Rory Sutherland

The test of time

The test of time
Text settings

In past years, I have been a critic of HS2. I might now change my mind. One simple tweak might make HS2 worthwhile — while saving the taxpayer most of its £60 billion cost. For this to work, all you need to understand is that 1 x 200 is not the same as 200 x 1. To put it another way, commuting is not commutative.

At present, all transport investment is driven by an economic model based on the purported economic value of overall time-savings for passengers. This, as David Metz shows in his excellent book Travel Fast or Smart? is a daft way to plan transport. Never mind that time spent travelling nowadays need be no less productive than time spent stationary: the model is dumb for a bigger reason.

By treating all journeys equally, it does not allow you to distinguish between one person saving an hour 200 times a year and 200 people saving an hour once a year. Yet the hours saved are very different: the first is life-changing; the second merely convenient. The first instance might be best exemplified by HS1 or Crossrail; the second by HS2 or Concorde. Thanks to HS1 or Crossrail, someone living in Canterbury or Reading can feasibly consider working anywhere in London (there is a big difference between an 60-minute commute and a 90-minute one).

By contrast, few people travel frequently enough between London and Manchester, or London and New York, for a small reduction in journey time to make much impact on their lives. Fred Finn, the world’s most travelled man, made a record 718 trips on Concorde, from its inaugural flight to its last. If my calculations are correct, over the 27 years the aircraft was in service, even he saved only 110 hours a year vs subsonic flights: equivalent to reducing one person’s daily commute by 15 minutes each way. By that measure, Concorde saves less time than the new Widnes-Runcorn bridge.

Time savings matter most where they improve what people do repeatedly — in particular when they give people new options of where they can live and work. Hence a far better way to realise the true value of transport infrastructure is not by time saved, but by the resulting gain in land use.

So why not make HS2 more like HS1, by allowing it to perform shorter journeys for frequent travellers, then use the resulting gain in property values to pay for it? Simply buy 50,000 acres of agricultural land halfway between London and Birmingham (at around £10,000 an acre) and do the same between Birmingham and Manchester — then plant an HS2 branch station in each location. Commuting to the City from Oxfordshire would thus be quicker than commuting from Fulham. With planning permission, that newly connected land will now be worth £10 million an acre, paying for the railway and providing more housing. (This ‘Georgist’ approach is, more or less how public transport is financed in Hong Kong.) In the Victorian age, railways led to the creation of hundreds of new towns. Why not now?

Perhaps it’s because the Victorians didn’t have spreadsheets. Bureaucrats love models, because they produce boring, incremental ideas which are easy to defend logically. But the price you pay is a homogeneity of thinking which favours bland improvements over more radical, oblique solutions. True entrepreneurial innovation typically emerges not from models, but when someone asks what’s wrong with the model everyone else is using.

The need for educated people to appear logical and consistent to each other means that, in defining any problem, there is always at least one thing everyone assumes is true that isn’t. Find out what that thing is, and about 50 per cent of the time, the solution to any problem becomes easy.

Rory Sutherland is vice-chairman of Ogilvy UK.