Our Whitehall insider imagines what’s going on inside the minds of the mandarins at Great Minster House, home of the DfT

There’s no getting away from it. Rail, and high speed rail in particular, continues to dominate the news and the priorities here in Great Minster House. Ministers continue to talk up their commitment to HS2, but Lord Mandelson’s recent intervention expressing his own newly-found doubts about the project has certainly started to pile the pressure on. Commentator after commentator is asking the obvious question: can we really afford the project now that its costs have escalated to a whopping £50bn when you add in the cost of the rolling stock? And could £50bn be spent more effectively on other transport projects, or even on other major infrastructure initiatives like high speed broadband?

I have no doubt that the business case for HS2 is weak – very weak, and we certainly haven’t helped ourselves by constantly revising downwards the cost/benefit ratios. Nor do we help ourselves by developing the business case with obvious flaws in it, like assuming that all time spent on a train is unproductive time, which in the age of mobile phones, WiFi and the like is clearly palpable nonsense. Sometimes we really do make ourselves look really silly.

I have to say that I am also rather taken by the point that is increasingly being made that by the time the whole project is built in 2032, the advances made in communications and technology will be such that the need for a high speed railway line may be redundant – presumably on the basis that home working, tele-conferencing and so on will be so common place that business travel will be rendered unnecessary. You do wonder if, when we develop the case for major projects such as HS2, we look far enough into the future in assessing the impact that technology will have on society and our working lives. Will the futuristic script writers of Star Trek actually not be quite so futuristic after all? Will being “beamed up” actually become an alternative means of travel?

But before I get too carried away, let’s come back to the realities of today. The reality is that the increased costs of HS2, announced at the time of the spending review, are piling the pressure on ministers. OK, some £14m of the total cost are for contingencies, but given that everybody fully expects the final costs to be much higher than even the £50bn now estimated (Boris Johnson recently suggested it could end up nearer £70bn or more) one has to ask the simple question: at what point does HS2 actually become unaffordable? Indeed, one has to wonder whether the Treasury has already pencilled in a figure and quietly placed a maximum price tag on this. It would be surprising if they hadn’t.

For now, our secretary of state talks a good talk about HS2, as indeed do all transport and Treasury ministers as well as the prime minister himself. Perhaps those who say that we need to be brave, bold and visionary are right. Perhaps it is the case that in the years and decades after HS2 is up and running we will all be wondering what the fuss was all about, and that we can’t imagine life without high speed rail. After all, the Channel Tunnel never had a good business case, and it even got abandoned once after construction had started in the 1970s. But can we imagine life without the tunnel today? I suggest not. But there is one not so subtle difference between the two projects. Not a penny of taxpayers’ money went in to the Channel Tunnel. It was the private sector that funded it and had to take the risk and the financial hit. With HS2 it’s taxpayers’ money that is at risk which, I suggest, rather changes the nature of the debate.

Do we really want £50bn, perhaps £70bn, of our money put at risk on a project whose business case is, frankly, wafer thin. If the experience of HS1 and indeed the tunnel itself is anything to go by, the demand forecasts that are being used to underpin the case for HS2 will be hopelessly over-optimistic.

There is no doubt that Lord Mandelson’s intervention has upped the political anti on this one. His brass-necked admission that the last Labour government’s support for the project was based on no more than a political whim will certainly encourage the objectors to fight even harder. I suspect there will be lots more said and written on why HS2 is catastrophic waste of money. Is the government heading for a monumental train crash? Or are the political supporters (from all main parties) true visionaries who in years to come will be hailed as the pioneers of a new age of the train in much the same way that the likes of Isambard Kingdom Brunel is today?
I guess only time will tell.

 

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