Big infrastructure in the balance for the UK

There are three huge projects lined up for the UK in the years ahead. The first is a public sector financed new high speed railway from Birmingham to London, HS2. The second is a largely privately financed London airport expansion, at Heathrow ( or possibly at Gatwick). The third is a privately financed nuclear power station in Somerset, underwritten by promises that the industry on behalf of and at the expense of customers will buy the electricity at three times current prices once it is producing. All three are subject to delay and/or to uncertainties about their future.

HS2 looks the most secure. It will attract massive sums of public money, and is widely supported by the major political parties in the Commons. I voted against with a modest number of other MPs because I did not like the business case. The 2013 Economic Case for HS2 showed Phase One of HS2, the Birmingham to London line, generating just £13.2bn of revenues against a capital spend and operating cost of £30 billion. The presence of revenues above operating costs relied heavily on a large number of people switching from the current conventional railway to the high speed railway. 69% of the forecast passengers are to come from switches from other rail lines, with HS2 generating an additional 26% of its total passengers by creating new journeys. The small balance is to come from switches from road and air travel. Such massive switching from existing railways would obviously damage revenues on the current railway and could induce bigger fare cuts, lowering HS2 forecast revenues.

The government claims HS2 passes its economic tests for such a project easily, as its evaluation shows substantial benefits from saved time for travellers and from possible extra growth generated by the investment. 42% of the claimed user benefits to passengers accrue to the London area. A substantial improvement in the existing railway could be achieved for this scale of investment, with more capacity on lines and in places where capacity is already under more pressure than it is on the mainlines from London to the north as well as improvements in capacity and performance on the existing northern routes.

There does need to be more London air capacity, and most of the cost can be carried by the private sector. The delay has been caused by strong environmental and planning objections to the Heathrow project. These have been made worse by NATs altering routes into and out of Heathrow to anger a lot more people about noise. They did this without consultation, and Heathrow itself has been caught in the crossfire, as they did not respond strongly against the NATs changes and have not so far been helpful to their local communities in putting things back as they were. The government has put back a decision, arguing it needs more time to sift the evidence. It is also going to find it hard to get the majority it needs if it wishes to back Heathrow, with more angry MPs unhappy about the bad neighbour aspects of the airport, and possible votes against from opposition parties.

The nuclear power station – or some other energy capacity – is sorely needed. The French and UK governments are keen to go ahead for all sorts of strategic reasons. Unfortunately for them the French company planning to build and finance the project is worried about the risks and costs that will be on its balance sheet, and is reviewing how to do it. The problem for the UK is not the capital costs or build risks, but the long term cost of the energy. If energy prices stay low and competitor sources remain cheaper, this investment will prove to be very burdensome for UK business and domestic customers.

As I look at these projects, I see the need for market assessment of the risks and viabilities of the schemes. We need faster decisions, less recourse to the taxpayer, and more manageable risks. In energy we could get this with a new fleet of gas powered stations. In railways, the state needs to take a closer look at potential passenger demand and how much people are prepared to pay for tickets.Saying a project is economically sound on the basis of notional financial gains will not pay the interest on the debt or the salaries of those running the railway. Only fare revenue can do that.

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105 Comments

  1. JJE
    Posted March 14, 2016 at 5:25 am | Permalink

    I was going to say it’s impossible for private money to invest at the level and timescales required when dealing with governments that constantly move the goalposts.
    But this lot don’t just move the goalposts, they can’t decide what the game is, where the pitch is, and if they want to play anyway.

    • Lifelogic
      Posted March 14, 2016 at 10:12 am | Permalink

      Indeed look at Brown and now Osborne’s endless attacks on pension saving and now his totally irrational attacks on private tenants & landlords. The constant chopping and changing over airport runways. The totally bonkers Huhne/Davey/Rudd approach to electricity generation.

      Huge damage was inflicted by Osborne just floating the idea for more pension mugging now apparently abandoned. Vote Brexit and get rid of the man and replace his with someone who will instigate lower, simpler, taxes and stop pissing money down the drain endlessly. Plus save the billions in EU fees and the cost of the lower paid and unemployed migrants.

      • hefner
        Posted March 14, 2016 at 10:25 pm | Permalink

        Strictly speaking, the UK problems with electricity generation did not start with Huhne/Davey/Rudd. It started in 1954 with the UK putting most of its eggs first in the Magnox, then in the 1970s the AGR (Advanced gas-cooled reactors) basket when most other countries (USA, France, Japan, …) were looking at PWR (Pressurized-water reactors). Right now, the UK has something like 14 (oldish) AGRs (not all of the same standard) and 1 PWR (Sizewell) in activity.

        The UK is likely to repeat the same mistake by trying to get a new type EPR, which is not yet operational and keeps being postponed wherever it is being installed (Finland, France).

        A question which is difficult not to be asked: are Ministers and MPs really qualified to judge the merits of this or that type? Looking at the history of nuclear energy in the UK, I am not convinced that PPE, History, PR graduates are the best qualified to do such a choice, specially when “economics” seems to be the main (and often only) argument that is considered (which they pretend to understand).

  2. JJE
    Posted March 14, 2016 at 5:36 am | Permalink

    Yet another budget this week I see.
    Wasn’t it altogether better when the Chancellor kept his speech secret until he delivered it? These days we get the best part of two weeks of briefings and pre announcements. Lots of activity but no added value.
    And then of course the odds are heavily for a Budget that brings more taxation, complexity, and micro interference.
    Look at the constant meddling with Pensions to see why no one trusts the Government to provide a stable environment for long term investment.

    • Roy Grainger
      Posted March 14, 2016 at 7:55 am | Permalink

      I see Osborne is playing his normal stupid game of hinting to the newspapers there will be some nasty surprises in the budget so that when he announces something not quite so bad we will feel grateful to him. It is a tired and feeble game that he plays over and over again – he did it recently over further pension raids. If he thinks this will bolster his ambition to be the next PM he is sadly mistaken, he has the personal charisma of a haddock and is digging a massive hole for himself with the Tory members by his facile sniping at Boris by saying things like “I don’t want Great Britain to be like Canada, I want it to be like Great Britain” – what does that actually mean ?

      • Lifelogic
        Posted March 14, 2016 at 1:18 pm | Permalink

        Except he usually only announces the very few good bits and his latest childish gimmicks in the speech and releases the details of the vast tax increases, pension muggings, IHT rattings, tenant muggings, insurance tax muggings, damaging rule changes, Stamp duty muggings and the rest only in the written details released later.

        One assume because he lacks the courage or honestly to do so.

        He also lack the honestly to admit he is failing hugely to keep his IHT promise and ratting on it comprehensively. Also that his bonkers attacks on landlords will put tenants rents up by 10%+. What a pathetic & dishonest tax borrow and waste man he is.

      • Lifelogic
        Posted March 14, 2016 at 6:11 pm | Permalink

        It is indeed a very stupid game. It inflicts pointless damage, worries people, wastes their time and achieves nothing at all that is positive.

        He should quietly get on with evolving a sensible, simple, clear and fair tax system that would benefit all but tax bureaucrats, tax accountant, tax book authors and tax lawyers.

        But then anyone who ramps up the minimum wage so much and thinks open door low skilled immigration, HS2 and Hinkley Point C, huge subsidies for wind, PV and Swansea lagoons are good things is, perhaps, a bit stupid.

  3. Mark B
    Posted March 14, 2016 at 6:33 am | Permalink

    Good morning.

    A lot of the root causes and why we need these massive projects can be laid at the door of mass immigration. Too many people in such a short space of time has meant that the UK Government has been unable to plan far enough ahead.

    Of course there are other equally valid reasons. Some political, some environmental and relating to the Climate Change Act, and some down to a government that thinks all projects should be state funded – they do not.

