Six reasons this rail plan is a mistake

 
Allister Heath
IF money grew on trees, the government’s London-Birmingham HS2 high-speed rail scheme would be a good thing. Unfortunately, the nation faces fiscal Armageddon; so here are six reasons (there are many more) why the coalition is wrong to back HS2.

1) Like virtually all government infrastructure projects, the costs of this grandiose white elephant will end up far higher than the (already massive) £32.7bn the government is penciling in. The scheme itself will be loss-making and require huge subsidies. These will benefit a small minority of elite travellers who can afford the fees. In years to come, we will wonder why we agreed to saddle our children with even more debt.

2) The benefits of this vanity project will be lower than predicted. Far fewer people will use it than hoped for (remember the Channel Tunnel Rail Link: passenger numbers after completion were merely a third of those estimated at the planning stage). Under the plans, some cities will end up with less frequent train services (and if they don’t, billions extra will have to be spent). To come up with a benefit estimate, the project assumes that all of the time business executives spend travelling is totally wasted (ever heard of wi-fi and laptops?)

3) Perhaps a couple of per cent of the population will use the link; yet 100 per cent will have to pay for it. The massively under-estimated cost of building HS2 is equivalent to £1,000 per UK income taxpayer. Even if fanciful ticket sales and cost predictions materialise, only 42 per cent of the capital costs will be covered over the project’s 60-year life. If there were a referendum tomorrow asking people whether they want to spend that money on HS2, or on something else, or get a tax cut, the scheme would be overwhelmingly rejected. Poor people will be subsiding rich people’s travel as long-distance rail is increasingly only used by the better off.

4) HS2’s first phase will supposedly enjoy a benefit to cost ratio of 1.6. Even taken at face value, that is poor for transport projects; it is below the cut-off point used for new roads. The stark truth is that there are lots of smaller infrastructure projects around the UK that are genuinely worth building and for which private sector funds could be tapped. Existing rail infrastructure needs modernising and expanding. London desperately needs more airport capacity. Our energy infrastructure is in a terrible state. More roads need to be built or widened.

5) The scheme is meant to bridge the UK’s north-south divide, yet it will probably merely boost London’s power, with more people travelling south. There are better, cheaper ways of regenerating the north, such as tax cuts and deregulation. The estimated regeneration gains are wildly speculative; they need to be set against the certain economic losses from the taxes and debt to pay for the project.

6) The economic case depends on estimates of demand growth (209 per cent over 45 years) that are too high. Rail travel did not increase between 1952 and 1995; it has grown since then but it is wrong to assume that this surge will continue forever.

There are many more reasons why I don’t like this ludicrous, unaffordable scheme. But I would love to know whether readers think I’m right on this or completely wrong – email me, or comment at the bottom of the online version of my column at www.cityam.com and we will publish the best reactions in our Forum pages. allister.heath@cityam.com

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