Prof Overman writes that the debate did not cover the opportunity cost of HS2. In other words, are there better things to spend £33 billion?
If the government decides to spend this sort of money on a single project, they can’t spend the money on other projects. If that money was used for smaller projects, finishing sooner, they could be analysed as they were completed. And then the next set of taxpayer’s money could be spent on more projects like the successful ones.
These don’t have to be transport related: for instance an earlier post on Prof Overman’s blog refers to the Regional Growth Fund. The government plan to spend £450 million on 50 projects, which they say will create 27,000 direct jobs.
Compare this to the government spending £17 billion on the first phase of HS2, to create 40,000 jobs. So spending nearly 40 times as much on one project, creates less then twice the jobs.
But even those jobs are dependent on whether HS2 Ltd and the DfT have got their forecasts right. HS2 won’t be operational until 2026: we won’t know for 15 years whether they were right or wrong.
That’s a huge risk.