    It seems wherever government goes, trouble soon ensues. Best let the market decide.

    • Dennis
      Posted March 14, 2016 at 2:28 pm | Permalink

      Mass immigration hasn’t helped but the main cause is the massive population of the ‘indigenous’.

  4. Jerry
    Posted March 14, 2016 at 6:38 am | Permalink

    Typical muddled thinking of politicos, public money for an all new electric railway (servicing the needs of relatively few people) but no direct public funding for the means of providing the necessary electricity to run such a railway line! Whilst many of the same politicos are promoting the expansion of one already very over-crowded airport or the expansion of another that doesn’t have anything like the ability to offer the required transport infrastructure required for a “Hub Airport” – with neither, at least to start with, connected directly to either HS1 or HS2…

    How about, if the north want their power house and thus massive investment, the state invests in a new nuclear power station and private finance pays and operates both HS2 and a brand new northern hub airport sited close and connected to HS2 so that passengers wanting to travel to London and beyond can do so either by connecting flight or train?

    At least post our Brexit decision we will be free of EU meddling, even if not yet outside of the EU, thus the state will be able to review what projects might be better funded via the State even if doing so would constitute a direct state subsidy under EU rules – if the EU do not like it they know what they can do, make for a quick, fair and easy Brexit!

    • hefner
      Posted March 14, 2016 at 8:31 pm | Permalink

      Maybe it would be even better if after Brexit the private sector could really be in charge of all these projects, HS2, nuclear-based energy, new airports, etc (including health and education) without any state subsidies at all, no charity status, and without interference from the Government?

      We shouldn’t settle for a half-full/half-empty glass. We should ask and have a minimal state (police? armed forces?). Isn’t it time that the private sector and all who put their faith in it pay for infrastructure and anything else they accuse the State to do so badly?

      • Jerry
        Posted March 15, 2016 at 7:16 am | Permalink

        @hefner; You want a private health and education services post a Brexit?!

        Sorry to say this but I suspect many will then want a BSE outcome…

        • hefner
          Posted March 15, 2016 at 4:06 pm | Permalink

          If the Brexiteers win, I think it would be fair to let these minimum state eulogists apply “the prescriptions from dead economists”, apply their full program, and bear the consequences.
          Past the shock, it might be a way to get rid a certain fringe of politicians.

          • Jerry
            Posted March 15, 2016 at 7:21 pm | Permalink

            @hefner; “Past the shock, it might be a way to get rid a certain fringe of politicians.”

            Well yes, more than likely those on the right!

            A Brexit is for the benefit of all, it is not be seen as a means to a political “power grab” by one side or the other, if attempted there is very likely to be a pendulum effect from the electorate – an equal but opposite swing the other way and thus if the right-wing try and use a Brexit as a to enact a ideology shift Mr Corbyn could very well become the PM in 2020.

    • Anonymous
      Posted March 14, 2016 at 11:27 pm | Permalink

      Good comment, Jerry.

  5. Excalibur
    Posted March 14, 2016 at 6:47 am | Permalink

    I laid out a few days ago some of the problems afflicting Hinkley Point. Five years after the meltdown of three nuclear reactors at Fukushima Daiichi nuclear plant in Japan, the precise location of the melted fuel remains unknown. Reactor number 1 is currently under investigation to establish the location of the melted fuel. The Japanese with typical resourcefulness and ingenuity are building robots in an attempt to locate the fuel. Radiation levels remain so high that human intervention is impossible. Water is being pumped in to keep the reactor cool. The Japanese have been unlucky in that they have lost two robots. One toppled over and another became wedged in a metal walkway. The other two melted down reactors are unknown quantities, and may well have different problems. Tons of contaminated soil and highly radio-active water are creating massive problems of containment and disposal. We should think very carefully before going with the unproven and costly French option.

    HS2 is unnecessary. It would be preferable to invest the money in the general railways infrastructure with improvements to both rolling stock (built in Britain) and punctuality. Everyone who buys a ticket should have a seat.

    The delay and prevarication over a decision on expanding our airport capacity is a disgrace. Another example of political expediency over getting things done. My preference is for Boris Island. It would provide a brand new hub airport with substantial capacity for decades to come. Existing and new rail links to the new airport would aid the infrastructure, and the project would underline a new confident Britain after Brexit.

    • turbo terrier
      Posted March 14, 2016 at 1:01 pm | Permalink

      Excalibur

      HS2 is unnecessary. It would be preferable to invest the money in the general railways infrastructure with improvements to both rolling stock (built in Britain) and punctuality. Everyone who buys a ticket should have a seat.

      You cannot be more right on this one.

      HS2 is just another vanity project to take our minds away from the real problems facing us.

      Surely the National debt is big enough without adding to it.

      Without a secure efficient energy industry we are all p******g into the wind.

      Further proof that the Climate Change Act has got to be repealed. We need projects to create energy not add to the high consumption.

      • Jerry
        Posted March 15, 2016 at 7:34 pm | Permalink

        @Mercia; “[HS2] is an act of unforgivable vandalism to the beautiful English countryside.”

        As was the building of the LNWR between Euston Stn. and Carlisle, as was the M40 and M6 between London and Scotland, or any other road, railway and even canal built in the last 300 years…

        I do not agree with HS2, but as I said to @Edward the other month, I would not object to a new railway along the same route if it was actually going to solve the operating problems of our existing railway network.

    • Anonymous
      Posted March 14, 2016 at 9:13 pm | Permalink

      A reminder that Fukushima was hit by an earthquake and a tsunami and it was still contained.

      • Monty
        Posted March 15, 2016 at 6:04 pm | Permalink

        Indeed, and the only reason for the actual meltdown was because some complete idiot had permitted the siting of the backup generators in the inundation zone. That isn’t a failure of reactor engineering, it’s a departure from common sense.

  6. The Active Citizen
    Posted March 14, 2016 at 6:50 am | Permalink

    JR, as ever you challenge the orthodoxies with common sense, thank you.

    On Monday last week the CFO of EDF (the 85% state-owned French electricity giant) resigned over Hinkley Point and the company’s strategy.

    On Thursday last week the EU Commission approved the Franco-Chinese partnership of EDF and CGN. This is the partnership that will supposedly build the nuclear plants at Hinkley Point, Sizewell and Bradwell.

    On the same day, the French Cour des Comptes (Court of Audit) produced their report on EDF, and very troubling it was too. Assuming that no readers are both accountancy-trained and fluent in French, the precis is that the Company has over-reached internationally and is worryingly debt-laden, with major negative cashflow throughout the five years of the report’s remit.

    EDF is way behind with Flamanville (a big French project) which is now estimated to come in at 3 times its budget.

    And this is without saying anything about the astonishing KW/hr price guarantee which the UK Government has agreed.

    If the UK were my client, my advice in respect of its current strategy to use EDF/CGN would contain words like “bargepole”, “touch”, and “don’t”.

    [Sources (translations may be available, I don’t know): French Court of Audit, Report on International Strategy of EDF, Le Monde & Le Point 10 Mar, World Nuclear News.]

    • stred
      Posted March 14, 2016 at 7:52 am | Permalink

      The astonishing rate offered for electricity from HP2 is inflation linked. Depending on start and finish dates, the price could be 6x present cost. The Chinese are building some EPR reactors, some Westinghouse -that Blair/Brown sold for very little, and some Russian designs. Some experts say they manage to build them for much less because the cut standards. The Finns are building a modified Russian design for half the price of HP and the Germans were too before Merkel stepped in and chose lignite.

