Pump money into railways – not HS2

Bank holiday weekends, often involving travel to see friends and family, are traditionally a time for moaning about the UK’s gridlocked roads and erratic rail services.

The British late-summer, with many of us having just spent a week or two on the Continent, is also high season for wondering aloud why “their trains are better than ours”.

We shouldn’t be surprised, then, that Alistair Darling has picked this moment to intervene in the great rail debate. Last Friday, just in time for the weekend news cycle, Labour’s media-savvy former Chancellor unveiled his opposition to HS2. This is significant, not just because Darling, during his time as Transport Secretary, approved the first stage of the high-speed rail project back in 2010. It’s also significant because he happens to be correct.

Since the 1994 privatization of British Rail, UK train passenger numbers have almost doubled. Freight rail traffic has also risen sharply. As our road system struggles to cope, an expanding national rail network is vital to our economic future. Incredibly, we’ve built only one new mainline route since the late 19th century – the St Pancras/Channel Tunnel link. But none of that means we should go ahead with HS2. For HS2 is the wrong answer to the wrong question.

The prospect of building “bullet trains” gets governments and well-connected engineering firms excited. Faster inter-city lines elicit much emotional outpouring, and even patriotic chest-thumping, among rail enthusiasts. Returning holiday-makers, too, often bemoan the swish of the 200mph – sorry, 320km/h – services across mainland Europe.

Yet our geographic reality is different from that of France, Germany or Spain. The UK is a small island, with a few relatively large cities. While our inter-city links aren’t ideal, the real rail issue that desperately needs solving is massive overcrowding on local commuter lines – not only into London, but Birmingham, Leeds, and Manchester too, where passengers numbers on such services have grown even faster than those into and out of the capital.

Governments will always be drawn to inter-city showcase projects. Prime Ministers are desperate for a “legacy” and the costs of building mega-infrastructure are all in the future. The unglamorous truth, though, is that the UK needs to solve its national rail issues by investing in and adapting existing infrastructure, while channeling far more investment into the humdrum local services that get the vast majority of commuters to work. It’s to that end scarce resources should be directed – and Darling is right when he says that the vast costs of HS2 will leave “far less money to maintain and upgrade existing lines”.

Work on HS2 is due to begin in 2017, with the link from London to Birmingham completed by 2026 and connections to Manchester and Leeds coming in 2032. When the Coalition government approved the project back in January last year, the official cost estimate was £33bn. Two months ago, that figure rose to £42bn. Costs will obviously spiral far higher – not least due to route changes and extra tunneling to mollify campaigners opposed to HS2.

Infrastructure projects, especially involving railways, nearly always involve massive additional cost. The Channel Tunnel link overran by 40pc, the West Coast Main Line by almost 80pc. This is not just a British disease. A relatively recent paper in the Oxford Review of Economic Policy, examining 58 large-scale rail projects from around the world, showed average cost over-runs of 45pc. Additional passenger numbers, meanwhile, were typically less than half those optimistically forecast in order to justify each project.

This brings us to the crucial question of cost-benefit analysis. While necessarily a dry statistical exercise, such number-crunching is crucial. Before being commissioned, large UK infrastructure projects are supposed to display a 1.6x cost/benefit ratio, with the financial advantages exceeding the disadvantages by a healthy 60pc margin, not least to accommodate inherent forecasting errors. At the time of the HS2 approval last January, the official cost/benefit ratio was just 1.41x. Since then, the discovery of a “mistake”, and a recalculation by the Department of Transport, have lowered that ratio to 1.1x.

This number assumes, of course, that costs are in line with the government’s £42bn estimate. But even the government doesn’t believe official estimates. Over the last few days, the Treasury has whispered that the final cash bill will be £73bn, close to the £80bn estimate in a well-argued recent report from the Institute of Economic Affairs.

For all the fanfare and triumphalism, HS2 will shave just 20 minutes or so from the London to Birmingham journey-time. Is that really such a big deal? Train time isn’t “dead time” – despite being treated as such in official cost-benefit estimates. E-mail and wifi technology mean that business-folk often get a lot done on the train, suggesting that more emphasis should be placed on improvements to train seating and capacity, rather than enduring the massive expense of boosting speed.

Rather than spending £80bn-plus on HS2, the London-Birmingham train capacity problem could be addressed much more efficiently by investing in the two existing lines that already run between the UK biggest two cities. The route from Euston to Birmingham New Street via Rugby and Coventry could be upgraded in terms of both capacity and speed with some clever and cost-effective tunneling. And the old Great Western route, currently a slow, frequently-stopping service from Marylebone to Birmingham Snow Hill, could carry many, many more passengers, and faster, with the construction of more double-tracks and bigger stations.

Beyond the Midlands, what we need isn’t a marginally quicker service from London to Manchester, Leeds and Sheffield, provided only at such a prohibitive costs that it excludes all but the most well-healed business travellers. We need world-class and far more frequent inter-city links between our great northern cities, as part of a much bigger emphasis on cross-country train services, rather than routes that are always about the fastest way to get to London. That what would really help promote regional prosperity. HS2, on the contrary, and for all the “boosting the North” lip-service of its proponents, is built around an evermore London-centric vision of our economic future.

While I have some sympathy for the half a million or so people across Middle England whose lives would be disrupted by the construction of HS2, I don’t necessarily object to the project on environmental grounds. I also accept that quite a bit of the UK’s existing infrastructure would not have been built if assessed solely on a cost-benefit basis. It strikes me, though, that the economic case for HS2 is now so weak, and the cost estimates so lacking in credibility, that the coalition needs to swallow its pride and re-think the future of the UK’s rail network.

Government spending in July was 3.7pc higher than during the same month in 2012. So far during the fiscal year 2013/14, public expenditure is 4.3pc above the year before. For all the “austerity” rhetoric, the UK is still borrowing well in excess of £100bn a year, with our national debt now pushing a massive £1,200 – and that’s excluding the bank bail-outs, public sector pension debts and all the other liabilities buried off the books.

This is a time in our history for the public sector to look for and implement smart, cost-effective solutions to the issues we face, while rejecting politicians’ vanity projects. So let us bite the bullet, spend the money on investing in and properly upgrading the rail infrastructure we have, and scrap HS2.

ENDS

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