From the Archives: The HS2 fight-back, powered by ACME

This was originally published on politics.co.uk , but we also posted it here.  It should be noted that the HS2 budget is now £55 billion.

So now we are in the middle of what David Cameron has heralded as the ‘big fight-back’ on HS2. Of course a ‘fight-back’ wouldn’t be needed if people were buying the case for HS2, as attempts so far to convince people of its merits resemble the attempts of Wile E. Coyote to catch the Road Runner, becoming ever more elaborate yet continually blowing up in the protagonists face. The latest example of this is a perfect one, with David Cameron telling the CBI that he has ordered Sir David Higgins to cuts the costs of HS2 to placate Labour, but making that statement on the same day it came out that the cost of new aircraft carriers has doubled from £3.65bn to £6.2bn. The fact Higgins will soon be in charge of HS2 is also meant fill us with confidence, because proponents have been saying that he delivered the Olympics on time and on budget, despite the fact that the original budget for the Olympics was £2.4bn and it officially came at £9.3bn, with independent estimates of £11bn, £13bn & £24bn. It’s also worth noting that while Higgins was at Network Rail, their profits went down and their debts went up.

The need to placate Labour is of course due to Ed Balls insisting that “There will be no blank cheque for HS2”, which is quite bizarre because a ’blank cheque’ is exactly what MPs voted for last week in passing the HS2 Preparation Bill. The notes accompanying the Bill were very clear: “It is not possible to give a definitive figure for expenditure that will result as a consequence of this Bill.”, if that’s not a‘blank cheque’, what is? The only reason the Preparation Bill is needed is because consultancy firms were going over budget as early as this January, a fact they neglected to mention when writing an open letter two months ago declaring they would not go over-budget on HS2. Of course the contracts that have already gone over budget are for millions on design, not billions on construction. The bottom line is that anyone thinking costs won’t go up is in complete denial, as the £42.6bn, or £50.1bn if you agree we might need trains for this train track, are in 2011 prices. Two years inflation need to be added just to get those costs accurate to today, six for when construction starts, maybe thirty to pay for the buffers in Manchester.

Last week the fifth HS2 business case was unveiled and, wait for it, it got worse. Again. Hence a swift rebranding exercise, what has up until now been called a ‘business case’, is now to be referred to as a ‘strategic case’. The first line of the Stop HS2 slogan is ‘No business case’, and now it seems that the Government officially agree. The reason for moving away from the ‘business case’ is that it has always relied on the entirely flawed concept that no business traveller (not commuter) has ever worked on a train, so now HS2 Ltd has simply said there will be more of them, upping the cash value of their journey time savings from £25.2bn in 2011, to £34.3bn in 2012, to £40.5bn today. This rebranding is a bit like realising that the phrase ‘high speed rail’ had become so toxic, that ‘north-south railway’ is now used by politicians to denote the direction of flow of economic activity HS2 would bring. To prove this, part of the fight-back was a KPMG report which unsurprisingly said the place which wins the most out of HS2 is London, despite Cameron now saying HS2  are betrayingeveryone north of Watford”.

Hidden away in a mountain of documents released last week was the analysis of the alternatives to HS2, which showed they all have better value for money for the taxpayer. Knowing that some bright spark might notice that the alternatives all have greater benefit-cost ratios than HS2, the Government did their best to demonise them, with Network Rail handily reporting the day before, that alternatives to deliver capacity would lead to 14 years of weekend closures on the rail network. This included an accidental concession; in that previously they’d been saying only HS2 could deliver the required capacity. Of course, the main alternative only involves putting flyovers in to four pinch points, which is hard to believe would take twice as long as the West Coast Mainline upgrade. They got 14 years by looking at every single thing they could do to the rail network, and ignoring that some works could be scheduled around disruption already planned from closing level crossings, creating an ‘electric spine’, and upgrading the WCML around Stafford. How they managed to ignore that was because believe it or not, they didn’t actually look at the work needed for the upgrades, they looked at the cost, looked at the cost of other projects and how disruptive they have been and worked it out on disruption per pound spent!

