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Thursday, 3rd March 2011

The case for abandoning HS2 restated

Matthew Sinclair 12:20pm

The government release a claim that HS2 will bring 40,000 new jobs. They are so desperate to let the public know that figure they breach proper practice by briefing it ahead of the publication of the consultation document.

When the consultation document comes out, I will look at whether creating that number of jobs is actually impressive, for an investment of £17 billion. The wider economy produces four times as many jobs per pound of capital, so it actually doesn't look very impressive at all.

Professor David Begg, eminent representative of an endangered quango, is furious though. He attacks me for making an unfair comparison. The 40,000 figure might be much higher if the new high speed rail line yields the transformative economic results claimed in the business case. And we shouldn't be talking about jobs anyway, after all:

"We don’t appraise the value of, say, spending money building a new hospital only on the basis of the number of new nurses and doctors it will employ and nothing else."

Absolutely. So it would be great if the government and other proponents of the line would stop making facile claims about jobs created and focussed on the substantive debate over high-speed rail's business case. Until they do, there is nothing unfair at all about testing the government's claims about the number of jobs high-speed rail will create against the number of jobs produced by other investments, as we did in our research note. We aren't going to disarm unilaterally.

Looking at that wider business case, and the cost-benefit ratio claimed, the weaknesses of high speed rail are just as clear. Even if the £2.60 of benefits for every £1 spent claim were accurate, it wouldn't be that impressive. It is way below the cut-off point for road schemes. It is also lower than more affordable options to get the rail capacity we need, if they are compared fairly.

That 2.6 ratio isn't remotely credible though. It relies upon absolutely heroic assumptions. Two key examples:

1) The original business case relied upon an incredible 267 per cent rise in demand. The projection is a bit lower in the consultation document in the short term but, to make up for that, it is being extrapolated further into the future, to 2043 instead of 2033. That is utterly absurd for a simple, fixed elasticity model. Senior figures in the transport industry like Sir Rod Eddington have previously worried about using such a model for forecasts more than 10 years in the future.

2) The analysis assumes people do nothing useful on board trains. I.e. that every minute saved on the journey is a complete minute of additional productive time that would otherwise be completely wasted. The reality is obviously that lots of people work on the train, and are able to do so more and more productively with laptops, smartphones and wireless Internet connections. Even those who just eat or have a cup of coffee are getting some productive use of their time. Adjusting just this one assumption to be more realistic would destroy the case for HS2.

They also compare an alternative with no additional capacity or other improvements apart from those already planned over the next few years. For forecasts through to 2043 that is obviously not appropriate. There are other options that are far more affordable, provide all the capacity needed until 2043 and produce less overcrowding than HS2, on the Department for Transport’s figures.

Marginal improvements in the journey time on an already fast and frequent service won't have a dramatic economic effect. Madrid to Barcelona took seven hours and high speed rail cut the journey time to less than three hours. There just aren't the same kind of gains to be had here as the existing service is better and the journey is shorter as we live in a smaller country.

With a business case so desperately weak, it's understandable that the Government have retreated to even weaker claims about the number of jobs the scheme will create. It is unfair and deeply misleading for Professor Begg to criticise us for responding when they do.

Spending £1,000 per household on HS2 is a major investment and there is every reason to think the line will be a huge white elephant. Proper scrutiny of the plans is essential. That which has been conducted to date suggests that the government should cancel the project.

Matthew Sinclair is the Director the Taxpayers' Alliance

Filed under: Growth (182 more articles) , High-speed rail (14 more articles) , Public spending (123 more articles) , Railways (8 more articles) , Taxpayers' Alliance (31 more articles) , Transport (51 more articles) , Travel (141 more articles) , UK politics (5406 more articles)

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Comments Post comment

Perry

March 3rd, 2011 12:39pm Report this comment

"David Begg, eminent representative of an endangered quango, is furious though. He attacks me . . "

Have no fear Matthew. Quangocrats turn nasty when their comfy little sinecures are threatened.

Anyway, what can he do? - apart from tying you to the rails - but we'll save you in the nick of time - actually there'll be planty of time before a train runs.

In2minds

March 3rd, 2011 12:42pm Report this comment

Typical of public transport this, you wait for ages for an article on such a thing then several turn up at once.

