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:


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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Show comments
  • Mark McIntyre

    NO2 HS2 – give it up Gideo !

  • Dr Omar Selim

    The only value for ToryLibDum Government of HS2 is keeping the people busy talking about a ghost project. If they just focus on better management for the existing rail system and making it affordable, maybe people will forgive some of their many blunders. How come that I can’t remember the last time I used the train in Britain while I have a fresh good experience of the French Rail?

  • Lady Magdalene

    Let’s not forget that UKIP has been opposed to HS2 from the start, because the business case put forward didn’t stack up.
    Once again the loonies, fruitcakes and clowns in UKIP have been ahead of the “oh so wise and experienced” LibLabCON.
    But what the EU wants, the EU gets …. doesn’t it Cameron!

  • paulus

    We all know that, its useless and we won’t get our money back. You cannot do a financial analysis on this investment and see where you can get a profit never mind a return on the capital. Its just ludicrous, if you want a train : go and buy a Hornby.

  • Two Bob

    I hear you darling, lets kiss and make up, all is forgiven…..

  • Gareth

    When all the politicians agree with each other, it is usually because they are all wrong.
    Projections of passenger and freight demand indicate that a new main line will be needed by 2030. Building a high speed line is not much more expensive than building a new slow line.
    The estimate of £80 billion was arrived at by including crossrail, a new link to a new hub airport and various other schemes that are nothing to do with HS2.
    So, let us hope that Osborne pauses to think before jumping on the bandwagon.

    • itdoesntaddup

      Until recently, all politicians did seem to agree on HS2. They were indeed wrong.

  • itdoesntaddup

    Darling is the second former chancellor to go public against HS2. You forgot to mention Nigel Lawson.

  • In2minds

    Osborne should, like Alistair Darling, ……..”withdraw support for HS2
    because the costs now outweigh the benefits”

    But it’s not Osborne’s money, also he’s more of a ‘spender’ of public than Darling!

  • dalai guevara

    We built the tube, what happened? The city grew.
    We built the tunnel, what happened? The tourists came.
    We built St Pancras, what happened? The French are now here.

    We WILL build HS2, what WILL happen? Take an informed and substantiated guess.

    • the viceroy’s gin

      …you socialist muppets will move on to your next boondoggle?

    • rtj1211

      Surrey Man Utd supporters will go by train instead of by car?

      • dalai guevara

        …or catch a plane from Norway

        • Wessex Man

          I always find the best way to debate with this halfwit is to ignore him.

          • dalai guevara

            He says posting to the world…
            The mods will have you for your lack of grandeur – do not come crying on my shoulder, boyo.

            And you have little factual insight, you have probably never been to a football match at all, just dreaming about it. Check the airline schedule OSL and TRP if you don’t believe me, it can be done from the convenience of your bedsit.

    • ScaryBiscuits

      We built the tube: no you didn’t; private investors did and made a success out of it long before the government nationalised it.
      We built the tunnel: assuming you mean the Channel Tunnel, no you didn’t: private investors did. If you meant the Jubilee line extension then yes government did build it but at about 50 times the price that the private sector would have built it for an ten years later.
      You socialists did rebuild St Pancras but at great public expense and about the same number of French are here as when the Eurostar stopped at Waterloo, except it now takes them half an hour longer to get to Kensington.
      If the government does build HS2, I bet my informed and substantiated guess will be a lot more accurate than yours.

      • Guest

        Ii was trying to make a BoJo point.
        My hunch is you believe it failed spectacularly.

      • dalai guevara

        I was trying to make a BoJo point.
        My hunch is you believe it failed spectacularly.

        Of course it is true that every single means of transport once set up by private industry, be it train stations, airlines, the tube, tram, coach and bus services, had to be nationalised at one point. Why is that do you think?

        • Alexsandr

          cos we had 2 world wars. After WW1 they did grouping. After WW2 when the railways were totally worn out they were nationalised. If we hadnt had ww2 I doubt we would have had the large scale nationalisation we had in the 40’s and 50’s

        • ScaryBiscuits

          Because socialists believe in nationalisation?