While Network Rail were never going to make a completely honest objective assessment such assaying “HS2 will cause years of constant road works along the proposed 351 mile route, including moving the M1 in two places, and causing years of traffic chaos near Birmingham Airport where you have to build a station and cross two motorways and two dual carriageways in less than two miles.”, it would have been nice if they’d been honest enough to say that constructing HS2 would cause disruption at;  Euston, Camden, Old Oak Common, Streethay, Crewe, Manchester Piccadilly, Church Fenton, Meadowhall, Golborne, Carstairs, and Preston.

But as always, the public didn’t buy this demonisation with YouGov reporting that 40% of the public favour upgrading existing lines, compared to 27% supporting HS2. 53% of the public are now against HS2. All of this has prompted David Cameron to say and “People who are against it, in my view, are putting our country’s future at risk”, I mean really? He doesn’t seem to realise he might as well be using the two scariest words you could ever hope to hear from a politician: “Trust me”. While Cameron ramps the rhetoric, Shadow Rail Minister Lillian Greenwood took to twitter, insisting that the reason the public weren’t buying HS2 is because they don’t understand the meaning of long words like ‘capacity’ and ‘connectivity’.

Far from the Great British people being too thick to get it, what the politicians don’t seem to be getting is they doth protest too much. They think that repeating phrases like the “Great cities of the North”, will go down well in Yorkshire, opposed to it sounding like the tired old patter of a used car salesman. The case for HS2 has now descended into nothing but rhetoric with everything being chucked at the idea that it must be a good idea, because those three words high speed rail, sound so much like they should be a good idea, or at least that’s what Cameron thought when he picked up the time-bomb Lord Adonis left ticking in the DfT.

Then there is that KPMG report, where the accountants who couldn’t find that £1.5bn hole in the Co-Op accounts, were bunged quarter of a million to invent a brand new untested methodology that you could drive a high speed train through. In saying proximity to labour markets were the only thing, the absolute only thing influencing business location, they handily said HS2 would be worth £15bn a year to the UK economy. I mean if they had said £2bn, people might have bought it, but £15bn? Really? To paraphrase Carlsberg, “If ACME did economic projections…”, but the adverts the proponents of HS2 should fear in a few years will start “Were you wrongly sold a high speed railway?”

It took an FOI request to reveal that large swathes of the country, including places supposed to ‘benefit’ from classic compatible HS2 trains running on such as Liverpool, Lancaster and Glasgow could lose economic activity if HS2 goes ahead. There were also some unexpected winners in their table, but that might have been due to the fact KPMG were working on the premise that HS2 will go to Heathrow, a proposed link which has been suspended pending the Davies review.

That FOI, which shows a full table of how much parts of the UK which could win or lose due to HS2 (under that completely invented economic model of course), also indicates that as far as KPMG are concerned, Northern Ireland isn’t part of the UK economy. Ignoring the province may prove costly, not only in that it must be one of the projected losers, but also in that after much toing and froing the Treasury have admitted that Wales has already got extra funding under the Barnet Formula due to HS2. While they are now trying to say that this doesn’t create a precedent, or that they may change the rules so it doesn’t, Barnet could mean an another cost escalation due to HS2 with an extra £1.3bn for Northern Ireland and another £4bn for Wales. With Glasgow, Dundee and Aberdeen projected to lose economic activity according to KPMG, maybe the Scots, referendum permitting or course, should be making a case for consequentials too?

So now we are exactly where we have always been, ever since in 2006 when Sir Rod Eddington said of high speed rail that: “The challenge to be tackled was not fully understood before a solution was generated, due to intense political lobbying from advocates.”, with Ed Balls and Labour being reigned in by advocates like Manchester City Council salivating at the idea that their uncosted plans for redeveloping Piccadilly will ‘cost billions’. As Lord Mandleson reminded us just the other week, Eddington said transport infrastructure needs would be much better met by a wide range of incremental improvements rather than a few high-profile extravagances and that “The risk is that transport policy can become the pursuit of icons”.

Well, that risk is now being fully realised. We will just have to wait to see what comes out of the ACME catalogue next to try and make us think that is a good idea.

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