Daily Archives: July 2, 2013

HS2 rail©PA

M y experience has taught me that the hardest thing in politics is to say you have changed your mind. Politicians instinctively hate u-turns as they denote fallibility and, they think, weakness. But reversals can be a sign of strength and courage. I once supported High Speed 2, a proposed rail link from London to the north which the Labour government of which I was a member first put forward. There are no simple options when it comes to transport – but I now fear HS2 could be an expensive mistake.

In any decision of the magnitude of HS2, understanding of the costs and benefits involved will evolve. Politicians should not be afraid to think again about a project whose estimated cost has just risen again by a quarter, to £42.6bn. In 2010, when the then Labour government decided to back HS2, we did so based on the best estimates of what it would involve. But these were almost entirely speculative. The decision was also partly politically driven. In addition to the projected cost, we gave insufficient attention to the massive disruption to many people’s lives construction would bring. Why? Not because we were indifferent but because we believed the national interest required such bold commitment to modernisation.

More

On this story

IN Opinion

Remember the context. We were emerging, or so we hoped, from the worst financial crisis of our lifetimes. We were on the eve of a general election and keen to paint an upbeat view of the future. Such publicly built infrastructure projects seemed to provide so much of the answer to our short- and longer-term economic and employment needs. We did not imagine that the taxpayer would meet all of the costs; HS2 looked a sure candidate to attract private funds. This is now far from clear.

But in truth, this was about the limit of our collective cabinet consideration. We were focusing on the coming electoral battle, not on the detailed facts and figures of an investment that did not present us with any immediate spending choices. The vision was exciting, a lot of spadework had been done in the transport department and the cabinet adopted HS2 as a “national cause”, competing with the then Conservative leadership whose enthusiasm for the project had predated our own.

Probably the most glaring gap in our analysis were the alternative ways of spending the £30bn cost, appraised against the stated objectives of HS2. These included the provision of future rail capacity, the creation of economic growth and jobs, the rebalancing of the economy between north and south and a contribution to a low-carbon future. Ambitious claims for HS2 were made in all these respects. All were based on the central assumption that if you could cut the travelling time between London, Birmingham, Manchester and Leeds, HS2 would transmit business and economic growth across the country, justifying the tens of billions of expenditure involved.

This assumption was neither quantified nor proven. We are still waiting for independent analysis to support it. Meanwhile alternatives – upgrading the east and west coast mainlines, major regional rail enhancements and mass transit projects in regions and provincial cities – were not actively considered.

A further key argument was that existing intercity services would reach full capacity. Without HS2, it was claimed, many people and freight would simply be unable to move. But this ignored what has only emerged since then: building HS2 would threaten rail services between the pole points of Birmingham, Manchester and Leeds. As resources dried up, the bullet train would risk becoming surrounded by railway deserts.

A big cut in intercity services running on the “classic” mainlines is built into the Department for Transport’s business case for HS2, including £7.7bn of savings in subsidy to existing services. In the business case, these savings offset part of the HS2 operating cost.

The government also predicts that the removal of a large number of intercity services would enable an increase in commuter rail services operating on the three lines into London. So, if the rebalancing argument is to be made, it perversely represents a shifting of rail resources away from the north to the south east commuter belt.

This is not the vision that captured our imagination in 2010. The goals of spreading growth and rebalancing have become even more pressing since then. There are plenty of important infrastructure needs to which a future Labour government will, rightly, want to commit itself. It is therefore reasonable that those who previously supported the project should not offer it an open cheque and should, instead, insist on keeping their options open.

By all means, let the cost-benefit analysis, and even the paving legislation currently going through parliament, continue. But all the parties – especially Labour – should think twice before binding themselves irrevocably to HS2. It is not all it seems and has the potential to end up a mistake, damaging in particular to those people that it was intended to help.


The writer is a former business secretary and is chairman of Global Counsel

 

The A-List

About this blog Blog guide
Welcome. This blog is available to subscribers only.

The A-List from the Financial Times provides timely, insightful comment on the topics that matter, from globally renowned leaders, policymakers and commentators.

Read the A-List author biographies

Subscribe to the RSS feed



To comment, please register for free with FT.com and read our policy on submitting comments.

All posts are published in UK time.

See the full list of FT blogs.

What we’re writing about

Afghanistan Asia maritime tensions carbon central banks China climate change Crimea emerging markets energy EU European Central Bank George Osborne global economy inflation Japan Pakistan quantitative easing Russia Rwanda security surveillance Syria technology terrorism UK Budget UK economy Ukraine unemployment US US Federal Reserve US jobs Vladimir Putin

Categories

Africa America Asia Britain Business China Davos Europe Finance Foreign Policy Global Economy Latin America Markets Middle East Syria World

Archive

« Jun Aug »July 2013
M T W T F S S
1234567
891011121314
15161718192021
22232425262728
293031