          • dalai guevara

            I tabled three options opposing our privatised oligopoly (Russian model);

            France, Germany, Norway. Two out of those three are definitely NOT socialist. Choose the best model.

            • ScaryBiscuits

              They are all just degrees of socialism. The best way would be a fourth model, the Victorian one, where private companies propose their own railways and then operate them at their own financial risk, just as they did when the railways were first built. It worked fine until the government started micromanaging and regulating them out of business, most notoriously by setting the fares they could charge for freight making it impossible for them to compete with the roads, which were (by happy co-incidence) a government monopoly.

              • dalai guevara

                Posts are disappearing again…I will try one more time.

                Ever since Manchester Capitalism, we know of the limitations of your proposal. I like Victoria, it had a good ‘feel’, but it did not work for long, the rent-seekers just drank everyone’s milkshake, they cared not enough about social effects, they cared about profits (which is the natural thing to do).
                Do not get me wrong, rent seeking ought not to be demonised, it’s the way of the world, but it will eventually require curtailing as greed takes over, every time.

                This is why the social market economy has beaten Victoria on every level.

                • ScaryBiscuits

                  I’m not sure what evidence you have for the venture capitalists who built our railways drinking other people’s milkshakes? Sure, these companies ultimately became rent seekers but that was caused by governments not allowing them to go bust and turning them into zombie train companies, much like we have zombie banks today. Rent-seekers are people who seek government funding (e.g. windmill farms) rather than making money by providing innovations that ordinary people actually want to buy.
                  If the free market had been allowed to take its course, we would had a much more rational railway today than that provided by a combination of government first bailing everybody out and then cutting too much under Beeching. As well as the banks, another industry that is far too important for the government not to interfere in is broadband, which is now apparently a human right. BT is being subsidised to provided it in rural areas which is the best way to ensure it dies a slow death.
                  If you make profits, everything else can be paid for. If you try to do it the other way around, all you end up with is debt and depression. Socialists seem to prefer it that way. The free-market answer to greed is bankruptcy. Companies that care just about profits generally go bust far quicker than those that seek a more rounded engagement with society.

                • dalai guevara

                  It’s the chicken and egg thing – the free marketeers will say it’s the ‘government that’s done it’, the government/or peoples’ representatives will say it’s the ‘bad capitalists that have done it’.
                  The facts are, no working free market capitalist state exists anywhere in the world, nor has it for any significant period of time. It’s an illusion, just like communism.
                  That is why the social market economy has fused the best parts of both.

                • ScaryBiscuits

                  Or the worst of both. No growth and massive debt. 3 million permanently unemployed. Uncontrolled immigration and steadily worsening GDP per capita.

                • dalai guevara

                  on a tangent, have you seen the latest reports on British seaside resorts and their demise?

                  If I said, now look at France you will respond: well, yes the weather, cheap flights and so on. So I will not – I will highlight Holland, Germany, Denmark etc. Their seaside resorts, in the same climate. Can they compete with Margate?

                  Dear me, the differences are plain to see, on every level. The *best* of both.

                • ScaryBiscuits

                  You still don’t understand capitalism do you? Failure is a necessary part of it. It’s customers who get the benefits of free markets, not providers. The best thing for Margate is to admit the seaside trade is never coming back, demolish its dilapidated sea-front and either return it to nature or build new houses.

            • IanRutherford

              re: “privatised oligopoly (Russian model)”

              there were no reports yet from any of the major news networks regarding the Russian government selling 51% stake in Gazprom and 75% in Rosneft. You appear to be better informed than anybody else on our long suffering planet …
              Perhaps president Putin telephoned you in person in order to seek your executive approval of the sale prior to publishing an official statement on the subject on the Russian government website …
              I any case, thank you very much indeed for sharing the truly astonishing news with the rest of us…
              Please enjoy the rest of your truly exciting evening …

  • Smithersjones2013

    It’ll be okay in the end, he says, just like the M25 which was attacked as a ‘road to nowhere’

    I bet Payne only uses it at the weekends when he’s toddling off to the country.

