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Business Comment: Terry Murden

HS2 is a taxing issue whether it comes to Scotland or not

HS2There have always been doubts around the financial case for building the HS2 high speed line. Critics say the £50 billion-plus budget could be better used upgrading existing lines and infrastructure.

Adding to the froth of indignation around the project is a claim today that Scotland may end up paying more than £3.6bn for a line that may never cross the border. That may be so, but this verges on the manic side of sensible analysis.

Projects in all parts of the UK are paid for by British taxpayers whether they use them or not. Should Scots also refuse to pay for a tunnel or a new rail station in Cornwall? Or repairs to the Dartford Crossing over the Thames? Should English, Welsh and Irish taxpayers refuse to stump up subsidies for Scotland’s windfarms?

Of course not. Sadly, a statement on Scotland’s share of the bill from the HS2 Alliance, a coalition of organisations opposed to the high speed line, has been seized upon by the nationalists, not to argue against the economics of the line, but as another weapon with which to beat the Westminster government – and the English.

This argument overlooks the fact that the Welsh, the Cornish and the Northern Irish will also subsidise a line that will not reach them. UK taxpayers inevitably pay for things they never use. A childless couple, for instance, still pays for the education system. We simply cannot pick and choose which projects we want our taxes to be spent on.

An ironic twist to the foot-stamping over this issue is that the fury over not getting what former Transport Minister Lord Adonis described as a “union railway uniting Scotland and England” is coming from the party that wants to break up the kingdom. Talk about wanting your cake and eat it.

The issues around HS2 should be focused on whether it is a good return on investment that will contribute to economic growth; that any such growth should benefit the regions of Britain; that the environmental consequences, both positive and negative, are properly weighed up; and on whether the benefits could not be achieved by any other means.

Scotland may have a perfectly legitimate right to demand connection to the route and there is some logic to extending it, not just to Edinburgh, but to Aberdeen. Were the likes of Isambard Kingdom Brunel, builder of the Great Western Railway, around today it would be unthinkable not to connect the two great trading capitals of Britain, one for finance and the other for oil.

But he operated at a time when ambitions were financed and fired by noble thoughts of economic greatness, unhindered by petty bureaucracy and politics. Only the French these days retain that same will to put their plans into action. It is why they were years ahead of the British in building a high speed connection on their side of the Channel Tunnel and why the TGV was such a roaring success.

The British dither over such grands projets until, of course, they are either delayed indefinitely or else built at a far greater cost than was originally planned, and on a reduced scale. The latest forecasts suggest HS2 may not extend even beyond Birmingham, although this is not a new claim. There was always a first stage that would take it to the Midlands.

Those, however, who demand it serves their own needs must accept that it will inevitably marginalise most of the country. Newcastle and Norwich are no better served than Dumfries or Dundee.

In the end, the chosen route will come down to cost. At a time when the Treasury is determined to cut the public deficit it will not want to over-burden the taxpayer with debt. Crucially, it will be averse to financing a project that, wherever it places the buffers, will turn out to be a white elephant.

Evidence from overseas suggests that where similar projects have been built, it is the capital that has benefited more than the regions as labour and investment is sucked into the main trading area rather than being spread outwards as planned. A Madrid-Seville line, which was supposed to benefit Seville, proved more beneficial to Madrid.

Scotland also has a precedent in building white elephants. The great Caledonian Canal was out of date by the time it opened, ironically rendered uneconomic by the new railways. Such is the precarious nature of long-term planning. HS2 is a (very) long term project and given the unreliability of economic forecasting to even accurately predict this year’s growth, it is verging on guesswork to produce meaningful figures for its eventual benefit.

It is also necessary to consider the technological change that is yet to happen. Investing such a huge sum to shave a few minutes off journey times must be questionable when people can connect more easily through virtual means. By the time it is built in 2032, who knows what may have replaced the need to travel at all, let alone at a faster speed?

 

 

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