Euston_station_facade

Euston Station Central London – with the technology today never mind in 30 years time will physically getting to Euston faster matter?     Is this an appropriate allocation of our scarce resources to invest in our nations future?    Will this simply improve prospects for the North or simply entrench Londons advantage by expanding its supply of labour from the midlands?

The business case for HS2 so far is not a good story. Costs, assumptions, benefits and deliverables are moving continously and so far the business case has not stood up serious “stress testing”.   The benefit streams in particular are porous and came under scathing criticism from the Public Accounts Committee recently as not reflective of real life.   This committee were also concerned that a third of the overall costings were contingency. In other words “finger in the air”. The government, looking urgently to address the benefit critique, commissioned KPMG who issued a report.

The KPMG regional economic report faced fierce criticism the 95 page report is freely available online however much of the report repeats the same generalised assertions.  That is the connectivity will improve supplier and consumer choice and extend the labour market.   All this is true of course but the same could be said about any infrastructure investment of this nature.  Certainly not investing in a single track and using the investment to develop the rail general system in targeted areas would do the same if not more.   Moreover the report had one major flaw which was jaw dropping.   It was that in order to quantify the stated financial benefits it had to be assumed that no other factor other than transport connectivity was in scope for the purposes of quantifying the financial benefits.   Yet as anyone who runs a business knows although transport is important it is but one of many factors in running a business.

Dealing with the “why we need HS2″ we are told this is about cutting the journey times to London, increasing capacity and regenerating the north of England.

Dealing with these matters in turn.

The journey time from Manchester Piccadilly to London Euston is  currently 128 minutes. This will be reduced to an impressive 68 minutes under HS2. This was built into the original business case as a benefit. People would arrive into the office 60 minutes earlier and this would improve productivity assuming people were unable to work on a train and that laptops, tablets, smart phones had not been invented never mind whatever technology we are likely to have in 2026. It also ignores the growth and sophistication of video conferencing and the technology into the future. You also have to wonder with trains running through villages and towns at 250 MPH what is the security risk and would future services be subject to airport style security?  So you wonder how much of a benefit the reduction in journey times will be to the future economy and in practice given the likelihood of a more virtual society of the future?

In relation to capacity there is no question the rail network needs upgrading for both commuter and freight.

However a single high speed rail line seems an expensive and constrained way to deliver this.  There is also a view that the reinforcement of the south to north route is the wrong approach and that if we are to rebalance prosperity to the north then the west to east would be more appropriate.   The opportunity cost of the money spent on HS2 might be better spent on redevelopment of rail systems countrywide rather than one expensive south to north railway line. Moreover high speed rail lines are more suited to larger countries such as France or Spain with greater distances between locations. At a time when Britain is moving to high speed rail other countries, which have had them for many years, are starting to turn their back on them. Spain has the most miles of high speed rail but even the most popular line, Madrid to Barcelona, loses money. France TGV lines just breakeven but their government recently cancelled new TGV projects in favour of developing non high speed lines on economic grounds. Many far eastern countries are moving to high speed broadband and trying to reduce commuting not encourage it. But to be fair, in China high speed rail is still in vogue and that country recently opened the world’s longest high speed line. However China is far bigger than Britain’s landmass.

51m

Yes of course we need new capacity but is putting potentially £80b into one railway line the answer?   51M argues for developing a greater number of rail infrastruture projects, perhaps  less glamorous  but more cost effective and delivering more benefits, they argue.

The economic argument for the north is also a matter for debate. Many North West business forums support HS2, just as many oppose it. A survey of 1300 business leaders (many in the North West) by the institute of Directors highlighted 70% were in opposition to HS2. Those who promote HS2 would argue that connectivity would link the prosperity of the South East to the North West bringing some of this business to the North West and many would conclude this. But there is an equal counter view that Birmingham, and all points south of Birmingham, would become a commuter zone to the South East entrenching this region and drawing trade away from the North West

In fact, in no region of the UK do more than 35 per cent of those polled think HS2 is good value for money. The institute of Economic Affairs (IEA) believe the true cost of HS2 could be nearer £80b. The UK treasury believes the true cost is likely to be £70b.  The IEA and the Treasury expects lobbying by local councils for extra infrastructure and design changes will inflate the cost and potentially more than double the planned £42b cost for infrastructure.