    Anyone who uses the most expensive car park (the M25) in history as justification for another transport infrastructure project is to use the pun “off their trolley”. If one expects HS2 to require perpetual expensive upgrading, if one expects it to be partially or completely blocked causing massive delays and enforcing absurd detours on an almost daily basis and regularly causing gridlock across significant parts of London and the South East then one might call it a success but to the rest of us its nothing but an extremely expensive flawed concept which is best avoided. In fact the failure of the M25 was likely part of the justification for HS1 (allowing Kent commuters reasonably fast access to London).

    So when Payne suggests HS2 will turn out like the M25 let’s hope not and if it clearly is going to let’s not bother building it in the first place because the best use of the M25 I’ve yet heard suggested is to close it and use it as the foundations of an enormous wall around London to keep all those urban liberal elitists and Westminster types in London so they don’t taint the rest of the country!.

    • Makroon

      The HS1 “allows Kent commuters reasonably fast access to London”.
      You obviously have no idea what you are talking about.

      • rtj1211

        It allows a subset of the fast access to London. The ones living near Ashford or Ebbsfleet.

  • Alexsandr

    If we want a step change in rail transportation NOW, lets get the Pendolinos and IC225 sets running at their design speed of 140mph. They are constrained to 125mph because the risk industry reckons you need fancy cab signalling to run over 125. But that is rubbish, you need a 5th aspect which BR developed in the 1990’s with flashing greens to say ‘OK to run faster than 125, next signal is green.’
    Running trains faster means they are available to do their next journey earlier, making them more productive.

    • ScaryBiscuits

      Good point. There are hundreds of little innovations like these that could easily double the capacity on the existing railway. Investing in more reliable trains to make them more comparable with modern cars would also enable hundreds of hours of ‘padding’ to be removed from timetables, for example. All this would be at a fraction of the price of HS2 and provide benefits to millions more people, not just overpaid bureaucrats and BBC suits.

      • Alexsandr

        the slack in scedules is governments fault. TOC’s have on time arrivals as part of their franchise agreements, and lose money for late arrivals. so the cost of padded timetables is less than the late fines. daft init.

  • Mynydd

    Who says Mr Miliband is facing pressure over HS2? Why bring Mr Miliband into an article about Mr Osborne and the problems facing the government in respect to HS2. It should remembered that it’s Mr Osborne, not Mr Miliband, who is committing tax payers money to this project. With respect to Mr Osborne’s political antennae, all I would say is: 2012 budget.

  • dalai guevara

    That would be unforgiveable.
    This country does not need hub airports, it needs a network of airports.
    This country does not need only crossrail in London, this country needs to be connected.

    This country is failing, as it is run applying a centralist *star* diagram, every time.
    This country’s organisational/ infrastructural/ political structure needs to move to a superior *web* diagram.

    Every vote ought to find representation in our Parliament (not just the block parties), every community ought to determine their local approach on energy, when a public transport system cannot be run competitively, do not give it away to create yet another privatised monopoly.

    • the viceroy’s gin

      …you socialists are having a rough time of late, innit? The Londonistan bubble denizens have apparently decided to ignore you dolts re fracking and HS2 both. Bummer.

      Fear not, the bubblesters are still a lot closer to you muppets than to normal people.

  • Hello

    If the UK wants a vanity project then Elon Musk’s Hyperloop looks like a much more economically efficient alternative, and tackles the state-of-the-art element a lot better.

  • itdoesntaddup

    OOH – that spelling mistake was almost Osbrowne!

  • Hello

    The M25 argument is still a rubbish argument. If HS2 will work out then there is a good economic argument for it, in which case that argument should be found, rather than encouraging the pursuit of dumb luck, which is the most thick-headed rationale evaar, and could be used to justify any ridiculous project.

  • the viceroy’s gin

    …so the bubble has decided against this, and sent out its criers, has it?