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HS2: The train to nowhere?

Kaveh Pourvand, 28 August 2013

With an estimated £50bn price tag, HS2 is a very expensive version of Marmite. People either love it or hate it. The Institute of Directors has called it a ‘grand folly’ while John Kay says it is ‘high time’ to abandon the scheme and he dismisses the business case for HS2 as not ‘merit[ing] the title of research’. In quite stark contrast, Will Hutton says HS2 is ‘vital public investment’ which will attract ‘investment into the Midlands, the north and Scotland and [transform] the country’s relationships’. Lord Adonis, the architect of the scheme, does not mince his words when expressing his opinion. He has ominously warned that abandoning the scheme will be an act of ‘national mutilation’.

Assuming Lord Adonis is not entirely correct, that choosing to abandon HS2 is not automatically a collective act of national masochism, I thought I would put in my two pennies worth into this debate.  The challenge with these big ‘white elephant’ projects is that the costs are easy to quantify but the benefits are not. This doesn’t mean that they don’t sometimes yield very substantial benefits. The US space programme yielded a plethora of technological benefits that helped the US economy immensely. But these couldn’t have been known in advance. It would have been a bad thing had the space programme not gone ahead because cost-accounting precluded it. Of course, big national projects can also fail, sometimes spectacularly. The point here is that one shouldn’t become too obsessed with the costs. Sometimes, it is even helpful to have an ‘irrational’ patriotic or political impetus for these projects, to overcome an excessive focus on costs.

In other words, just because one can’t tally a readily identifiable list of benefits from HS2, it doesn’t necessarily mean it shouldn’t go ahead. However, there is a big difference between HS2 and, say, the US space programme. The latter was at the technological cutting edge while the former is simply not. High speed rail is hardly new.  That would probably limit the amount of spin-offs and positive externalities that could accrue from HS2. If the government wants to fund big national projects, it would probably be better to fund the technologies of tomorrow. As part of its ‘Catapult’ programme, the government has identified several emerging technologies of the future, such as cell therapy, ‘smart cities’ or offshore renewable energy, that need public support. These may well be better targets of the funds that are currently earmarked for HS2.

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