By Professor Stephen Glaister, director of the RAC Foundation.
It is good to be in a position to debate a full proposition for high-speed rail. There was never much sense in a link just between London and Birmingham: they are too close to justify the vast cost of building through London and the home counties. This is revealed in the government’s estimate that shows a benefit of only £1.40 for every £1 spent.
That is poor compared with other ways of using the money. The benefits of the full scheme are now claimed to be of the order of 2:1. This is better but still easily beaten by other rail and road projects.
Key figures to focus on are that the capital and operating costs are estimated, as of August 2012, at £59bn and the revenues at £33bn. Crucially, this leaves £26bn to be funded by the taxpayer. No amount of clever financial engineering or attempts to involve the private sector investors can escape this.
We must decide: is this £26bn of public spending somehow going to be extra, or will it come at the expense of an alternative way of addressing the objectives? The state of public finances suggests that each £1 dedicated to HS2 is £1 not available for something else.
The initial justification for HS2 was to expand capacity, but advocates have failed to address the extent to which this is needed only at the peak. There are plenty of empty seats on the west and east coast main lines. To unquestioningly plan to meet growing peak demand can only be described as “predict and provide”. With £26bn at stake there must be a more committed attempt to see if there are cheaper ways of dealing with a problem that affects a relatively small number of people.
The government has applied the best analysis to assess the value of “wider economic benefits” for competitiveness, labour markets and agglomeration. Adding these only raises the total benefits from £2 to about £2.5 per £1 of spending; and they are not normally counted when appraising alternative schemes.
Everything claimed beyond that is speculation. That does not make them wrong. It’s just that they are without supporting evidence and hard to balance against the indisputable costs.
Experience overseas is helpful. But the story is mixed. Where there has been development around stations it is rarely clear to what degree this has been at the expense of competing neighbourhoods. But if development is to occur the local planning regime must encourage it, rather than restrict it – and that may be a problem in the UK.
The effects on “regional development” and the “north-south divide” could go either way and one person’s assertion is as good as the next. Where is the evidence that bringing Manchester within an hour or so commuting time of London will not amplify rather than attenuate London’s gravitational pull?
A disproportionate amount of the construction spending on HS2 will be in London and the south-east because that is where the engineering is most expensive. But jobs would be created however the public money were dispensed.
We always come back to the same question: if we have £26bn of public money to spend in the name of regional development or job creation or whatever, should we allocate it to this single, geographically specific scheme?
The nation needs more infrastructure – in particular transport infrastructure – to meet the needs of a rapidly growing population and economic recovery. We must spend the desperately limited public funds on those projects with the best return. While HS2 may score highly in terms of political and personal legacy, it will not help the tens of millions of ordinary travellers for whom it is an irrelevance.