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Soak the taxpayer? Ongoing subsidy required for HS2 – European precedents suggest £2billion

PCU: As some members of the public have suggested, if the business case for HS2 is so compelling, let business fund its construction and the whole operation.

In July PCU published an article and associated report by Andrew Bodman, on behalf of the South Northants Action Group, identifying ten projects which collectively have wasted more than £30bn.

On August 22nd the following message cited the findings of the government’s Public Accounts Committee investigation into HS1 (below)

It would appear from the experiences of several other countries that HS2, if it is built, will add to the ongoing subsidy required for railways in the UK. High Speed Two (HS2) if built will involve the expenditure of £33bn for its construction (London to Manchester and Leeds) plus several more billion for the trains. Is this sensible for a country as indebted as the UK? There are alternatives to HS2.

World Bank: copious and continuing budget support for the debt

What has been overlooked is that high speed rail involves a subsidy to keep its trains running once the lines have been built. In July 2010 a World Bank report cautioned that governments planning high-speed rail systems: “. . .should also contemplate the near-certainty of copious and continuing budget support for the debt”.

The National Audit Office estimated that the total cost to taxpayers of supporting High Speed 1 (in Kent) could be £10.2 billion over a 60 year period. HS2 is considerably longer than HS1 and will cost several times more to build.

Does it make sense for the Government to commit to not only an initial outlay in the order of £40 bn but an ongoing subsidy to run it? The subsidy could amount to £2 bn per year based on the experience of some European countries.

The Optimised Alternative

51M, a group of 18 councils which are opposed to HS2, advocates significantly cheaper alternatives which can be made available much sooner on a progressive basis. These measures would consist of lengthening existing trains to 12 carriages, changing one first class carriage per train to standard class and relieving a handful of track pinch points. This solution is known as the Optimised Alternative and more details may be found on their website: http://www.51m.co.uk/.

Further information:

The underlying question: will more billions be wasted?

Government wastes Billions of our Money!

Just as the headlines featured Treasury minister David Gauke, focussing on the relatively small amounts lost to the Treasury by ‘cash in hand’ payments – minute compared with losses due to tax avoidance – PCU received a research paper commissioned by the South Northants Action Group. Its findings: Government wastes Billions of our Money!  

Peter Deeley and Andrew Bodman explain in the introduction that significant projects initiated by government in the last ten years which might be deemed failures were investigated. The projects selected wwere those which cost hundreds of millions of pounds of taxpayers’ money and which, at the time of deciding to proceed, there was evidence to suggest that they were likely to be flawed. 

The report’s intention is to introduce some accountability into decisions made by MPs because, though in industry senior individuals can be fired for making major mistakes, such accountability rarely exists in the political world. 

The first part of the report lists ten projects that met their criteria and the total of taxpayers’ money spent on these projects which have failed to deliver what was originally proposed is estimated to exceed 33 billion pounds. 

Permission has been granted to place this informative and disturbing report on a page on the PCU site, here.

STOP PRESS:

26 July 2012:  The HS2 Alliance website reports that the Court today set the timetable on the case against High Speed 2 (HS2). The judge agreed that the five cases against HS2 will all be heard and sets the date for the hearings; he caps the opposition’s costs and he opens the door to further amendments to the claims.