While she was Economics Editor at the BBC, Stephanie Flanders said “I’ve found it very difficult to find an economist in favour of HS2”. There were of course some exceptions to this rule; economists who were being paid by Government or local authorities to promote HS2 or to lobby for it.
One of the prime examples of this has been Volterra. For years, ‘Yes to High Speed Rail’ (remember them?) had on their front page that HS2 would create a million jobs, a claim they had got from a Volterra report, which at closer inspection stated HS2 ‘might support’ upto a million jobs, with a very fuzzy justification for this figure. The consultancy was also paid by Nottingham City Council to say the proposed East Midlands station should not be in Derby, but Nottingham, and in a similar vein produced another report saying the Sheffield station should actually be in Sheffield, opposed to Meadowhall.
When the infamous KPMG report was published and slated by independent economists (i.e. ones who had not been paid to offer an opinion) as essentially made up, as they had adjoining seats on the HS2 consultancy gravy train, it was no surprise that Volterra leapt to the defence of KPMG.
Instead of engaging with the specific criticisms of KPMG’s methodology, Volterras Bridget Rosewell decided to dismiss a statistically rigorous approach to estimating economic benefits, and decided off the top of her head that that Crossrail will ‘generate total output returns of around £80bn on an investment of £15bn’ and therefore HS2’s investment of ‘around £40bn’ should, based on analogy like this, generate £200bn in new jobs, incomes, additional commuting to productive centres, taxes, dividends and so on. This was especially odd, because Volterra helped to produce the assessment of the economic benefits of Crossrail, and despite it having been updated several times, even the high-end estimates of the benefits of the project have come nowhere near £80bn.
Incidentally, Rosewell was chair of the audit and risk committee at Network Rail while their debt ballooned to £30,000,000,000, and she formerly chaired the audit committee of the Britannia Building Society which was rescued by the Co-operative Bank. As a reward for all this sterling work, she was appointed by George Osborne as one of his National Infrastructure Commissioners.
However, the person at Volterra who has broken ranks is co-founder Paul Ormerod. Rewind three years and he was doing what you’d expect, dismissing the criticisms of HS2 by the National Audit Office, claiming the failures they had highlighted were more to do with the way the DfT operate than HS2 specifically. On the issue of HS2 and the North he said at the time:
“The North faces many economic challenges. One of these is that it just does not have enough connections – it is not networked strongly enough with the prosperous and dynamic South. The North needs to generate more exports to London and the South. HS2 makes it more connected, and gives it the dynamic potential to meet this task.”
However, today writing in City AM he has made a complete about face. In a piece headlined “Forget HS2: Only radical education reform will rescue the Northern Powerhouse”, he laments a North-South divide in education, stating:
“The dominance of the London-Cambridge-Oxford golden triangle needs to be challenged. Instead of spending on HS2, the money should go to Northern universities to transform some of them into world class institutions.”
Maybe it’s not just Northern Universities which need to provide better standards of education?