As HS2 gets more expensive, its economic benefits become more doubtful. A perennial problem is that government-backed infrastructure projects solve yesterday’s problems tomorrow. In a rapidly changing world that results in ‘white elephants’, says Victor Hill.
£106 billion or £142 billion?
A report out this week by a former head of the UK rail regulator, the Office of Rail and Road, says that the carbon emissions from the construction of HS2 (the high-speed rail line linking London to Birmingham and then to Leeds) will be equivalent to, if not more than the reduction from the car journeys it will replace, over its economic life. Professor Stephen Glaister told the Daily Telegraph: “Carbon reduction was never a strong argument in favour of HS2”.
So, according to the report, HS2 Levelling up or the pursuit of an icon, prepared for The Institute for Government, the HS2 project will be at best carbon neutral. In fact, the environmental benefits of travelling on a fast train will be eroded since, as we know, from 2030 onwards there will be fewer and fewer internal-combustion-powered cars on our roads – thanks to government policy. A spokesman for HS2 asserted in response that HS2 will reduce the number of UK domestic flights by 379m passenger miles. Maybe.
If the project was not about reducing carbon emissions, what was it about? The Johnson government has ambitious plans to increase public investment in infrastructure as part of its often-stated policy of ‘levelling up’ parts of the UK that have been left behind (principally, the north of England).
And there is no doubt that well-designed infrastructure projects can have long-term economic benefits. But in the case of HS2, over the course of more than a decade, the decisions of senior politicians, including David Cameron, George Osborne and Labour transport secretary Lord Adonis, were determined by political considerations, to deliver the project without a sufficient analysis of its economic benefits. Legislation for the first phase of the line was given royal assent in 2017 with only 50 MPs dissenting.
Last month, Lord (Tony) Berkeley wrote to Simon Case, the cabinet secretary, calling for an inquiry into whether ministers misled parliament over the cost of the project. In April 2019 Theresa May’s cabinet was told that the project could not be delivered on schedule within the existing budget. Yet the then transport minister, Nusrat Ghani MP, told the House of Commons that the project was on track: “I stand here to state confidently that the budget is £55.7 billion”, she told MPs on 10 July 2019.
Tony Berkeley is a Labour member of the House of Lords and has been an opposition transport spokesperson. He was the public affairs manager at Eurotunnel from 1981 until the completion of the Channel Tunnel in 1994. Before that, he was involved in various rail projects around the world. He wrote a dissenting report following the 2019 review of HS2. While the government now concedes that the cost of HS2 could rise to £106bn, Lord Berkeley believes that a figure of £142bn is more likely.
As the Institute for Government states on its website:
“The controversy that has surrounded the HS2 rail link from London to the north of England demonstrates the problems that can arise when major infrastructure decisions are made without clear objectives, without proper use of evidence, when alternative options are written off too early, when there is a lack of transparency and accountability for decisions, and when central government fails to engage adequately with local communities and subnational authorities”.
Originally, the project was envisaged as a Y-shaped network with spur lines from Birmingham to Manchester and Leeds. HS2 Ltd, the government-owned firm behind the project has already concluded that the section of the line between Crewe and Manchester represents poor value for money. And the fate of the spur line from Birmingham to Leeds, which would cost an estimated £32bn, still hangs in the balance. The decision on its precise specification has been delayed until after Chancellor Sunak’s spending review which is expected in the autumn. This will most probably coincide with the much-anticipated integrated rail plan to upgrade train links across northern England.
Then there is the issue of environmental degradation. The citizens of Wendover, Buckinghamshire have had to watch as an enormous concrete railway viaduct was constructed across the entrance to a historic Chiltern town in an area of outstanding natural beauty. There is concern that tunnel boring may damage the fragile chalk aquifer beneath the Misbourne Valley and that the water table might be polluted. The Environment Agency has so far refused inspections of the tunnelling process.
Not that the good people of Buckinghamshire will benefit at all – there will be no stops there along the line. That was one reason why the Conservatives were defeated by the Liberal Democrats at the Amersham and Chesham by-election (17 June). Another was the prospect of the Tory government’s proposed planning bill, due in the autumn, described by locals as a charter for greedy developers. The same government that wants to save the planet seems to many natural Tory voters to want to concrete over our countryside.
Huge swathes of woodland, much of it ancient, have been felled – this by a government which is supposedly supportive of rewilding and tree planting on a scale of a proposed 30,000 hectares of new forest each year from 2025 onwards. However, tree planting on a scale sufficient to negate our carbon emissions, even given all-electric road traffic, is mathematically impossible according to a recent report from the charity Oxfam. It would require that massive tracts of farmland be taken out of production – a huge threat to our food security.
Another problem with HS2 is that it does not solve the challenges of getting to London for people who do not live in Birmingham. Try getting from Prestatyn or Coventry to Euston. People who live in these towns will tell you that while Brummies might get home 30 minutes earlier, many of their services to the capital have been cut to the bone.
Moreover, the claim that HS2 will boost the Northern Powerhouse/‘red wall’/new ‘blue wall’ constituencies is highly dubious. HS1 (St. Pancras to the Channel Tunnel) has been of precious little benefit to the people of Kent. It is true that property prices in Ashford and coastal towns in east Kent such as Deal have soared as travelling times to the capital have been slashed (40 minutes and 75 minutes respectively). But that is my point – by reducing travelling times, London sucks resources and labour towards the bloated centre as commuting becomes possible.
