In June last year I predicted in these pages that the government would allow High Speed 2 to die a quiet death. Although the government has since reaffirmed its commitment to the proposed railway line, I am sticking to my prediction. Indeed, if the line is ever built I will book a ticket on the first train out of Euston and consume my hat in the dining car.
How can I be so sure? Because the projected costs of the project are now so ridiculous that it cannot possibly go ahead. Even before George Osborne, in his spending review in June, added another £8 billion to the estimate cost of HS2, the project had a feeble and a deeply flawed benefit-to-cost ratio of 1.4:1. As a suppressed Department for Transport report, finally disclosed in a freedom of information report last summer, made clear, most of the supposed benefits of HS2 are based on the false assumption that businessmen do not use their time sitting on trains productively. But with the new costings even the flawed benefit-cost ratio falls to just above one: the level at which the cost to the public purse equals the forecast benefit to the economy. And that is assuming that you believe the new costings. Many do not. This week the Institute for Economic Affairs published an analysis which, including all the related projects required to make HS2 function, such as another Crossrail from Euston, brings the project to close to £80 billion. The record of HS1 (the Eurostar line through Kent) does not bode well: in 1985, when first proposed by British Rail, it was costed at £1 billion at current prices. It eventually cost £11 billion.
The National Audit Office, too, is deeply sceptical about the justification for HS2. It produced a scathing report in May attacking the ‘lack of clarity’ about the objectives of the project.
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