    • Mockbeggar
      Posted March 14, 2016 at 12:22 pm | Permalink

      There was a very good letter in The Times last Wednesday (9th March) from Rear Admiral Richard Phillips in which he says… “An analysis of small reactors based on the well-developed, safe reactor design that powers our existing and future nuclear submarines, would be most welcome. Based on homegrown technology, it might not be a ‘grand projet’ but it might do the job at a much lower cost and risk.”
      This is something I’ve wondered about for some time.

      • ian wragg
        Posted March 14, 2016 at 5:10 pm | Permalink

        MB. These reactors are extremely reliable and could no doubt be stepped up a notch from their present 20 plus megawatt to something a little more substantial.
        Instead of investing on HS2 the money would be far better spent on R&D for a larger say 200MW reactor. Combined with British auxiliaries instead of exporting the jobs and technology to Europe and China.

        • stred
          Posted March 15, 2016 at 10:46 am | Permalink

          Unfortunately, the problem with small reactosr is that any proposal would result in greens and nimbys protesting that they were being threatened with armageddon. The wonderful Caroline Lucas and her friends would be out there and the pinko police and CPR would let them carry on for a while and then give up on prosecution. Planning enquiries would go on forever and often be overruled by local politicians if permission was recommended. Same goes for fracking. They have to use existing sites and put in big ones, which are worth the enquiry costs and are supported by residents with jobs in nuclear power.

  7. Horatio
    Posted March 14, 2016 at 6:51 am | Permalink

    HS2 is a canard of the highest order. The sole purpose of the project to persuade the north that the Tories care about them. The sad reality is that, if anything, it will suck investment from North to south.

    The power station debacle gets worse and worse. We should be taking Chinese investment and designs for our nuclear power as they are building the most and best at present, just as we should do as the Chinese have done and employ a great modern Brit; Lord Foster to design an airport hub. Oh wait he did, Boris island. . One runway here (perhaps ) or one runway there (maybe ) is just not good enough. UK post brexit will need the links to the BRICs that Frankfurt and Schipol currently afford. We are being short sighted in the extreme.

    Thank god for Crossrail 2 because London will be undercapacity again,within a year of Crossrail 1 opening.

    • forthurst
      Posted March 14, 2016 at 9:22 am | Permalink

      “We should be taking Chinese investment and designs for our nuclear power as they are building the most and best at present”

      Most of the technology is not Chinese and they would be constrained from exporting it because of licence agreements. Russia is under no such constraints and has a thriving export market including China.

    • alan jutson
      Posted March 14, 2016 at 9:49 am | Permalink

      Horatio

      I see from a report by Andrew Gilligan in the Telegraph 12th march 2016 that there appears now to be some concerns about the sustainability of high speeds on the present planned HS2 Route, due to sub soil and embankment construction problems.

      It would appear, (if the so called secret report and soil examination results completed are correct), that the track may not be stable enough to sustain the high speeds forecast and required, as the sub soil will not be stable enough.
      Thus much higher construction expense or a reduced speed will need to be considered, otherwise derailment may occur due to dynamic track movement.

      Seems they have just found this out, so costs will rise or speeds will have to be drastically reduced, which renders the scheme almost pointless.

      • Lifelogic
        Posted March 14, 2016 at 1:19 pm | Permalink

        The scheme was already pointless before this.

      • stred
        Posted March 14, 2016 at 4:16 pm | Permalink

        The Rayleigh effect, which produces a sound wave in the ground and means that the softer the base- the slower the trains have to run, is known to railway engineers and should have been taken into account from the start of HS2. HS1 runs at 186mph and some TGVs at 200, but the chief British rail engineer, who was on the EU railway committee decided we would have a better trainset going at 250mph.

        HS2 employed one of the best respected engineers to produce a confidential report, but somehow it leaked. The report says the type of base will not be adequate at the higher speeds and a concrete base or piling will be necessary, or slow down. Last year a report by environmentally concerned engineers pointed out that by slowing to HS1 speeds, much less energy would be necessary- and, as we all know, there is a shortage of energy and it is becoming much more expensive. Slowing down also makes for less noise, wheras concrete increases it.

        So it was amusing to read in todays Guardian that HS2 is doing a Cameron and putting out PR gloss denying that the balls up. A Mr Ruse was quoted in the Telegraph saying that they were designing out the problems. The denial, however, only refers to ‘safety’ not cost. The cost and noise are not mentioned. If they slow down the business case will have to be reinvented too.

        Regarding Mr Gilligan, Zac Goldsmith said that if Gilligan’s Cycle Superhighway infrastructure did not work, it would have to be pulled out.(LBC) The traffic jams caused by it have produced much higher pollution, which will discourage cyclists from using it. They could have been routed through pleasant city streets. How is this project going? Maybe electric cars, vans and taxis going at the speed of milk floats would be the answer.

        • stred
          Posted March 14, 2016 at 4:20 pm | Permalink

          omit ‘that’ the…

        • stred
          Posted March 15, 2016 at 10:55 am | Permalink

          Boris was on LBC this morning and had calls from drivers stuck in Cycle Super jams. He assured them that it will all be ok when it is finished. Could someone please ask him to go down Upper Thames St on his bike and have a look. The dual carriageway has been reduced to two way singles PERMANENTLY and so the james will be PERMANENT too.

          Last weekend I managed to find the one crossing over the Thames with a right turn to go east and join the jam along the old road, rather than go through the gridlock now to the north. As a result, I was able to take my disabled bird to a concert, where half the seats were empty, and get home only delayed by 20 minutes instead of the hour last time. Don’t tell LBC , as they may think this is cheating and put another no right turn up.

          • stred
            Posted March 15, 2016 at 10:57 am | Permalink

            TFL-not LBC

  8. Horatio
    Posted March 14, 2016 at 6:52 am | Permalink

    On another note; going by Marr’s chummy ‘interview’ yesterday, Osborne obviously passes the establishment, magic money tree , green-guff, europhile, BBC test. No interruptions and plenty of sniggering over the biased treatment of Boris. Osborne would do well to consider the disdain in which the grassroots now hold him. I do agree however, that Gove should be doing these interviews as he is never short on detail and is very punchy. Where Boris excels is with the popular, positive tone he is able to take.

    Also great to see another Andrew Neil spectacular on Sunday politics, absolutely destroying sturgeon, intellectually pummelling her and the case for Scots Independence. Would be hilarious to see him dissect CMD but it will never happen.

    • Mick
      Posted March 14, 2016 at 8:51 am | Permalink

      I also saw Mr Neil destroy Sturgeon yesterday, I think he should chair all the BBC debates that are planned about the dreaded eu and not the bias Mr Dimbleby

      • Lifelogic
        Posted March 14, 2016 at 1:55 pm | Permalink

        I do not think Osborne or Cameron would dare to appear before a sensible interviewer like Andrew Neil.

        They only dare to turn up for wet, dopey, on side, BBC think, lefties like Marr.

    • Lifelogic
      Posted March 14, 2016 at 1:52 pm | Permalink

      Indeed not that Sturgeon is much of a challenge given her incoherent stance on almost everything she ever utters.

      • stred
        Posted March 15, 2016 at 11:01 am | Permalink

        She gets by because most of her supporters are incoherent too- usually helped by too much Buckfast.

  9. Antisthenes
    Posted March 14, 2016 at 7:15 am | Permalink

    None of those projects are worth the paper they are written on except the additional airport capacity and that is the only one that makes commercial sense. The dithering on that is typical of what happens when government agencies are too heavily involved. The other projects are of course the result of bureaucratic thinking. Heavy on theory and politicians and civil servants seeing themselves at being infallible when choosing what is best for their citizens. When it should be the public deciding what they need through the mechanism of the market. If the private sector wont do it without taxpayers subsidy then the chances are it should not be done.

