The battle over HS2 has raged on for six tediously drawn-out years. Now, however, the battle has reached its conclusion: the taxpayer has lost.
According to a study published by The Taxpayers’ Alliance, 84% of the country don’t think HS2 will benefit them. Rather than seeing this as a reason to discontinue the plans, the Government has decided to persist with the £90billion vanity project.
The Government’s case for HS2 is tied to the hope that it will “unlock” the power of the North — or create a “Northern Powerhouse”, as some have taken to calling it. The answer to whether this plan would work is fairly simple: it wouldn’t.
Without first devolving fiscal power to local administrations, HS2 would work hugely to the detriment of the North — rather than encouraging London-based firms to move Northwards. Without dramatically accelerating the devolution agenda to encourage investment in the North, HS2 could easily spell disaster.
When high-speed rail connects two cities, surely economic activity is bound to favour the larger and the more dominant? For example, in France when the TGV extended to Lille, Lille’s unemployment jumped by 2% relative to the rest of the country. A similar situation happened in Lyon, where many regional businesses closed their offices and moved to Paris as a result of the increased links to the nation’s capital. For a British government with the wind knocked out of them, this should be too big a risk to take.
While it was once the consensus among Northern council leaders that HS2 was “essential” in order to heal the North-South divide, much has changed in recent years. Now, most Northern politicians, academics, and business leaders seem to have agreed that there are cheaper and more effective alternatives. Improving the East-West links have been one such proposal. The idea is that in order to develop a true “Northern Powerhouse”, the main focus should on improving links between Northern cities, not merely connecting the North to London.
An interesting alternative was proposed by the New Economics Foundation. They concluded that a £33bn package of investment, including major upgrades to the East Coast and West Coast main lines, would be far more effective at dealing with the issues surrounding the lack of a “Northern Powerhouse”. This proposal details how the £33bn would allow for regional rail enhancements, greater investment in urban transit and bus networks, and improvements to the infrastructure for cyclists and pedestrians. Furthermore, the £33bn would still allow for extra investment, for example the roll-out of superfast broadband.
Another reason to be critical of HS2 is that it is operating years behind schedule. Phase 1 is expected to be completed by 2026, but given the advances we’ve made in technology, we could see a similar situation to that which the Concorde faced: business strategists failing to account for low-cost airlines stealing over 20 million potential customers. With the world on the verge of technology like driverless cars, HS2 could very well be redundant by the time it opens for business.
Research by Green Gauge shows that when two satellite cities are linked by high speed rail, the more economically dominant always benefits. Indeed, strengthening a major city “tends to make others in the region more dependent on it”, meaning that not only the North, but cities like Reading would lose out because of HS2. Jobs will inevitably go to London due to ease of access, rather than vice versa.
The exponential cost of HS2 is a scandal. Individuals trust the politicians by whom they are governed to spend their money wisely; remain reasonably frugal; and have detailed, reliable plans when they are intending to invest billions of pounds. In the case of HS2, the Government has clearly not done its job. This leaves only one loser: you, the taxpayer.
Matt Gillow is a Co-founder and Director of Strategy of 1828.