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Coffee House

Now is the perfect time for George Osborne to stop wasting money on HS2

23 August 2013

2:32 PM

23 August 2013

2:32 PM

It’s not just Ed Miliband who’s facing pressure over HS2. George Osborne’s famous political antennae must be twitching furiously by now  — does he really want to be the last man in England backing this? Alistair Darling’s case (£) reeks of cold logic: he has become the latest public figure to withdraw support for HS2 because the costs now outweigh the benefits. The facts changed; he changed his mind. This is what rational people do. Unless you’re ideologically wedded to the idea of HS2, then there’s now not much grounds for supporting it – as a glance at the latest the Institute for Economic Affairs report attests.

Ross Clark writes in this week’s magazine that funding for a high speed project between Nice and Paris has been frozen – the money is being spent upgrading the network in other places.

My colleague Sebastian Payne is still keen on HS2, and his position is certainly intellectually honest. He doesn’t pretend to care about an economic rationale. It’ll be okay in the end, he says, just like the M25 which was attacked as a ‘road to nowhere’. We discuss in in this week’s podcast, below:

[Alt-Text]


But Osborne is the puzzle. He’s still cheerleading for what he must know is a doomed project – the only question is how much taxpayers’ money will be racked up before it is scrapped formally. Soon it will be seen not as a transport programme but a metaphor for political tin-earnedness and vanity.

If Andrew Adonis (the main HS2 evangelist) wre not a senior adviser to Ed Miliband, then Labour would be its (inevitable) abandonment. A Newsnight report suggested HS2’s costs have grown to the extent that it now has a negative return on investment. Like Andrew Adonis, Osborne was an early advocate of HS2 – which, in 2006, did seem like a good idea. So did the poll tax at first: early calculations suggested it would be a tiny amount. But when costs boom, it’s time to think again and now the price tag for HS2 is out of all proportion to the benefit. By all means spend £80 billion on infrastructure, but there are so many better ways of doing it.

Last night, I boarded a train from Paddington to Bristol where people stood everywhere not even bothering to check seats: they knew there’d be none. And this on an economically crucial link between the capital and the south west. What will HS2 do for them? Our rail network needs expansion but there are better, cheaper, saner way to do it. Alistair Darling sees that. It won’t be long before voters in the north see that too: if the £80 billion is for them, aren’t there better ways of spending it? Can’t London think of better ways of helping the north than letting them come to London a bit quicker?

The Economist. The IEA. The CBI. The NAO. Vince Cable. Now, Alistair Darling. By Christmas, I suspect that any unbiased observer will have come out against this project. Osborne has had a good summer, he’s built up some political capital that he can spend.

UPDATE Since I wrote this, two pieces defending HS2 have been printed. One by Andrew Smith, a lobbyist, on ConservativeHome and another Will Hutton, in the Guardian. Both appear to elaborate on the Payne position: never mind the ‘naysayers’ with the calculators who demonstrate there is nothing resembling a business case for this insanely expensive project. Have confidence in Britain’s future, etc. Hutton makes rather amusing claims that shaving 20 minutes off a train journey…

“will bring Britain together: the ripple and cascade effects will be enormous, attracting investment into the Midlands, the north and Scotland and transforming the country’s relationships.”

Of course, if there was a germ of truth in this hyperbole then a similar effect would have been noticed in other parts of world where high speed rail has been built recently – to no great effect. The truth is that the economy is evolving in ways that rapidly diminish the premium placed on high speed travel. The opposition to HS2 is growing from those affected by the construction to anyone who cares about rationality in government. That’s why, from France to California, those who are careful with public money intended for infrastructure are finding better ways of spending it.

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