die belebende Bedenkung

The ever-morphing rationale

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The House of Lords Economic Affairs Committee’s third and fourth HS2 economics oral evidence sessions took place on 28 October and 4 November 2014.

28 October 2014

[House of Lords, 28 October]

Committee Room 1 of the Palace of Westminster:

i. Professor Henry Overman, Professor of Economic Geography, LSE

ii. Alison Munro, Managing Director-Development, HS2 Ltd
David Prout, Director General of the HS2 Group, Department for Transport

Prof Overman told the Committee that HS2’s computed benefit-cost would put it in the bottom ten per cent of potential transport schemes. He did not believe that the utility of alternative investments had been adequately investigated. In his view London’s economic performance had been aided by the concentration of particular human capital in a dense core, and he was less than convinced about the replicability in a ‘Northern powerhouse’ dispersed over a large area.

For the most part, Ms Munro left the talking to David Prout. He claimed that the ‘£50.1 billion’ P95 budget “is the budget”, so there would be no overall escalation of the global cost of HS2. He gave the impression that only small-scale interventions on West Coast, such as Pendolino lengthening, had a higher benefit-cost than HS2.

4 November 2014

[House of Lords, 4 November, audio only]

Committee Room 2a
Economic Case for HS2

i. Joe Rukin, Campaign Manager, Stop HS2, Bruce Weston, Director, HS2 Action Alliance

ii. Cllr Martin Tett, 51m Alliance of Councils, Dr Richard Wellings, Institute of Economic Affairs

The Committee heard Mr Rukin argue that plans for improving north to south, and east to west, connectivity should have been developed as part of a wider transport strategy, rather than in isolation. He also mentioned the desirability of looking at overseas experience, such as France’s Cour des comptes assessment of the TGV network.

Bruce Weston recounted the difficulties experienced in obtaining rail passenger counts from the Department for Transport (HS2AA were eventually able to establish that Euston long distance services were only about half full in the peak). In Mr Weston’s view, HS2 Ltd’s forecasting model was unsuited to the project’s timeframe (which stretches over many decades), and an incrementalist approach to meeting demand was preferable.

Councillor Tett told the Committee that, as leader of Buckinghamshire county council, he was used to receiving and handling complaints about infrastructure developments from local interests, but his opposition to HS2 had been shaped by the project’s unsatisfactory and ever-morphing rationale, and the existence of superior alternatives.

Opportunity costs were the Achilles heel of HS2, Dr Wellings explained. He invited the Committee to look at topics such as deadweight costs and wider economic disbenefits, and consider HS2 from a public choice standpoint. In a level playing field situation, the existing West Coast Main Line services could be more attractive than HS2 in various respects (such as access to Birmingham’s central core), so the government might resort to rigging the market, to reduce competition.


Written by beleben

November 11, 2014 at 8:44 pm

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