There’s a big gap in the argument of HS2 sceptics. What should we spend the money on instead?
“OK, then lets skip High Speed Railway”
“Melbourne-Sydney? Ah, Why can’t we have fast trains? I like fast trains. I like infrastructure. I just don’t like specifics.”
“That’s the killer, isn’t it? Announcing a big spend. That’s easy. But then what do you spend it on?”
The Hollowmen, ‘Future Fund’
Let’s say Labour decides that High Speed Two is too much cost for too little reward. It’s an entirely respectable view. It’s a lot of money to spend. Maybe there are better things to spend it on.
So what are they?
It seems to me there’s three main possibilities for the money saved. First, you use it to reduce the deficit. Second, you use it to drive current demand directly through tax cuts or increased public budgets. Third, you spend it on some other infrastructure projects.1
Since even more rapid deficit reduction during a period of sustained cuts would be a stretch for a Labour government, I’m going to discount option one, at least in large part. There might be room for some additional debt paydown, but it’d be marginal.
Option two (current stimulus) would cut against everything Labour’s been saying about long-termism, the need for greater infrastructure spend in the UK and so on. (and, to be fair to the government, the things they’ve been saying along the same general lines) It would look a bit odd for Labour to talk about underinvestment in the economy, and then recycle HS2 money into a tax cut or a pensions rise or something. After all, I’m not sure our argument against the current government is that they’re spending too much, too slowly.
So what else might the money be spent on? Not Heathrow, or Gatwick, I’m willing to bet. Or Boris Island or any other large increase in London’s airport capacity. Not a bunch of new roads in the South-East, even though some say they’re needed. Lots of train upgrades? Maybe, but then you’re into much the same value for money, capacity and disruption debate as you have with HS2.
Housing? Well, the money’s needed for social housing, but do we really want to spend all that money building green new Towns in the London commuter belt? That’s where they’re likely to go. The green belt was a Labour achievement, and we’re going to build on it, as the man once said. Anyway, won’t somebody please think of the Marginals? On top of that, any such programme would involve a pretty big subsidy to the private sector as a) You would need to encourage mixed use developments and b) building new transport and road links. Oh, and if you built in areas of high demand, a housing programme would do precious little for the economies of the North and Scotland.
So there are lots of options, but they too all have problems and issues. Whatever the scheme or schemes that get the nod, I’m willing to bet the project budgets will overrun, they’ll be politically controversial and annoy a hell of a lot of people.
That’s the problem you see. As a country, we like the idea of infrastructure and the long-term. We just don’t like the specifics very much.
Maybe we could just put the money in a Future fund? I like the sound of that. It sounds.. glossy.
- There is a fourth option, I guess: use the money to offset lost premiums from taking Rail companies back into public hands. But that would mean missing out on a big infrastructure project, unless you assumed publicly owned lines would cost significantly less to the treasury over the long term. Once you control for infrastructure spending, DOR is paying about the same premium as it’s predecessor and getting about the same subsidy, so the difference is likely marginal, so I’m not going to rely on that, though others models of train nationalisation costs may vary [↩]