HS2 – a study in why politicians make bad choices

Yesterday, a number of us voted against the preparatory bill for High Speed 2. I remain opposed for the reasons I have given.

As if the economic case were not weak enough already, yesterday another £10 billion was added to the cost:

Patrick McLoughlin said that the projected cost has risen from £33billion to £42.6billion because of a significant “contingency” fund to cover the cost of potential problems with the programme.

This excludes the cost of the rolling stock, billions more.

The arguments for and against are well-rehearsed. To be for it, you have to believe that it is right for the state to require and subsidise a railway to meet the demand created by heavily subsidising rail travel.

The point of the profit and loss system is to tell you when you are creating value for people and when you are wasting resources on things people don’t want. One needs quite a high level of formal economic education, or to be a politician, to think that building an expensive railway with billions of pounds worth of resources taken from taxpayers is a good idea. That so many countries are doing it is a poor excuse.

Unfortunately, the project is a case study in public choice theory, a body of knowledge which seeks to explain why politicians and officials make the decisions they do. Here’s a related video:

The benefits of HS2 will be concentrated around the stations and in the hands of those who will be paid to build it: politicians representing those places are in favour and there are powerful rail interests lobbying (as there always have been).

The noticeable costs of HS2 — environmental damage, noise, ruined homes and businesses — are concentrated along the route: the public there and their representatives are opposed, stridently, often on broader grounds that they only discovered because it directly affected them.

The dispersed costs of HS2 — the billions of pounds over decades — will be borne by everyone, but at a rate people won’t particularly notice. That’s why most MPs just voted with their whips.

HS2 isn’t due to go through Wycombe constituency but quite a few local people worry that it is the wrong thing to do and that it will wreck a swathe of the Chilterns Area of Outstanding Natural Beauty. I voted against it because I think it will not be in the UK’s interests. The truth is, if you look closely at HS2, you see at work in this project many of the factors which explain why we find ourselves in such a mess: politicians are incentivised to do things which make most people just that little bit worse off.

Eventually all that adds up to ruin. That’s why government should be small and society should be free.

Further reading:

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Comments & Responses

8 Responses so far.

  1. Steve Rodrick says:

    In the absence of a national transport strategy to commit any public money to HS2 is folly – to commit £42 billion and climbing (it will be £100 billion by the time, thetrains, taxes and borrowing charges are applied) is not just immoral but bordering on the insane.

  2. The Pragmatic Liberal says:

    Is it possible to build any meaningful transport infrastructure using only the free market model?

    There’s a paradox. Roads, railways and airports have all been, in-part or wholly built and maintained with tax payers’ money, often against a backdrop of massive local opposition. The only major private road I can think of, the M6 toll, has been a complete commercial failure, yet being near good infrastructure (albeit not on top of it) remains hugely desirable for individuals and businesses alike.

    I think most people would agree that an improved transport infrastructure would be of economic benefit to this country, even if HS2 itself isn’t. I don’t see how we’d ever get anything built without some form of central strategic planning and decision-making.

  3. Steve Sturgess says:

    Well done for voting against HS2. Are you the best M.P.Wycombe has had?

  4. Gary says:

    In general I am supportive of HS2, but on the grounds of the vast increase in rail capacity it gives the nation as a whole. However the sheer cost of this scheme ( with new revised figures ) actually makes it more expensive than the whole of Network Rails regulated asset base !! I have yet to see any convincing argument as to whether this whole project is actually ” value for money ” , but of course the timescales involved probably make that impossible. The only real true test imo is would the private sector invest relieve the taxpayer of cost once the thing is built – in much the same way as HS1 ( Channel Tunnel Rail Link )?.

    • peter jones says:

      Of Course the private sector wll take HS2 off the public hands but only at a deep discount to asset value and only if there is continuing public subsidy – good idea? doh!

      It should also be noted that the people of Camden do not wan the benefits that would come from a station at Euston – 10 years of construction,inadequate compensation social cleansing and a local tax to pay for the all these local benefits. And the bloody thing will not do what it claims. So suffering for nothing

      • Gary says:

        Peter – you dont actually know what price the private sector would pay.

        My understanding of part of the deal for Camden is that the housing ( ie flats ) which are earmarked for demolition are in fact in very poor condition anyway….

  5. Miles Palmer says:

    “That so many countries are doing it is a poor excuse.” The whole point is that in fact other countries are NOT doing it. We are constantly being told that we have to catch up with Europe but across Europe governments and rail networks are backing away from so-called high speed rail. Existing lines are in financial trouble and several EU countries have cancelled new plans because the cost is not justified. It is also a fact that we already have some the fastest train services in Europe despite the difficulties caused by Victorian bendy lines etc and much of Europe actually looks with envy at what we have in this country. Just a few of the billions would be much better spent NOW on upgrading our existing network, longer trains and platforms to ease capacity, improving lines and signalling which would allow 140 mph which is quite fast enough in terms of CO2. Then additional investment in better regional and commuter services,(light railways and trams!) etc. HS2 sounded like a good idea and we are being very seriously misled by HS2 Ltd and the Dept of Transport about the economics, the business case and the environmental impact in a cynical attempt to justify this white elephant.

    • Gary says:


      We are already spending huge sums of money on the existing network for both heavy and light rail with the likes of Thameslink, Crossrail and the major expansion of Manchesters Metrolink system.

      Can you expand also on how we are being misled on HS2 by the DFT etc…..this project has already been under close scrutiny from both the Transport Select and Public Accounts Committees.