    The railways are not the future and apparently neither is nuclear if the cost of energy is going to be that high. Your solutions to both seem eminently sensible ones. We need rail for now but technological advances would appear to suggest that road is best and will become even more so.

    • Lifelogic
      Posted March 14, 2016 at 1:56 pm | Permalink

      Exactly so they got all three decisions wrong! Despite the fact that a few hours with a paper and pencil is sufficient to come to the right conclusions on all three.

  10. Lifelogic
    Posted March 14, 2016 at 7:24 am | Permalink

    We need an extra runway at both Heathrow and Gatwick and both should have been given the go ahead many years ago.

    HS2 is clearly a huge waste or money, we need slightly better slower trains all over the place not one HS2 London to Birmingham. HS trains rarely save much time door to door anyway as to be high speed they have to have fewer stops, thus longer transfers at each end. Anyway you can work on the train so who cares if it takes a few minutes longer?

    It will cause huge disruption for years to come. HS train are not even green when the new track, staff and energy use is properly considered.

    I am in favour of Nuclear, but this project is totally the wrong one. A guarantee of three times the current value of electricity guarantee for years into the future and with price increases each year too. Yet another tax on electricity users (thus, in effect, not actually privately funded).

    The government is wrong on all three decisions. If the party elects daft LibDims as leaders what do you expect?

    Matt Ridley is quite right on his blog about the Hinkley Point C project.

    Watching the wooded Osborne on Marr I really cannot see him ever becoming leader of the party still less PM. He should instead concentrate of being a good chancellor. Lower simpler taxes, a smaller state sector and stop pissing money down the drain at every turn. He should also deliver his IHT promise properly and in full and stop pretending his IHT botch proposals are anything of the sort they are a comprehensive con.

    His double taxation of Landlords, Tenants and mugging of pensions are also a complete and damaging outrage.

    Fuel is tax far too much already at 74% of its retail price so leave that alone too.

    Just simplify the system and stop all the bloated waste for a change. Undo the damage you have done in the last few budgets perhaps.

  11. Richard1
    Posted March 14, 2016 at 7:32 am | Permalink

    We are often urged by leftists, commentators, ‘keynesian’ economists and others to make huge infrastructure investments as ‘surely it’s possible to find projects with a positive return at these interest rates’. Leaving aside the economic illiteracy of this – it is the opportunity cost of capital not the current borrowing rate which is the ‘cost’ – HS2 shows (or unfortunately will show) that it is quite possible to find big infrastructure projects with a negative return, which destroy value. All these projects (including the failure to permit Heathrow expansion) show how the political process, insulated as it is from market economics, can result in hugely damaging, expensive and uneconomic decisions.

    • Lifelogic
      Posted March 14, 2016 at 1:59 pm | Permalink

      The dig holes and fill them in again school of economics!

      When governments “invest” they are nearly always using money that would have been invested far better by the person they stole it off in the first place.

  12. Pete
    Posted March 14, 2016 at 7:38 am | Permalink

    All three projects are awful. Both HS2 and nuclear power stations are schemes to transfer public money to private coffers because of their total reliance on subsidies. A nuclear power station that produces electricity at huge cost and thousands of tons of incredibly toxic waste is lunacy. The expansion to Heathrow is an environmental disaster that will most likely prove to be a massive waste as oil production declines and prices soar. Air travel will not continue as it is long term.
    All three projects are totally unconnected with the public good and designed to benefit insiders at the expense of everyone else. Perfect examples of modern “democracy”.

    • Lifelogic
      Posted March 14, 2016 at 6:20 pm | Permalink

      Not much sign of oil prices soaring currently. If they do sufficiently then a replacement fuel will surely be found, developed or manufactured in some way, perhaps using nuclear power to synthesise it.

      Mankind can very inventive when required. As indeed can womankind, even if so few do study further maths, physics and computer studies at A level and beyond.

      Reply They have risen by more than a third from the lows.

  13. Ex-expat Colin
    Posted March 14, 2016 at 7:43 am | Permalink

    I think the energy inadequacy we experience needs a referendum. Have no confidence in whats happened to date as regards this critical service. If the people got to speak I think nuclear would have to be suspended. Unfortunate really for something that is and could be very useful….not at this cost and trouble though!

  14. Antisthenes
    Posted March 14, 2016 at 7:51 am | Permalink

    I see the great American meddling bungler is going to ride in 7th cavalry style into the UK to help keep those other great bunglers in Brussels in control of our land. The natives of the UK should do what the Sioux did to Custer yet another bungler to his modern day equivalent Obama when he arrives and while they are at it give DMC a good dusting as well.

    • Lifelogic
      Posted March 14, 2016 at 2:03 pm | Permalink

      The idea that the USA would sign up to anything like the EU is laughable. Obama has been a disaster, needless to say the BBC was hugely biased in favour of him.

      He was however quite right on Cameron’s dreadfully damaging and half baked interventions in Libya though.

  15. Anonymous
    Posted March 14, 2016 at 7:53 am | Permalink

    HS2 is a money pit.

    • Lifelogic
      Posted March 14, 2016 at 6:27 pm | Permalink

      It can surely only be being pushed through due to vested interests, what other reason is there for it? Ten minutes with an envelope and a pencil is sufficient to show it makes even less economic sense than the Swansea Lagoon, the Millennium Dome, offshore & onshore wind or Cameron’s happiness index.

  16. Leslie Singleton
    Posted March 14, 2016 at 7:54 am | Permalink

    Heathrow should have been expanded years ago. It has the advantage that it is relatively close to its city, which happens to be the capital of the world.

    Nuclear should be government-owned because keeping government out of such a large and important project is impossible in this day and age. The French and Chinese involvement is barking.

    HS2 is silly and doesn’t need to go all the way in to London. There should be a (non-terminal) terminus somewhere like Watford and HS2 should unarguably obviously be connected to HS1, Manchester to Milan, Madrid, Marseilles etc being the main raison d’etre. Most “Londoners” would find it just as easy and perhaps easier to get to Watford than Euston and Watford would be shedloads easier and cheaper to build. Megalomania apart, and if a connexion to London is necessary there is every reason to use the track way of the old Grand Central in to Marylebone–best standard gauge already in place on bridges and the like. And BTW Birmingham is close to London and already has two motorways and two railways in to London.

    These are the sort of decisions government should be making not non-market minimum wages.

    • miami.mode
      Posted March 14, 2016 at 7:21 pm | Permalink

      Leslie. Agree that nuclear should be government-owned, as if there is any problem such as accident, bankruptcy or waste disposal then it will be the government that will carry the ultimate responsibility. The downside, of course, is that government-run organisations are rarely very efficient.

  17. agricola
    Posted March 14, 2016 at 8:06 am | Permalink

    If HS2 was so attractive it would be a private investment project. As it is no one but government can see a profit in it, and when did they last do anything which made a profit. It is only profitable if you have the governments own relaxed view of mathematics. It is a vanity project just like the Dome but on a grander scale. Ask this key question of all those in government, political and civil, how much of their own money are they prepared to invest in it. After a blank stare they will be rushing for the door.

    The inability of government to create airport capacity commensurate with market demand only emphasises the unfitness for purpose of government. As you point out this will be done largely with private capital. To date a pitiful performance.

    EDF, a largely French government organisation has woken to the fact that they cannot afford to finance an as yet unproven project. They are apparently having a lot of trouble with their own version of this. If we are to have more nuclear capacity let it be from proven technology. While everyone continues to read the tealeaves lets get on with fracking and gas powered generation.