The survey above was enacted before these announcements. What would it be if they ran the same survey today?

Whatever is right in this morass of claim and counter claim it is clear that the infrastructure cost and the macroeconomic case for HS2 developing the North West and the cost of it is far from concluded.

51M

There is an alternative group to HS2, 51M, formed by MP’s and 19 local authorities to oppose HS2.

This group has formulated its own proposals around further development of the West Coast Main Line infrastructure which, from the Atkins report, was considerable cheaper. The group is so named because HS2 will cost the taxpayers of every constituency in Britain £51 million pounds.

The cost of HS2 was originally £32b and has since be revised 53% upwards to £49m (£42m infrastructure and £7m rolling stock) and remember a third of the £49m is finger in the air contingency. The real figure once money starts to be spent could be anyone’s guess. Britain does not have a good track record of delivering public projects to budgets as we saw in the Olympics which, from an original budget of £2b, spiralled to an eventual cost of £9b.

Environmental

Barrow Lane to Horwich Moors

More than 100 of Britain’s most important wildlife habitats and dozens of ancient woodlands will be directly affected by the proposed high-speed rail link between London and the North.    Official documents also disclose that hundreds of acres of green belt land will be lost and more than 1,000 buildings will be demolished. This will never be replaced and this only includes the areas within 60 metres of the line. It does not include the immediate adjacent land which will be blighted including many homes and villages. The case for HS2 is that it will be good for the environment moving millions of road trips on to rail both on the HS2 line and freeing up paths on the West Coast Main Line. However counter to this argument is that the climate change case has virtually disappeared in that few high speed passengers will transfer from air particularly given the high speed line is likely to be more expensive that existing cross country travel which is already prohibitively expensive. Most users would otherwise have taken conventional trains or avoided the trip. The argument for rail freight is valid but this could be delivered cheaper by deploying the £42b to £80b on alternative rail investment in conventional lines

The climate change position of course does not address the loss of countryside, green belt, villages, homes, heritage etc. which will disappear from the landscape. A landscape already uder great threat from housing and other developments. So before we undertake this lets be sure we know what we are doing.

Conclusion

The case for putting all our eggs in a single high speed railway line is very much unproven at this stage particularly as this will draw investment away from other transport infrastructure projects which might deliver more benefit.  These are not being considered at the moment one suspects because they are less glamorous to politicians who want headline grabbing initiatives to garner votes.

There are plausible arguments both for and against HS2.

But ask yourself this simple question why have we not seen an outline fare structure for HS2?

Clearly the business case must have detailed costs, projected passenger traffic and other detail.   If not then why are we proceeding?    It would be a simple matter to publish a fare structure yet the government chooses to keep this aspect under wraps.   Why? might this just be HS2 will be unaffordable other than for the very rich and / or expensed executive corporate travel.

What is the point of spending upwards of £50 Billion on public transport that will be unattainable for most of the public?

In the 1960’s Beeching shut down much of Britain’s railway system in favour of a new revolution the motorcar.    Given the cost of energy and carbon emissions does it not make sense we now have another revolution?    Those of getting a usable transport system, let’s get the people out of cars and into the rail system with a workable public transport system not expend the budget on a single railway line.   In the future the need to meet and discuss face to face is likely to be less and less as technology advances.   But we will still need to travel in terms of leisure and we will want an alternative to visit London particularly when the cost is likely to be prohibitive.

In terms of the freight aspect leaving aside the obvious matter that in the North West the Atlantic Gateway is the core plan for freight with its ports based infrastructure.    If indeed we are to carry freight from the south to the north by rail to a regional central point then we still have to distribute the freight regionally.    If we don’t have the regional freight capacity then it will have to be moved by road.

Many of the proponents of HS2 declare it to be investment for the North.   You could argue it is no such thing and merely infrastructure to extend the tentacles of London.   Many in the rail industry and local MP’s in the north west argue the money would be better spent on the rail infrastructure across the nation and from east to west not just north to south.   That would be more likely to distribute the wealth more evenly across Britain.

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