Comments on an interview with the new head of HS2 – Sir David Higgins – where he plays down expectations of delivering large savings to the £50bn budget:
Sir David Higgins is right to point out that there is no magic wand that will wave away the high costs of HS2. There is no escaping the reality that a mid-21st century rail project of that magnitude, in a densely populated, environmentally conscious country like the UK, is going to be expensive. There also is no escaping the fact that whatever the estimate of costs we come up with today, we will continue to have to make revisions up and down as economic and political circumstances change over the coming two decades.
Equal to the uncertainties on the cost side are vagaries on the benefits side of the ledger. Just as the the price of land and construction chargess can only be estimated on the cost side, , the price of petrol that fuels motorway traffic and the patterns of population and work movements, for example— which factor into the benefits of HS2 — will be dictated in the future by market forces that are largely beyond our control.
Certainly we need to keep an eye on costs and benefits and try to manipulate what we can to provide taxpayers with the biggest bang for the buck as possible. But cost-benefit analysis is not the holy grail. We have to look at the big picture and decide whether we want to increase rail capacity significantly, versus small increments, whether we believe that greater connectivity between London, Birmingham, Manchester, and Leeds will help address growing regional imbalances, and whether there is symbolic importance to the UK in moving from its Victorian-era rail infrastructure to the kind of technology used by most other advanced and emerging countries.
I’ve joined supporters of the project because I see no better way to address our capacity challenge, believe that it will be good for economic development in the Midlands and North of England, and will help to keep Britain’s industrial infrastructure competitive in a fast-moving world. Like Sir David, I would focus on the timing of the project, getting it done as quickly as possible so that we maximise the present discounted value of whatever benefits are generated.