6 October, 2023
The Spectator, by Annabel Denham
Rishi Sunak has finally slayed the white elephant that is HS2 or, perhaps more accurately, cut off its hind legs by scrapping the northern leg. It’s been a tortuous process: remember the proposals to link it with HS1 to Europe (March 2014), the spur to Heathrow Airport, and the Eastern leg to Leeds?
The hope must now be that future policymakers will look back on this debacle and avoid repeating its mistakes. We must ask what this embarrassing episode tells us about the way in which infrastructure is planned in Britain, and the massive, costly barriers to building.
HS2 is a classic example of what happens when egos and vested interests come before cost-benefit analyses and the needs of the silent majority. Few could have foreseen spending exceed the basic budget at such pace, that expected costs would balloon from £36 billion to £100 billion. Yet many did issue warnings that initial estimates were grossly undershooting the likely expense, and these went ignored.
In 2013, for instance, the Institute of Economic Affairs warned that the decision to build the line was not justified by an analysis of the costs and benefits of the scheme. The TaxPayers’ Alliance was against it from the start. Economists, commentators, campaigners – many opposed the project. As it happens, even the government’s own figures suggested it represented poor value for money compared with alternative investments in transport infrastructure, much like the ones it is now, years later, promising.
Jeremy Hunt this week insisted that ‘we have to have an answer as to why it costs ten times more to build high speed rail in this country than in France,’ and he’s right. Analysis by Britain Remade found the stretch of HS2 from London to Birmingham cost £396 million per mile; in France, similar projects cost £46 million per mile.
But a corollary to that must be: why did no one in government see this coming? It’s all very well the Prime Minister insisting that when the facts change he will, with courage, change his mind. Yet the writing has been on the wall for years. The criticisms and the misery and the embarrassment – all could have been spared if the government had taken its own advice.
Politicians could have looked at many prior infrastructure schemes: Crossrail, which was delayed by years and billions over budget; the TransPennine Route upgrade, which was expected to cost £289 million and finish in 2019, but is still incomplete, while the costs are estimated to be £10 billion. From this, they might have anticipated that HS2 might spiral out of control.
They could have considered how high-speed rail failed to transform the economy of East Kent, making apparent that fast trains alone cannot level up ‘left-behind’ regions. Nor will policymakers be strangers to Britain’s planning bureaucracy or environmental requirements. And while we may be shocked to learn that HS2 publishes 52-page annual Equality, Diversity and Inclusion statements, surely those who create the structures which enable such waste are not?
Once spades hit the ground, the economic case becomes far harder to make. Even the most ardent free marketeers will struggle when confronted with what our failure to finish the project tells us about Britain as a nation and its ability to build. ‘What signal would it send if we cancelled our highest profile infrastructure project?’ some might ask. (In fact, Hunt did.)
After all, we weren’t trying to create settlements on Mars. We were trying to build a new rail line at a time when our record is becoming increasingly dismal. Housing targets are set, missed, dropped, on repeat. Meanwhile, our population grows and the number of renters competing for each property in London jumps to 25. Hinkley Point and Sizewell C have suffered substantial delays and cost overruns, while our energy security hangs in the balance. Whatever happened to the third runway at Heathrow?
We need policies that take advantage of agglomeration effects: that larger cities in most countries tend to be more productive and richer. As the economists Sam Bowman and Stian Westlake have pointed out, we need investment to make cities function. We need to build homes and nuclear power plants and roads and east-west transport links.
Whatever is decided now, it must be done with deeper consideration to the costs and benefits. And it must be planned with greater awareness that special interests – engineering firms likely to receive contracts to build the infrastructure and trains for HS2, as well as senior officials of the local authorities and transport bureaucracies that expect to benefit from the new line – will always shout the loudest. It doesn’t mean they should be listened to.