The High Speed Two rail investigation was commissioned by Labour Transport Secretary Andrew Adonis in 2009, reporting just as the election was called in March 2010. Adonis proved to be an aggressive supporter of the project. He claimed that it would be an “act of national self mutilation” to reject the scheme after former Labour Chancellor Alastair Darling called for it to be scrapped in August 2013, and Ed Balls warned there would be, “no blank cheques” for HS2 if Labour won power in 2015.
The cost of the scheme just kept on growing and by the summer of 2013 the figure for updating the London/ Birmingham section stood at £50 billion. All well and good as we are all in favour of big Government investment in infrastructure projects. But they have to past three tests. Firstly do they create well paid and sustainable jobs? Secondly do they contribute to long term GDP growth and thirdly do they increase or decrease regional inequalities?
In the midst of economic stagnation which faces the UK mid decade, the GDP issue is the one that really matters. The Tories used this argument, thus tacitly endorsing the belief of us in the left that big government projects are the way forward to stimulate the economy. The truth is hard to find as economists disagree. During 2013 Government ministers were quoting an annual dividend of some £15 billion from HS2. This prompted Henry Overman, Professor of economic geography at the London School of Economics to resign from the Whitehall rail advisory panel claiming that the calculations of benefit were, “essentially made up”. He told a Parliamentary committee, “I don’t understand why the £15 billion number was allowed to go out there.” Even Whitehall bean counters KMPG accountants, who had produced the £15 billion figure were forced to tell Committee Chair MP Andrew Tyrie that their findings, “ had no firm statistical foundation.”
On the jobs front even the official HS2 website is sketchy. “40,000 jobs will be supported” is a far from grandiose claim and the most it can say for permanent jobs is 1,500. Indeed an investigation by Andrew Gilligan for the Sunday Telegraph suggested that, “HS2 will destroy more jobs than it creates” due the scrapping of regeneration projects to fund the rail upgrade “costing 20,000 jobs”
Peter Mandleson weighed on our third question regarding the regional inequalities being exacerbated test. The former First Minister and Business Secretary (de facto Deputy Prime Minister) under Gordon Brown told the House of Lords in October 2013 that he was initially supportive of his fellow unelected Cabinet Minister colleague Andrew Adonis regarding the HS2 project. But he was now claiming that it was becoming, “a political trophy issue”. He continued by claiming, “I think the sheer cost of it will suck the very life blood out of the rest of the country’s rail system.” At a time when we need to be looking at investment in the areas still suffering decline it seems to us illogical to continue to centre investment in the south and its hinterland. For example Hull, a major port still lacks a link to the electrified rail network which was rolled up the east coast in 1970 and made famous in the title sequence to the seminal 1971 Michael Caine film “Get Carter”. And in Northern Ireland the need for the mainline to Derry to be upgraded is urgent. In addition the south west of Ulster is not linked by rail to the rest of the island and as a result has some of the poorest wards in the UK. Mandleson concluded, “If this goes ahead we will see a shrinking of the rail network in this country and that should be the very last thing pro-rail supporters would want to see”.
We contend that the HS2 project sees a hi tech solution to a low tech problem. The issue is journey time, and the new high speed rail link will only cut 20 minutes off the time spent on the train between London and Birmingham. So it it really beggars belief that the Tories and Adonis are committed to such a massive spend.
The Channel Tunnel provides an example from recent history and should set alarm bells clanging. Wilson reversed Heath’s commitment when Labour regained office in 1974 but Thatcher, ironically the arch anti European, went forward with the project in alliance with the French President Mitterrand, a socialist. Completed in 1994 the tunnel was a year late and £2 billion over budget.
David Freund was head of of Warburg, the investment house which sold tunnel shares to the public. Speaking in 2005 he said, “We were predicting that on Eurostar there would be 21 million passengers (annually) The actual figure was less than a third of that. So the traffic forecasts were not just out by a little bit. They were completely potty; they were nowhere.”
We would contend that, like HS2 the tunnel itself was not a bad idea, But unless these projects are part of an overarching vision for the future they simply become what Mandleson labeled “trophy projects” which sit in isolation. Looking out of our office window, we can see the example of another such vanity construction, the Humber Bridge. As part of an east coast motorway linking London to Newcastle it would have been an excellent addition to the system. Instead it sits in splendid isolation, a multi million pound road to nowhere.
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