Commentator

March 3rd, 2011 12:45pm Report this comment

Matthew, if the jobs argument is all the HS2 fanatics have got, they are running on empty. As Keynes would have put it, we might as well spend these untold billions we can't afford on digging holes in the ground and filling them up again.

michael

March 3rd, 2011 12:52pm Report this comment

better off spending the cash enhancing LHR LGW
MAN PIK as transport hubs with dedicated airport express trains and stations where you can check in and drop baggage...HONG KONG style. -Its an incredibly CONVENIENT set up.

alexsandr

March 3rd, 2011 1:01pm Report this comment

People dont just go from Brum to london. they go from kidderminster, walsall, wolverhampton, coventry, nuneaton,redditch, warwick, worcester etc. These all have good london through trains at the moment. take away the birmingham-london traffic and the existing rail services from these places will wither. We need investment in the current rail system, like elimintaing busy flat junctions, and 4 tracking where inter city and local trains share tracks like between coventry and birmingham, and between high wycombe and marylebone.

And ELECTRIFICATION.

michael

March 3rd, 2011 1:14pm Report this comment

It is totemic for the government, it is just a symbol- they are worried re north/south divide- ecomonically this is getting wider- i dont like the idea of payingf £1k per household for a totemic matter to make any government feel it is doing something meaningful

CS

March 3rd, 2011 1:18pm Report this comment

***Matthew Sinclair is the Director the Taxpayers' Alliance.***

And probably lives in the Home Counties.

Simon Stephenson

March 3rd, 2011 1:41pm Report this comment

alexsandr : 1.01pm

Yes, I agree, but this won't appeal to the neophiliacs who seem to gain ground every year. The reality, though, is that any clown can have a novel idea whose efficacy is swathed in speculation, but it requires someone of real talent to take what's already been built, and work out how to make it function better.

Regrettably, the encouragement of real talent has become a political no-no in our "all must have prizes" society, and so we plough on with the mindset that novelty is synonymous with progress.

Arthur Dent

March 3rd, 2011 1:42pm Report this comment

To take a current trend and extrapolate it into the future as the basis for forecasting is barmy. Writing in the Times of London in 1894, one writer estimated that in 50 years every street in London would be buried under nine feet of horse sh*t! No one can predict the future.

Richard Crow

March 3rd, 2011 1:55pm Report this comment

All this talk about jobs created - what about the jobs lost? The villages along the line will see less tourism. For every action there is a reaction and if you are going to counnt the job gains you have to net off the job losses including those lost through less cars on the road - as much as having less cars on the road is desirable. Less motor manufacturing jobs, less road maintenace, less garage workers are all the knock on that need to be netted off.

To claim all these jobs from this one project is bunkum. They've massaged down the costs and upped the gains in order to get this through.

What actually amazes me is the amount of gullible people we have in this country that will buy this codswallop that they are being fed by Phillip Hammond's one sided department.

The EU want it, there's probably a bung from th EU to do it too, that's the likely reason this government are so keen - aside from the fact the toties are funded by all the companies and directors that want the business building the thing - asceptic might say - I couldn't possibly comment :-)

TrevorsDen

March 3rd, 2011 2:26pm Report this comment

More appalling bunkum and bigoted opinion.

The fact that the Spectator gives the bigoted Sinclair a platform shows why this county is stuck in its Victorian past.
Germany and France are lucky we bombed their rail networks to bits.

tonyp17

March 3rd, 2011 2:34pm Report this comment

I am totally against the continuation of this project. I cannot find any justification for it and the spurious claims being made would not meet any private enterprise criteria.

The strongest reason to reject is that this country is simply too small for a separate High Speed rail network. The theoretical time saving is too little and as any traveller has to get both to the terminal to board the train and then complete their journey at the other end the savings become miniscule.
As far as I am concerned - end of debate.

In addition if we had this sort of money available it should be used elsewhere on projects with much bigger returns. This project has no right to queue jump.

Victor Southern

March 3rd, 2011 3:00pm Report this comment

If this attitude had been in vogue in the 1830s to the 1870s we would have no rail network at all. Every mile of rail laid impinged on someone's enjoyment of tranquility.

I have no firm opinion as to whether this will benefit the country or not but this sort of contra-argument is very shaky. The money is a huge sum - about two years worth of foreign aid so we really ought to have a dispassionate discussion.

The matter that concerns most train users is the staggering rise in fares that happens even with low-speed rail. Will anyone other than MPs be able to afford to travel on the high-speed variant?

mongoose

March 3rd, 2011 3:08pm Report this comment

Begg, eminent? My Rs.

