Institute of Economic Affairs
Lobbying by special interest groups will add an extra £30bn to HS2
HS2 could end up costing taxpayers double the current estimate according to new research from the Institute of Economic Affairs. Lobbying from local authorities for new links to HS2 stations and changes to the route to keep voters on side are likely to add around £30bn to the overall cost of the project. Estimates already put the project at £43bn and when the cost of new trains (£7.5bn) is added, as well as the additional £30bn, it takes the total close to £80bn – equivalent to £3,000 per household.
The High-Speed Gravy Train: Special Interests, Transport Policy and Government Spending also shows that the true long-term cost to the economy is even higher. HS2 will divert funds from high-return transport projects that could have delivered over £300bn of benefits.
The additional £30bn in costs comes from lobbying that will mean:
- Additional infrastructure - for example, various new rail links, tram lines and road upgrades that will now be given the green light to cope with the additional pressure on infrastructure along the HS2 route.
- Design changes such as extra tunnelling to ‘buy off’ opposition. Critics have already claimed an extra £600m has been added to the project to keep the route away from towns in George Osborne’s constituency.
- Taxpayer-subsidised regeneration schemes around the new stations and in towns that are bypassed by the line.
The decision to build HS2 is partly the result of lobbying by special interests. These include city councils in urban centres connected to the route, train manufacturers and other rail/engineering firms - all concentrated interests who stand to gain from the project going ahead. For example, the contract to build the trains is likely to total approximately £7.5 billion. There will also be valuable contracts for installing signalling systems, building tunnels and so on.
Lobbying has taken a number of forms including sponsoring high profile events with policymakers, such as fringe events at party conferences, as well as one-to-one briefings and the commissioning of opinion research.
There are also strong political reasons for the Conservative Party to have pursued this project. Its support for HS2 appears to have been closely related to its decision to stop the expansion of Heathrow Airport. It is unlikely to simply be a coincidence that this policy happened to coincide with the party’s electoral interests. It is also possible the policy was partly a response to poor electoral performance in the North of England in recent elections.
Recommendations
The government should cancel HS2 and ideally use the money to reduce taxes. In developing transport infrastructure it should prioritise the removal of regulatory barriers to the construction of commercially viable schemes not requiring support from the taxpayer.
However, if rather than reducing taxes the state does continue to spend on new infrastructure, the schemes boasting the highest benefit-cost ratios (BCRs) should be built first. Only after schemes with high BCRs have been implemented, and if there are funds left in the transport budget, should officials move on to those with medium ratios. Projects with low ratios, such as High Speed 2 Phase One, should be at the bottom of the priority list. This would help ensure that the economic benefits of investment are maximised for a given budget.
Commenting on the report, its author, Dr Richard Wellings, said:
“It’s time the government abandoned its plans to proceed with HS2. The evidence is now overwhelming that this will be unbelievably costly to the taxpayer while delivering incredibly poor value for money.
“It’s shameful that at a time of such financial difficulty for many families the government is caving in to lobbying from businesses, local councils and self-interested politicians more concerned with winning votes than governing in the national interest.”
Notes:
The full report, The High-Speed Gravy Train: Special Interests, Transport Policy and Government Spending, by Dr Richard Wellings, can do downloaded from www.iea.org.uk.
In July 2011, the IEA published High Speed 2: The Next Government Project Disaster? The research revealed why the scheme is economically flawed and showed that taxpayers will bear a high proportion of the financial risks. This can also be downloaded from www.iea.org.uk.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
HS2
HS2 Ltd statement on the IEA's report
19 August 2013
A spokesman for HS2 Ltd said:
“The IEA report is extremely speculative and completely lacking in concrete facts. The headline £80bn figure appears to have been arrived at by lumping together transport schemes that are not part of HS2 and in some cases are many miles from the line. The report claims a theoretical and unsourced cost of £30bn for these projects, although elsewhere admits many will never be built. The IEA also fails to show how a myriad of piecemeal incremental transport schemes would address the capacity and connectivity issues that we face or how they would even come close to providing theopportunities that HS2 as an Engine for Growth will bring to the national economy. The fact is HS2 is absolutely vital for this country. Without it the key rail routes connecting London, the Midlands and the North will be overwhelmed. This report does nothing to challenge these undeniable facts.”
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The Zig Zag Railway
Latest news.....
Hello again supporters. You'll never guess what happened this week.....
1. The mobile crane water pump kicked the bucket. We're desperately after donations to make up $432 to pay for it's repair and fuel costs to get it to Bowral and retur...n.
2. After the break-in at Clarence we have had to purchase locks for and repair the fuse box and storage shed which set us back another $219.54
3. The Zig Zag ute was broken into with the windscreen and ignition panels smashed with a copper pipe (the only one not stolen by copper thieves from C17 966 at Clarence - see below) stored in the back seat. No idea how much these repairs will cost yet.
4. The alternator was stolen from Mine Loco #6 as were copper components from the injectors on 966 (police have the rego of the vehicle used in this one, once again fingers crossed).
...and some GOOD news :)
5. Measurements for repairs of the small slips have at Bottom Points on the main line, loop and depot roads have been taken, which would indicate there has been progress made with the repairs to the embankment damaged by floods back in March.
6. A senior Railcorp Structures Engineer has confirmed that the design of a new retaining wall between the Down Main and Our Loop is underway. He says it could be finished in as little as 12 months (this shouldn't however affect our resumption of services earlier).http://www.zigzagrailway.com.au/donation.php
1. The mobile crane water pump kicked the bucket. We're desperately after donations to make up $432 to pay for it's repair and fuel costs to get it to Bowral and retur...n.
2. After the break-in at Clarence we have had to purchase locks for and repair the fuse box and storage shed which set us back another $219.54
3. The Zig Zag ute was broken into with the windscreen and ignition panels smashed with a copper pipe (the only one not stolen by copper thieves from C17 966 at Clarence - see below) stored in the back seat. No idea how much these repairs will cost yet.
4. The alternator was stolen from Mine Loco #6 as were copper components from the injectors on 966 (police have the rego of the vehicle used in this one, once again fingers crossed).
...and some GOOD news :)
5. Measurements for repairs of the small slips have at Bottom Points on the main line, loop and depot roads have been taken, which would indicate there has been progress made with the repairs to the embankment damaged by floods back in March.
6. A senior Railcorp Structures Engineer has confirmed that the design of a new retaining wall between the Down Main and Our Loop is underway. He says it could be finished in as little as 12 months (this shouldn't however affect our resumption of services earlier).http://www.zigzagrailway.com.au/donation.php
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