Network Rail’s financial results which were published at the end of last week. Its debt has now risen to just over £30 billion and its cost of servicing that debt in the last financial year was £1.038 billion. Despite a drop in profits, a reduction in train punctuality and this increase in debt, the chief executive Sir David Higgins has received a £100,000 bonus.
Building HS2 will add to our debt. It may not appear under the heading of Network Rail but the cost of building HS2 will become a further debt. Just look at HS1 for a moment: the cost of building the line was £6.2 billion. However the National Audit Office estimated the final cost to the taxpayer of HS1 is likely to be £10.2 billion. One of the contributing factors to the latter figure is the cost of servicing the debt.
In France the accumulated debt from TGV line construction costs had reached 38 billion euros by 2011. Total rail debt in Spain in 2012 was 21 billion euros. Japan has had major issues with the debt incurred in building its high speed lines. China’s high speed rail debt is close to $300 billion and has been described by a professor as more serious than the US subprime crisis.
UK government debt as a proportion of GDP has doubled since 2007 and is now 90% of GDP. Our national debt (in excess of £1 trillion) is a significant constrictor on government decision making. Building HS2 will increase our debt and is likely to require an ongoing subsidy which could be £1 billion or more per annum based on the experience of other countries. Our government should be working to reduce our debt.
HS2 reminds me of the classic Simpsons episode: “Marge vs. the Monorail” where sleazy Lyle Langley convinces the town (using a catchy song) to build a monorail which they neither want nor need. It turns out that the monorail is built on the cheap, whilst Lyle Langley intends to run off with bags of money.