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Will David Cameron be the last to recognise that HS2 is a white elephant?

19 July 2013

3:14 PM

19 July 2013

3:14 PM

The business case for HS2 is falling apart, and with it the political consensus. Vince Cable has today become the latest one to say that the case is not made. Wednesday’s Newsnight put together transport experts who suggested that the taxpayer would get 50p or 60p of benefit for every £1 spent. (HS2 started by claiming a £2.60/£1 ratio). The ex-Transport Secretary, Philip Hammond, said that £1.50 would be his breaking point). Inside government, jokes are made about how David Cameron and (to a greater extent than you’d think) George Osborne are in denial about the implosion of this grand project.

Labour had been supportive (thanks to the continuing evangelism of Andrew Adonis) but today’s FT has Ed Balls saying there will be “no blank cheque” for HS2. He senses a U-Turn is inevitable and wants to call for one now. Mandelson says HS2 could prove an “expensive mistake” and Alistair Darling is against it. Anyone looking at HS2 objectively would draw the same conclusion: the benefits are paltry compared to the cost. And it’s a rather Marie Antoinette way of solving the north’s problems (“Let them come to London, a little bit earlier”). If you are going to spend £42bn to increase train capacity there are very many better ways to do so.

Those who speak to Cameron and Osborne about this say they are not too worried about the collapsing business case is. Doomsayers poo-pooed the M25 and the Jubilee Line, they reply. While this is true, it makes a dangerous leap: it means your backing for a project is no longer supported by logical analysis but a gut feeling. Another word for this is ‘vanity project’. People poo-pooed the NHS supercomputer and the identity card project. Given that Britain is broke anyway, and the government living off printed money, it’s far from clear that we can afford gut feelings.

Vince Cable today spoke as if case has not been made (contrary to what George Osborne said in his Spending Review statement):-

Well, the case for High Speed 2 is still being made – I mean, the figures, as you know, are being revisited – have to meet a standard of cost/benefit analysis which the Treasury seeks, and which meet the requirements of the Green Book, as it’s called, on public investment.

The Department of Transport has admitted that its original HS2 business case was nothing more than a “high-level desk-based exercise”. As the FT put it, this is civil-service speak for “a wild guess”. In other words, HS2 is a project that should never have got off the drawing board.

Labour is beginning to realise this, as is Vince Cable. As is the CBI. And the NAO. And most Tory ministers. And over the summer, I suspect almost everyone with no working interest in HS2 will withdraw their support for it. Sooner or later, David Cameron and George Osborne could be the last two men in Britain who still think it’s a good way to spend £42 billion.

UPDATE: In the interests of balance, I have just been contacted by a government adviser who is not directly involved with HS2 and does think it’s a good idea. So that’s one. My inquiries have established a Cabinet member, who shall remain nameless, who is also enthusiastic about it in private (in the context of Britain needing more infrastructure projects). If I come across any others, I’ll let you know.

Update 2: A Department of Business official kindly gets in touch to say that Cable is “in favour” of HS2 and was referring to the business case. But when I asked if Cable therefore thinks the case has in fact been made, the spokesman declined to comment.

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