Puncheon

March 3rd, 2011 3:40pm Report this comment

All these extra jobs - where are they going to go? Irish navies built out first rail network and east European ones will build this line, so how exactly does it benefit our economy? In my north of England City local enterprise has expanded and modernised our rail terminal so that supermarkets can rail their goods up to be distributed locally, thus saving thousands of miles of HGV motorway travel. That's the kind of thing we should be doing. But out political masters aren't interested in that are they? They prefer 'eye-catching initiatives', as the Great Pretender used to say. The fact is that the railways have always been uneconomic for passenger traffic. It only makes sense for goods, because they have a different time sensitivity. Public transport is the pits for people - it takes them from where they don't want to go from, to where they don't want to go to, at a time of someone else's choosing, which is precisely why bossy socialists love it. So motorways for people, and rail and railheads plus good local road systems for goods. But this will require lots of detailed work and effort, which is not something our political/media class are known for.

yank

March 3rd, 2011 3:41pm Report this comment

It is a measure of the Cameroons' incoherency that this discussion is being pushed right now... massive public spending, of unknown but certain-to-rise cost, of uncertain (impossible?) payback, select regional focus, all during an era of alleged "austerity".

This one has all the negatives of the forests issue and more, and none of it's charm and asset, plus it throws the Cameroons' fiscal credibility out the window (not that they had much).

So I'm predicting that like his soulmate Obama, Dave's gonna keep pushing this boondoggle.

Simon Stephenson

March 3rd, 2011 4:33pm Report this comment

Victor Southern : 3.00pm

"If this attitude had been in vogue in the 1830s to the 1870s we would have no rail network at all."

On the contrary. We would have had a rail network, but we wouldn't have had a wider and more extensive canal network, which is the equivalent of what the HS2 supporters are proposing now.

Catalyst

March 3rd, 2011 4:34pm Report this comment

£17 billion divided by 40,000 jobs equals £425,000 per job. Therefore, the jobs argument as a reason for HS2 is just plain silly.

Mike Spilligan

March 3rd, 2011 5:08pm Report this comment

It may cost £1,000 per household, but in practice about 35% of households get tax credits / benefits, so that for the rest of us it'll be £1,500 per household.
Simon Stephenson @ 4:33:- A good point. As a railway history "buff" I'd like to add that the canal / barge owners said that they thought locomotives were a good idea, but only to run alongside the canals in order to pull the barges - and we know how that one worked out.

Charlie the Chump

March 3rd, 2011 5:50pm Report this comment

If we want to spend £17bn rising to god knows what then: Cut Taxes; nothing, NOTHING will stimulate the local economy more effectively.

If we want to boost the economies of Liverpool, Hull, parts of Birmigham or the whole of Cornwall then cut all taxes in clearly defined development zones - zero corporation, personal, NI for all businesses, staff, directors - everyone - for 5 years; suspend employment law for 3 years; halve council taxes for 3 years and see what will happen. Mini Hong Kongs will flourish, in 5 years the tax take will soar.

Enough with the Begging bowls already!

eggshell

March 3rd, 2011 6:11pm Report this comment

I agree with alexsandr if we can see it why the heck cant the government.Oh and I believe
mr hammonds constituency would be affected if
heathrow was expanded .I would not use the N
word because it is childish to name call.

In2minds

March 3rd, 2011 6:20pm Report this comment

@Mike Spilligan - "so that for the rest of us it'll be £1,500 per household".

Good point that, it's also £500 more than I paid for my last car 5 years ago which still makes regular motorway journeys. Rail is a rip off.

fluffyhead

March 3rd, 2011 6:53pm Report this comment

I truly believe that this Coalition Government has misread the mood of the Nation. WE don't want fancy toys we want to get to work in reasonable comfort at a reasonable price. Who is going to be using this train? Most train journeys are probably to and from work. Government - think this through it isn't some fancy toy that another boy has at Eton and you want to play with it! ps it isn't your money either it is the taxpayer and we want value for money!!

AndyinBrum

March 3rd, 2011 6:58pm Report this comment

Anyone who thinks there's enough capacity on the WCML or much room for expansion along the current corridor doesn't know a lot about railways, or how highspeed rail is now built.

There's little capacity left at airports, little left on the roads, little left on the existing rail lines or at stations, so we need to build the new rail line.

Victor Southern

March 3rd, 2011 7:11pm Report this comment

Simon Stephenson @4.33pm

I think that you will find that the canal building era ended about 1815 and any residual plans were shelved as the railways cam along.