  18. Mike Stallard
    Posted March 14, 2016 at 8:14 am | Permalink

    These three projects would not be undertaken by any private company – even global ones.
    So why is the government doing them?
    I strongly suspect DG MOVE over HS2 – but that, being secret – is just a thought.
    I strongly suspect the EU Climate Change stuff about the nuclear power station. Again, it is secret discussion which I shall never know about.
    As for Heathrow, if a private company (even a global one or a bank) behaved like that, surely the shareholders would go ballistic?

  19. Ian Wragg
    Posted March 14, 2016 at 8:40 am | Permalink

    3 projects all stymied by the dead hand of government
    HS2 and Hinckley would not even be considered in a financially competent government. Both white elephants buying useless technology purchased at great cost from abroad
    I bet of the £55million cost of HS2 only 20% will go to UK companies.
    As for nuclear stations why are we not encouraging UK companies to design and build
    We have the knowledge and expertise.
    Then again the government has to demonstrate it’s good European credentials.
    A complete waste of taxpayers money.

    • Excalibur
      Posted March 14, 2016 at 11:10 am | Permalink

      All good points, Ian. I posted on the problems Japan is having at Fukushima. John has apparently declined to publish this. I wrote it to highlight the dangers of nuclear when things go wrong. Apparently we are prepared to spend taxpayers money to bale out the unproven French reactor, instead of giving our own industry a chance. Although, like JR, I prefer a non-nuclear solution.

      • ian wragg
        Posted March 14, 2016 at 5:17 pm | Permalink

        Ex, with a non nuclear solution we are tied to CCGT plants. Again the British manufacturers of steam and gas turbines have been sold off to Alstom and Siemens.
        These 2 companies will be lobbying hard for the government to invest in CCGT but the power companies are loathe to do so because the CCA wishes to shut down all fossil fuelled generation by 2030.
        Would you invest in CCGT plants with the prospect of only operating on part load and there being a chance they will be shutdown halfway through their life.
        The Tories have done nothing to repeal the CCA despite it being economic suicide.

    • Know-dice
      Posted March 14, 2016 at 1:11 pm | Permalink

      And don’t forget out of the EU, large contracts will not have to be advertised in the EUJ and can be directly given to UK companies without any interference from Brussels 🙂

      That’s if you have a government with its head screwed on, which really doesn’t seem to be the case at the moment 🙁

  20. ChrisS
    Posted March 14, 2016 at 8:43 am | Permalink

    The three Projects :

    HS2 is a ludicrous use of resources. The expenditure of upwards of £50bn to cut journey times by half an hour or less to Birmingham is simply not worth it. We would be better putting a lot less money into driverless cars and coaches with power from induction cables under the road surface. This technology is the future.

    Expanding Heathrow is similarly misguided. The airport will still be running at almost maximum capacity so that as soon as there is the slightest problem traffic backs up far more seriously than at any other airport. Boris Island may be a step to far but is a worthwhile solution but in the interim a second runway ( and provision for a third ) at rural Gatwick makes so much more sense.

    As for EDF’s proposed Hinckley Point C Nuclear power station, the chosen system is extremely expensive and largely unproven technology. Hitachi proposed a much cheaper power station using well established technology. Surely that is the right way to go when resources are precious and failure far too expensive to contemplate ?

    Why there are four stations around the world being built to the HPc design, all four are running late owing to problems and are all considerably over budget.

    The whole basis for France’s existing chain of 59 Nuclear stations is that they are almost all standard types. There are two basic designs of which 34 are of one type and 20 of a second. Building costs were so much lower as a result that despite France having 75% of its electricity produced by “expensive” Nuclear power, the price per KwH to the French consumer is among the cheapest in Europe.

    Building one highly advanced station in the UK is bound to be hugely costly and high risk compared with one of proven design. I suspect that with that kind of proposal we could have four or five times the generating capacity for the same expenditure and much cheaper power as a result.

  21. ChrisS
    Posted March 14, 2016 at 8:49 am | Permalink

    We never seem to learn lessons over large infrastructure projects.

    Does CMD really think appointing Labour’s original proposer of HS2 as the Chairman of the new UK Infrastructure Commission was a sensible idea ?

    He should have appointed someone like Lord Sugar who would have applied sound economics and business practice to any project as well as ensuring a much more intense look would be taken at alternatives made possible by new technology.

    • stred
      Posted March 15, 2016 at 12:01 pm | Permalink

      Lord Adonis the Beautiful was on the box this morning, ignoring all the stuff about his infrastructure disasters and telling us that there will be another High Speed white elephant to transport the citizens of the Northern Powerhouse between the Leeds and Manchester districts. While motorists wishing to avoid the M62 will be able to go through a long tunnel under t’ Pennines and avoiding the view. The Commissioners will be pleased to hear the local administration is still obeying zee orders with such enthusiasm.

      I have not made this up. He said Gideon would have something to say about it.

  22. ian
    Posted March 14, 2016 at 8:57 am | Permalink

    No money but you have to have something to talk about

  23. oldtimer
    Posted March 14, 2016 at 8:58 am | Permalink

    Thank you for delivering another dose of reality on these projects top waste our money. It appears to be a universal fact that the political ruling classes are totally and utterly useless when it comes to evaluating the economic case for such projects let alone applying any vestige of common sense. These latest UK monstrosities are more than matched in, for example, Germany which boast some half dozen failed projects, Japan and China.

  24. Bert Young
    Posted March 14, 2016 at 9:00 am | Permalink

    HS2 is a mistake – economically and strategically . The values of alternatives were never given proper evaluation ; the project was always a political one ‘

    The dithering about Heathrow (or Gatwick) is nothing but an indication of Cameron not being able to control or influence objectors within the Conservative ranks . If the case for the extra run-way is justified then the go-ahead ought to have been given some time ago ; as it now stands the stand off makes us a laughing stock to international onlookers .

    Atomic Power stations should never be left in the hands of outside countries ; EDF may have significant technology but , in the end , it is French owned and subject to French over-riding considerations – I would never trust them . Using outside financing capital is another matter ; if the investment is justified and viable , the risk can – and ought ,
    , to be put to the market . In any event – as far as the technology is concerned , the expertise should be left in British hands and controls .

  25. Shieldsman
    Posted March 14, 2016 at 9:10 am | Permalink

    I was prompted by a headline yesterday to write the following: –
    HEATHROW
    International development secretary Justine Greening has taken it upon herself to declare
    “I don’t believe that this government will proceed with a third runway decision. I just don’t think it is a smart decision. Trying to expand Heathrow is like trying to build an eight bedroom mansion on the site of a terraced house. It is a hub airport that is just simply in the wrong place.”

    So with her MBA is she qualified to make a decision on behalf of the Cabinet, or is she making a politically correct preemptive strike for her Seat as MP for Putney (since 2005) under the flight path.

    It is really decision time for Cameron, but being cynical he has his mind on other things. After all his rich mates have told him he cannot let us leave the EU, they will lose their fiddles and might not be as rich. So he is rushing around the Country scaring the s…. out of the workers with lies that they will lose their jobs. He was even telling the farmers they would lose their grants and that has been a mishandled Government disaster area for many farmers. EU budget 2011, UK contribution to CAP: 4.082 billion euro, UK receives from CAP: 3.315 billion euro, UK net contribution to CAP: 767 million euro.
    We could be just as generous and better tailor the grants to the needs of our farmers. Obviously beyond the abilities of dodgy Dave to work that out.

    The government has delayed making a decision on what form airport expansion will take, even after a long-awaited independent report from the Sir Howard Davies’ Airport Commission was published, recommending building a new runway at Heathrow rather than Gatwick.
    Business and the unions: We both back a third Heathrow runway – now get on with it

    The final cost of the report is estimated to be approaching £20m, so will that be money down the drain. How did we ever get so many muddled headed people as MP’s. It was the same 30 years ago they could not make up their minds on Roskill.

