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.
- Public Choice – A Primer | Institute of Economic Affairs (IEA)
- They Meant Well, Government Project Disasters | IEA
- High Speed 2: the next government project disaster? | IEA
- High Speed Fail – there is no case for HS2 | Adam Smith Institute
- Is HS2 really the best way to spend £33bn? | new economics foundation