John Emsley

March 3rd, 2011 7:13pm Report this comment

The creation of a high speed rail network requires a huge mental leap. The same kind of visionaries who made the original network. Until it is there, no-one can truly assess the social or economic effects.The negative comment reflects the unpersonal email/text world of 2011 business. In West France-where I now live-the TGV has come of age now. Putting western France within 2 hours of Paris is changing everything.Major companies are investing here because property costs are much lower while management can go to a meeting in Paris during a single day.
Shrinking a country like that really works, I'm watching it happen all around me.
Mind you the fares here are much,much lower than the UK.............

One last point-I read a comment claiming that a high speed line is a 75metres wide concrete band carved through the countryside. Sorry-no. I cross one every time I go shopping.....say 12..... and there is no noise pollution.....

Ruby Duck

March 3rd, 2011 9:33pm Report this comment

Nothing about freight on this page, either.

Cynic

March 4th, 2011 12:42am Report this comment

I've always thought it's a pity they didn't build a monorail system beside existing motorways.

Steve Patriarca

March 4th, 2011 7:16am Report this comment

The High Speed Train plan embodies all the blunders and waste of corporate socialism. It is politically driven not market driven. How many passengers put speed at such a priority over comfort and convenience? Why not improve rail travel? The demand for a third runway at Heathrow is market-driven and vital for the country's infratsructure but it does not fit the Government's Stalinist Plans. The sheer level of public waste involved in HS2 is beyond belief and as we know it will come in many times over budget. It is a sort of transport version of the Dome - Cameron's Ozymandias.

Roz

March 5th, 2011 2:09am Report this comment

@ John Emsley - last paragraph
Regarding width and noise created, this is not the TGV we're talking about, nor even HS1.

HS2 Ltd's own figures say 'about' 22 metres width for 2 rail tracks and service road, with 25 m 'vegetation-free zone', of nature as yet unspecified, on each side through open country. More land will of necessity be taken for cuttings up to 20 metres deep.

No figures on noise, just government statements....

Richard Grosse

March 8th, 2011 1:13pm Report this comment

The idea that the global village needs more physical transport in order to continue functioning better is rather backward thinking.

A huge number of people are already using the plethora of digital technologies available to communicate faster, face-to-face (all be it on-screen) and more accountably, being able to record and log conversations and wasting no time on journeys to and from stations, let alone squandering hard earned money on train tickets and hotels etc. Business relationships are just as real on-line and the old boys cliché that there's nothing like a handshake frankly doesn't wash any more.

The future of communication is already here, and were the government to spend more energy on educating and enabling people to use this technology to its full potential there could be massive savings financially and environmentally, as well as pulling the us towards a leaner, more tech-savvy business community.

As communications technology advances, the need to travel physically will inevitably reduce, so by the time that the 'high speed' rail line is actually built we may just find that the demand for it is no longer there, leaving us with a huge bill for an ill thought out dinosaur.

Windsor Thomas

March 8th, 2011 8:11pm Report this comment

After studying the DfT's HS2 documents to go with the Command Paper announced in Parliament on 11 March 2010 by Adonis (who also wrote-off the £6 Billion that went into HS1, I wrote to SoS Philip Hammond and pointed out that HS2 was a deeply flawed scheme with no sound business case, no environmental case whatever, it was uneconomic,unaffordable and entirely unnecessary. I reminded him of the same DfT's work for the Channel Tunnel Railway HS1 which has never carried above 37% of the greatly over-inflated pax demand forecasts nor has it ever made a profit, and will be subsidized out of our taxesas long as it operatets. I also said that the DfT's forecasts for HS2 were even more extreme. I said the DfT had wasted (at that stage) some £10 million on HS2 for a scheme that did not stand up to scrutiny. I asked him,instead to upgrade, fully electrify and provide track, signalling and rolling stock improvements on the whole existing UK railway network in a rolling programme staged over, say, two decades and to re-integrate it into one coherent and well interconnected national railway system with common time-tabling and affordable ticketing to re-create an effective railway system for the UK. The fobbing off letter I received from the quango was not worth a reply and now nine months later everything I have seen, read, heard and understood about HS2 being a deeply flawed and unnecessary scheme has been re-inforced by a vast amount of intelligent comment and critique in the media and in national and local press coverage. We must win through in our efforts to consign this one to utter oblivion on a bonfire of our own politician's vanities!

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