    Throw it all back in the pot as Greening suggests, and at the rate our Parliament works you might get a new airport in thirty years time.

    • turbo terrier
      Posted March 14, 2016 at 1:12 pm | Permalink

      Shieldsman

      It is really decision time for Cameron, but being cynical he has his mind on other things.

      I do hope you are not holding your breath for a real decision to be made. The state of play at the moment is there has been so many lies and fear stories he is beginning to be scared of his own shadow.

      Is this man really upto the task set by the people? I think not.

  26. ian
    Posted March 14, 2016 at 9:24 am | Permalink

    Its all gone into the black hole, nobody thought the black hole would come to 1.2 trillion with asset sale and QE, cuts and other things and still counting with no end in sight.
    Maybe another 4 to 5 hundred billion to go if your lucky, if include asset sale with kitchen sink thrown in, you should stick to building sand castles in sky for general public consumption, still no money for houses or anything the people want but maybe some more money for EU and a war.

    • Anonymous
      Posted March 14, 2016 at 9:19 pm | Permalink

      Ian – I reckon you are someone really well educated and important and I claim my five pounds.

  27. bigneil
    Posted March 14, 2016 at 9:44 am | Permalink

    On the budget, the info now going out on radio says that people on UC can save £50 a month for so long and get a bribe at the end. Clearly the end result of this is for the govt to say – -“look – you’ve saved £50 a month – That means you can manage on £50 a month LESS – which means WE can knock £50 a month off their UC benefits – Trust this lot to kick the poor yet again.
    As for cuts to everything we need /use I’ll take it that the illegals here claiming asylum will still be in hotels, all found, nice and warm etc etc and spending money still being handed to them. Get them out of hotels and in disused army/RAF camps with armed guards. They are criminals ( illegal entry) and we know NOTHING about them.
    Nice to see just how much contempt our govt has for us and our taxes – just like the contempt Merkel has shown for the German people.

  28. William Long
    Posted March 14, 2016 at 9:49 am | Permalink

    And now we hear that the HS2 trains will not be able to run at the necessary speed without expensive strengthening of the track. Will this white elephant ever fly?

  29. alan jutson
    Posted March 14, 2016 at 9:51 am | Permalink

    Whenever governments get involved, delay and increased cost seems inevitable.

    How do other Countries cope and manage thesis problems ?

    • turbo terrier
      Posted March 14, 2016 at 1:17 pm | Permalink

      Alan Jutson

      How do other Countries cope and manage thesis problems ?

      By putting people in charge of the departments that are qualified to run them.

  30. Wingsovertheworld
    Posted March 14, 2016 at 10:04 am | Permalink

    Sir, your arguments are well made and very logical. A great many people agree with them. So, I am led to wonder how it is that governments, both Conservative and Labour, seem so inept at managing and providing large projects? There has been a historical problem of governmental myopia over the “D” part of “R&D” in the UK. We are too quick to realise the cost of the research without realising the gains of the development. Too quick to sell off something of which we should keep hold. How is this problem so endemic? Is it the government’s advisors who keep getting it wrong? Too wrapped up in the bubble of London to realise there’s an entire country out here?

    On HS2 – what greater folly of spending public money is there? Increase road capacity instead, especially in the Midlands and the North. Many people, such as myself, now work shifts to cover the 24-7 world we are heading to. Public transport just can’t cut it. If getting somewhere quicker is more productive then make the speed limit 85mph on the motorways – most modern (mainly German) cars seem unable to do less anyway! Or how about spending the £42Bn to invite new R&D in the “5th mode” of transport? A company in the US is trying to build a vacuum tube train over a 400 mile track for $11Bn. Even if their figures are widely optimistic, you have to love the vision and vigour with which they (the small private enterprises) are taking on the challenge. They are currently striking up a deal with China to build a real-sized version. You have to hand it to the Chinese – grabbing resources across the world (and beyond), investing in future versions of transport (Maglev and Hyperloop), investing in airlines, in future power generation. We would do well to think that far enough ahead.

    On the new airport – as a matter close to my heart, I never saw the reason why we would want to build at LHR. It is too congested, with old infrastructure and a flight path directly over a capital city. I cannot think of any other major airport in Europe which does that. Gatwick would be the best short term solution, STN another (albeit rejected after a long gestation). My preference for large, forward-looking infrastructure projects however, does lean me towards Boris Island. If only!

    On energy – how is it that we give away large portions of strategically important utilities away to other international (government funded) companies? Should we not be protective of our energy or water supply? Does our model of privatisation make any sense, if the result is lack of infrastructure development and buying the product back at a price far higher than the market value?

    I have to say, I am worried about where this Government is taking us. It is losing grassroots support, with its unpatriotic, small-UK, sneering world view; its raiding of the middle classes for funding of vanity projects; its drive away from what is the right long-term thing to do for UK PLC, to that which is currently the most popular, ‘internationalist’ or least difficult (and these days, mostly according to The Guardian).

    With no immediate challenger in Parliament coming from across the benches, I fear a great number of protest votes will head towards the one place which has been resolutely anti-EU, anti-HS2, anti-wind farms, smaller government, low taxation and had a costed manifesto.

    On writing that last sentence I am left to wonder – are the real Tories wearing purple these days?

    • alan jutson
      Posted March 14, 2016 at 4:29 pm | Permalink

      Wingsovertheworld

      The more this nonsense about airport capacity goes on, the more I am in agreement with Boris Island, although they would need to do something about the Montgomery wreck first, although they would probably take another 75 years discussing that !

      • Wingsovertheworld
        Posted March 14, 2016 at 9:52 pm | Permalink

        Ah yes, I was going to mention it but the name of the ship escaped my mind at the time of writing.

        I think in the meantime, a second runway at LGW really is the best course of action, followed by looking once again at STN. But insomuch as we’re talking fantasy airports, how about up-cycling disused WW2 airfields? How about Bruntingthorpe – it’s right next to the M1 about 90mins from London by car; it’s close to the midlands high speed rail line running to Euston; has a large runway; flight path would not go over any large conurbations and it’s within a sphere of influence of Birmingham, Rugby, Luton, Leicester….

    • ChrisS
      Posted March 14, 2016 at 11:36 pm | Permalink

      “On writing that last sentence I am left to wonder – are the real Tories wearing purple these days?”

      Have to say I tend to agree. I’ve been a dedicated Conservative in the Redwood mould for more than 40 years but CMD and his sidekick at No 11 have been stretching my allegiance to breaking point, especially over the referendum and migration issues.

      I have a sneaking admiration for Nigel Farage but he is a Marmite politician.
      But then so was a certain M. H. Thatcher and she was the best post-war politician by far.

  31. Atlas
    Posted March 14, 2016 at 10:17 am | Permalink

    I suppose the term “Political Vanity Projects” summarises them.

  32. Vanessa
    Posted March 14, 2016 at 10:22 am | Permalink

    I would love to know where all the money is coming from for all these HUGE projects. It seems that governments are incapable of being prudent with other people’s money. The next generation must be looking at these sums and wondering how they are going to live!

  33. graham1946
    Posted March 14, 2016 at 11:22 am | Permalink

    People who have no money can save no money. They can’t even pay meaningful amounts into their obligatory pension funds, so that at the end they will still have no money to live on. Even if they did manage to save something and get the ‘bonus’, it will amount to no more than the price of a couple of pairs of shoes for SamCam.

    Out of touch? They are not even in the same universe, let alone the same planet.

    Cameron and his government -too much money, too little brain.

    • turbo terrier
      Posted March 14, 2016 at 1:14 pm | Permalink

      graham1946

      Out of touch? They are not even in the same universe, let alone the same planet.

      Sheer brilliance!!!