The main argument for HS2 was always capacity. It will allow longer-distance services, including those to Scotland, to be diverted away from the West Coast main line which, in turn, will be able to accommodate more freight services. But with the probably permanent shift to home working, that argument is undermined. The five-times-a-week commute to London is over. That is a blessing for many people who find the cost of annual season tickets crippling.
And then there are concerns about suppliers. The French engineering giant, Thales SA (EPA:HIO) which is expected to supply electronic signalling equipment, information screens and power cables to the HS2 project, has put its transport infrastructure operation up for sale. Thales has a market capitalisation of about €19bn.
It is probably too late now to cancel HS2 altogether – the Chilterns have already been disfigured anyway. But it is not too late to add more station stops so that people there can use it. And why did no one in Whitehall have the imagination to construct a traffic-free, long-distance cycle lane to run parallel with the rail track?
John Bull’s other project
There is another massive infrastructure programme much nearer to completion than HS2 which is so behind schedule that it has fallen out of the news. That is the Queen Elizabeth Line (aka Crossrail) which will run from Abbey Wood in the London borough of Bexley to Reading in Berkshire – as well as from Shenfield in Essex to Heathrow airport. The latest word (early July) was that Crossrail Ltd plans to bring the Queen Elizabeth (QE) line into passenger service as soon as practically possible in the first half of 2022.
That will be – if it happens – at least three years behind schedule. The cost overrun announced in November 2019 was £450-£650m. In August last year, the project managers announced they would need an additional £1.1bn. Last month they announced that they would need another £150mto finish the job. The anticipated final cost of the project will be just shy of £16bn.i
I don’t doubt that the QE Line will make it easier for Londoners to get from the eastern and western suburbs to the centre, and certainly to get to Heathrow quicker. It promises aesthetic public spaces such as its flagship stop at Tottenham Court Road. But there again, the QE Line will aggravate further the hyper-concentration of the UK’s airport network. Heathrow and Gatwick together accounted for over 44 percent of all air passengers in 2019. The top four UK airports – Heathrow, Gatwick, Manchester and Stansted – accounted for 64 percent.ii
By rights, when a project overruns its budget so severely, its net present value should be recalculated – publicly. But things don’t work like that in this country. According to a research paper by the Campaign for Better Transport, the Beeching cuts to the railway system in the early 1960s devastated poorer communities the most. That was where the rot set in.
There is something rotten in the state of Whitehall.
Tories can afford to vote Liberal Democrat in by-elections, knowing that they have zero chance of forming a government. They know that some Lib Dems are ‘good eggs’ who arrange the flowers in church, even if they are overly keen on foreign aid.
According to people who know about these things, the Johnsonite slogan of levelling up has never worked in the focus groups. Southerners are suspicious that it means they will have to cough up more taxes; northerners think it sounds patronising. Mr Johnson should ditch this catchphrase, just as Mr Cameron was persuaded to ditch his ‘Big Society’ mantra.
The Johnson government looks confused – or, worse, hypocritical. It is out to cut carbon emissions to zero, yet it has a road-building programme; it preaches sound financial management while borrowing like crazy and causing rampant inflation; it is the party of personal freedom which has presided over draconian restrictions to our personal liberties during the pandemic; and it is a party of opportunity which is now threatening tax rises and huge increases in energy bills.
It is the party of business which is heaping new and burdensome responsibilities on company directors. (The cost of directors’ liability insurance has doubled over the past year). One week the government proffers a national food strategy to combat obesity and the very next it bribes youngsters to get vaccinated, by offering free pizza and Krispy Kreme.
Corporation tax is going up – and possibly capital gains tax too. The negation of stamp duty is about to be reversed. Council tax is shooting up. National insurance (a tax on jobs) is earmarked for an increase. There will be a new tax to fund state-sponsored care of the elderly, just so that upper-middle-class people can inherit their parents’ expensive homes.
Illegal immigration is, quite literally, out of control. Our departure from the EU was supposed to usher in an era of ‘light-touch’ regulation. Instead, regulations are to be tightened. A long overdue review of how the labour market works post Brexit was scrapped. The remarkable opportunity to unleash the economy given the success of the vaccination programme seems to have been dissipated. It would be a tragedy if the opportunities offered by Brexit were dissipated too.
The government apparently does not even trust the City – one of our most precious assets – to allocate capital efficiently. The Tories, once obsessed by economics, no longer even discuss the subject. This is a government that refuses to ‘take the knee’ yet does not stand straight-backed either. It has no ideology except crisis management.
Meanwhile, the Labour party continues to repel its core base of white, working-class voters who, until Brexit, would not have voted Tory to save their lives. Labour activists worry that flying the Union Jack looks extremist while filling social media with Palestinian banners. By the time the next election comes round Labour will probably have adopted the Black Lives Matter policy that we should pay reparations for slavery and that any reservations about trans athletes competing at the Olympics be treated as hate crime. Labour’s chances of winning back essential support in Scotland, which it once held like a f iefdom, look slim.
So, we are probably stuck with the confused Tories indefinitely. They assume that people like me will still reluctantly tick the Conservative box next time round – while firmly pinching our noses. But will we?
When the Tory knights of the shires fear losing their seats, they become mutinous. Don’t rule out a palace revolution
ii See: https://simple.wikipedia.org/wiki/List_of_busiest_airports_in_the_United_Kingdom The calculations are mine.