    • Lifelogic
      Posted March 14, 2016 at 7:25 pm | Permalink

      It is a pathetic gimmick (like so much of the Cameron/Osborne agenda) it will not cost the state much (as people with low earning will not be able to save very much), it will cost a lot to set up and administer – but it sounds like they are helping the poorest.

      A pathetic PR stunt that will damage the economy but what do they care they are politicians PR, lies and stunts are the name of the game.

  34. turbo terrier
    Posted March 14, 2016 at 1:26 pm | Permalink

    Mercia

    We need full cover high speed broadband

    What is this? Is it something from another planet?

    Living in rural dictatorship Scotland we are very lucky if we get a reliable phone line. Some roads border on being unpassable due to the pot holes and surface failure, Confined to home and waiting for a miracle. Still it will all be right in the end as Empress Nick tells us, new taxes and the wind turbines will make it so.

  35. James Winfield
    Posted March 14, 2016 at 1:35 pm | Permalink

    The most important infrastructure project that the country could embark on is a massive house-building project in London and the south-east to combat the exceptionally high house prices and reverse the trend where less people are owning their own homes – especially amongst the under 40’s.

    The romantic in me would love to see HS2, however I really think that money would be better spent on housing – or at least on upgrading existing transport infrastructure.

    I dearly hope that Hinckley does not go ahead – it looks a terrible deal and cannot understand why an economically competent government would proceed with it. Bizarre.

    The Conservative government has disappointed me on infrastructure decisions so far – I do hope this improves by 2020.

    • Anonymous
      Posted March 14, 2016 at 9:25 pm | Permalink

      Better still, control immigration levels better. We wouldn’t need the housing nor HS2 !

      The national debt and the national deficit show that the mass importation of people is not working.

    • ChrisS
      Posted March 14, 2016 at 11:55 pm | Permalink

      We don’t have a housing crisis, we have a migration crisis.

      We are building enough homes to satisfy demand from the current population. The shortfall is entirely due to the housing needs of the 336,000 net additional residents arriving in the country each year.

      The fact that a majority of these migrants flock to the South East makes the problem particularly acute in the London area. Even if CMD fulfilled his target of “reducing net migration to the tens of thousands” at the top of the range, i.e. 99,000 net arrivals a year, the shortfall in housing units being built would be well under 10,000pa, a problem, easily solved.

      It goes without saying that the real cause of house price inflation and rising rents is inward migration. It’s yet another example of the adverse effects uncontrolled inward migration has on UK citizens.

      Of course, no mainstream politician will tell the real truth in a major speech on this subject, will they ?

      Ours are not the only culprits : Merkel refuses to take any notice of the message voters sent her on Sunday. That was a big mistake and will only lead to more trouble in her country.

  36. Lifelogic
    Posted March 14, 2016 at 2:08 pm | Permalink

    Of course they are socialists. This scheme is as daft of Brown’s baby bonds to fund their 18th Birthday Parties. It is mainly to distract from what will be more tax grabbing by the man.

    Tax people then give them some back if they save it in a silly, expensive to run, special savings vehicle.

  37. Lifelogic
    Posted March 14, 2016 at 2:09 pm | Permalink

    They are indeed a potential target. It they put security on them that will add an hour or two to the journey.

  38. stred
    Posted March 14, 2016 at 3:31 pm | Permalink

    According to Sustainable Energy- MacKay, the nuclear waste for the UK could be stored underground in a volume about the same size as an Olympic swimming pool. The French use a cavern near Dieppe. The waste is mainly low grade, but even the more radioactive stuff has a half life and decays over 100 years to less dangerous levels. Plutonium can be used in fast breeder reactors. Nuclear waste is manageable and if we do not have nuclear power, we cannot have reliable electricity for transport and industry, unless we allow carbon fuels.

  39. Mark
    Posted March 14, 2016 at 3:57 pm | Permalink

    We could simply not close coal power stations and save ourselves a lot of money.

    It will be interesting to see how much difficulty the grid gets into now that so much coal capacity is being shut down by the end of this month. I gather they paid £1,000/MWh to cover peak demand last week when the wind had dropped.

  40. Yosarion
    Posted March 14, 2016 at 4:22 pm | Permalink

    John off topic, however, the Welsh windbag on the daily politics suggested that he became pro EUSSR after the regions were promised devolution and then went on to argue his points to remain on a purely Welsh standpoint.
    The English have been in a Pincer movement between the Celtic fringe and Brussels for thirty years or more and all we get is EVEL, and a joke in number Ten with Scottish blood running through his veins.

  41. Margaret
    Posted March 14, 2016 at 5:20 pm | Permalink

    300% rise .. that’s comforting! HS2 … whatever ! Constantly being conned and we will all behave like good little citizens . I grow about 10 varieties of fruit , have space for vegetables , can sink a water a tank and even install a wood burning stove and I live in a tiny bungalow , but what about those who have recently bought 4/5 bedroomed detached houses and live in a 2m x 2m plot, who will be paying through the roof for a mortgage and may well be be shivering and hungry?

  42. fedupsoutherner
    Posted March 14, 2016 at 5:54 pm | Permalink

    It has been reported that if the trains on the line of HS2 were to travel as fast as they are capable of, they would derail. If they had to go slower then the journey would not be that much faster than trains go now. HS2 is a big vanity project that the UK can do without for a while unlike Heathrow which is a necessity if we are to keep up with global expansion.

    As for energy!!!! Well, what can anyone say except that Merkel and her ideological ideas about ‘green’ energy will be the death of Europe and the UK if we carry on as we are.

    I really thought that when we got rid of the LibDims we would get some real action over this ‘green’ energy crap. But how wrong can one be? Amber Rudd is useless and it’s about time we had someone in charge that knew a thing about energy policy. Yes, if nuclear is proving to be so expensive then we should invest in gas and with our own gas, not imported gas. We have plenty and it would provide jobs and give a good return. The whole energy debacle is ridiculous. All the turbines where I live were still today. Nice high over the UK and they are useless. Amber, for goodness sake stop all payments for wind and invest in something that is going to work whatever the weather. You know it makes sense!! Or perhaps you don’t?? In which case move over and give the position to someone who does.

    • Anonymous
      Posted March 14, 2016 at 9:29 pm | Permalink

      The trains aren’t the only things likely to be derailed. The whole cost/benefit calculation will be derailed if those journey time reductions cannot be met.

  43. turbo terrier
    Posted March 14, 2016 at 5:56 pm | Permalink

    Big infrastructure is alive and kicking and doing very very well here in dictatorship Scotland ably supported by the millions of bill payers in the UK and especially all those suffering with fuel debt and poverty.

    Reported today in the Scotsman

    Power supplier SSE has signed a £355 million deal to sell almost half its
    stake in a complex of wind farms in South Lanarkshire.
    >
    The Perth-based group is selling 49.9 per cent of the 350 megawatt Clyde
    Wind Farm business to renewables investor Greencoat UK Wind and GLIL – a
    joint venture between the Greater Manchester Pension Fund and London
    Pensions Fund Authority.

    Today’s deal follows a decision by SSE in March 2014 to scale back its
    investment in wind farms as part of a sell-off programme aimed at bringing
    in about £1 billion; a target that has now been exceeded.

    This is just the start of the big boys selling off their windfarms and by the time you get to the last couple of years it will be owned by Bill and Ben and when it comes to the decommissioning they will be nowhere to be seen, just as has happened in the USA.

    If Gideon wants to raise real money from real taxes this is the place to start and hopefully the poor old UK taxpayer will be given a break.

    It will not happen, but one can dream!!!!!!!!!!!

  44. ian
    Posted March 14, 2016 at 6:25 pm | Permalink

    Hs2 is a fallacy, 225 mph on length of track you have is to short, it might do it on a test run but everyday uses is another thing, If you need more rail capacity you should go for 140 to 160 mph and near the rail lines you have now and up grade all track to 140 to 160mph so you can uses all the same rolling stock, you might lose 12 mins on a short trip like that, most train engine now can do 150 mph and lines 130 mph or more, you should be building concert corridors out of London so trains can speed up right away, that where you are losing time, it only over 100 miles to Birmingham.

    • acorn
      Posted March 15, 2016 at 7:33 am | Permalink

      Agreed ian, getting more capacity now, from the existing kit, is the way to go. 130 mph is probably the optimum top speed needed on a short sector system like the UK’s; but trains need more horsepower to accelerate out of stations faster and raise the average sector speed.

    • ChrisS
      Posted March 15, 2016 at 9:02 am | Permalink

      Quite right, Ian

      High speed lines only really work when you have long distances between cities with no intermediate stops. The geography of France is ideal for the TGV fleet, the UK is not. Rail is fast losing any advantage it had over road transport. Self driving vehicles, cars, coaches and trucks, running in purpose built lanes on motorways and powered by electricity through induction would provide more flexible transport and be vastly cheaper to operate.

      I suspect an automatic long distance coach running at 100mph in a dedicated lane separated by concrete barriers could well be faster than a train. Individual unit would not have to stop at any intermediate stations and several could be electronically or physically linked together to cope with variations in demand. Many stops would be out of town where there is room to park and arriving passengers could transfer to small electric cars on hourly rental or another coach to complete their journeys.

  45. Lindsay McDougall
    Posted March 14, 2016 at 6:30 pm | Permalink

    You are right that HS2 will attract passengers and revenue from existing rail and air. And we haven’t yet been told the fares policy. I bet that, at least in the early years, it will be a service for fat cats, top politicians and Civil Servants, and EU officials, presumably charged at a premium. It will still make a loss.

    When the channel tunnel and HS1 were built, there were two types of passenger forecast. The first, conventional, forecast was based on reassignment from ferry and air, plus travel growth as GDP grew. The second type of forecast assumed that competition would force prices down and that the there would be a jump shift in demand (trip generation in the jargon). The conventional forecast turned out to be correct.

    Gatwick could be built quickly, with limited opposition on legal challenges. The Government should support the idea of 100% private finance for Gatwick and let the punters get on with it. Government finance would be limited to improving road and rail links to the airport.

  46. Ian Wragg
    Posted March 14, 2016 at 7:01 pm | Permalink

    Postscript. Peak demand 47 gigawatt
    Wind 2.25 gw.
    And still they continue to build them
    Beggars belief.

  47. acorn
    Posted March 14, 2016 at 7:21 pm | Permalink

    I have my doubts about all these infrastructure projects. The UK is not an emerging nation, it is in its dotage. The UK national battery is gradually going flat, brain cell by brain cell. When the best Chinese Restaurant in our area, with a three week waiting list for Saturday nights, closes down, there is something wrong somewhere; Mr Osborne.

    What use would HS2 be? It won’t generate a large increase in GDP, except while it is being built. The government can afford to build it; it can afford to build anything it wants, it issues the currency. But it will be the equivalent of digging holes and filling them in again. That would be good for the unemployed; it would take so long it could virtually be a national “job guarantee” (JG) scheme. It would probably run out of skilled trades fairly quickly, so the pace of the JG, would have to be controlled, to prevent excessive inflation in various resource components.

    Down South, we would appreciate our trains having 20th century electrics, never mind 21st. But again, they still work well enough for what the South and South West of the country is going to need in the (lack of) foreseeable future.

    Airports? Boris Island could be another national “job guarantee” scheme; but, are we likely to need it? I don’t see UK, or rather English commerce expanding that much to justify it. It’s all too late for a nation that is going into its grumpy old farts, every body is a victim now, twilight.

    There is plenty of scope to use Schiphol airport with its six (6) runways. We need a large fleet of 737s / 319s to shuttle back and forth from every regional airport in the UK to Schiphol. Leave Heathrow for the (spiv) City State of London and Gatwick for the South East and London tourist industry. I notice that some UK Tour Companies have started using Schiphol, as their long distance “HUB” for both east and west flights.

    Nuclear Power Stations? Would someone please tell me why we need the ECB to print the money (via Le France) to build them, rather than having our own Treasury, print our own money to build them? Alas, we must assume that those involved in the project, no longer wish to be left holding Pounds Sterling in their corporate Treasuries, in the foreseeable future! Surely we haven’t run out already, of Chelsea mansions for them to buy and use up them Pounds!

  48. Maureen Turner
    Posted March 14, 2016 at 9:20 pm | Permalink

    Large infrastructure projects in the UK almost always go over estimated budget but it’s not just they go over initial projected costs it is they do so in such a big way.

    Holyrood Parliament bldg. Original estimated cost £ 10 million to £ 40 million. Actual completion cost £ 430 million. Similarly the Edinburgh Airport to city centre tram rail link went way over budget and installation time, disrupting Princes Stree for years.
    Thankfully, now it is up and running it is proving popular with residents and visitors alike. There was a need for it but can the same be said for HS2?

    Have just looked at the estimate figures for HS2 (2014) and this has almost doubled from £ 43 bn. to £ 80 billion – Institute for Economic Affairs. Seemingly outside funding is not easy to attract which might tell us that it is hardly likely to be a good investment for any party involved. I read some time ago that the Channel Tunnel hasn’t proved itself particularly lucrative for its investors.

    Does no one in government consider that spending £ 80 bn. to cut a journey time by 30 mins. might be a bit excessive when you consider the need for upgrading the existing rail network. Rural areas in the UK are often transport deserts and make it a necessity to own a car. It would be nice to think the myriad of railway cuttings now disappearing under willow weed could be reclaimed for rail but that’s never going to happen. Dr. Beeching’s axe wielding is with us to this day..

  49. fedupsoutherner
    Posted March 14, 2016 at 10:31 pm | Permalink

    How will we know that the people receiving this extra interest will be the ones on benefit? They could be wealthier parents or relatives using their childrens names to apply!

  50. stred
    Posted March 15, 2016 at 3:31 pm | Permalink

    I f HS2 was not economic, Lord Adonis now has a proposal for HS3 and a road tunnel between Manchester and Sheffield 18 miles long, costing £9bn and needing light projections on the wall to avoid bad psychological effects on drivers. But it will save half an hour and putting up with winter weather.Described by the campaign for better transport as ‘madness’.

    How is it that we can’t afford a Thames crossing for the inner London ring road, but a garden bridge is going ahead and now for the Northern Powerhouse £9bn for a few lorries to save half an hour is a good investment?

    • ChrisS
      Posted March 15, 2016 at 11:07 pm | Permalink

      Guys like Adonis don’t understand the concept of money, let alone value for money.

      As I recall, when HS2 was estimated at a mere £50bn, it was going to cost every single household in the country £3,000 but less than 5% of them will ever use it, not even once in a lifetime.

      How can anyone with more than a single brain cell think that could be a sensible use of resources ?

  51. a-tracy
    Posted March 16, 2016 at 10:38 am | Permalink

    Perhaps this power plant shouldn’t look to foreign investors/France. Perhaps we should look to our own savers/investors who could buy shares in a new power plant with guaranteed long term returns.

    We should be protected as shareholders by ensuring the bid for the power station goes out around the world to tenders with a certain number of the jobs used to build the plant to be hired from within the UK residents that have lived here for five years or more, bar apprentices on training schemes.

    Why do budgets always have to be negative, why do we just hear about what money you need to raise, why don’t we hear about new schemes to make money, instead of just spend money. Oh yes :0 that’s the hard bit!!!

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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