Would you invest your money in HS2?


Yesterday I tried to explain the problems with the business case for investing in HS2 during the debate.  Everyone agreed that the private sector would not finance this big scheme. The main political parties have all decided that nonetheless it should go ahead with borrowed public money. Even more remarkable, they evaluate the finances of the project without putting in any cost of capital. They claim it will be a good investment, but they do not even ask themselves will it generate sufficient money to pay the interest on the borrowings, let alone eventually pay the money back.

Their idea of a good investment is something which brings “economic benefits” which expensive consultants have put a cash value on. This is misleading. The so called repayment is not money paid to the providers of the trains on HS2, and certainly not money paid to  the providers of the capital, us the taxpayers. When you decide on an investment in the private sector, you add up all the costs of  providing the new capacity or facility on the one side, and compare that with all the additional revenue you will receive from users. Judged on this more normal basis HS2 will not work.

Consider the cost of capital. The taxpayer has to borrow £50 billion to complete HS2. Next Parliament the government forecasts higher interest rates than at present. Let us suppose the government can over the next few years of buying this railway borrow all £50bn for an average of just 5%. That means the railway will need to generate £2.5bn of extra revenue over the costs of running the trains, just to pay the interest. That is before taxpayers get a penny of profit or return, and before we receive a penny to start paying off the collosal debt. To put this into context, the total revenues of the  entire existing railway in England, Scotland  and Wales derived from fares are just £7.7bn  at the moment.

I have long argued that the West coast mainline is the train line least in need of capacity improvements. The project’s own figures reveal the truth of this. By 2037 they reckon the West coast mainline will only be 31% full following the construction of HS2, which it elf will only be 52% full. That is after they have made substantial cuts to services on the existing lines  to try to reduce costs and remove empty seats.Trains out of Waterloo and Paddington are far busier than trains out of Euston, and there are serious capacity problems on shorter haul commuter routes.

The project assumes there will be no price competition once HS2 opens. Given the huge amount of capacity that will be provided on a route that is far from busy, experience suggests there will be a vicious outbreak of price competition leading to even lower fares revenues . This week, as a traveller to northern cities, I have been offered trips to Birmingham for £7.50 and to either Liverpool or Manchester for just £12.50. This does not sound like a railway suffering from a huge shortage of capacity, nor does it sound like a great business opportunity to make money from providing more capacity.

Much of the alleged cash benefits from running the extra railway comes from the saving of time on the journey. Business travellers are assumed to save £31.96 an hour for every hour of travel time saved, and this sum rises over the forecast period of the train project. As business people normally work on a train it is difficult to understand this calculation.

The wider economic benefits are said to come from the sudden acceleration of growth in Birmingham, Leeds and Manchester  which will come from the arrival of faster trains. This needs to be set off against the adverse impact on cities like Coventry,Leicester, Wakefield,Chester, Carlisle,Durham and all the others that will have worse train services following the cuts on existing lines. But will it anyway generate more activity? East Kent has not experienced any lifting of its growth rate following the arrival of HS1.


  1. margaret brandreth-j
    April 29, 2014

    All based on projections which we witnessed in Insurance policy and pensions many years ago. Nobody can just pick up a number out of the air and talk of growth .There are many more factors to consider. Business people starting up in small businesses would not put there own money to risk to this extent so why should the government allow public money which I work mightily hard for to be put into such projects.

    1. margaret brandreth-j
      April 29, 2014

      ahhh! their money

    2. dave/r
      April 29, 2014

      off subject slightly but this has nothing to do with improving train journey,s it is all to do with the eu,s TENS program offical documents state that this must be pushed through without the public being made aware of eu involvement

  2. Andyvan
    April 29, 2014

    Mr Redwood why are you assuming that making a logical argument will sway people that can only see a huge pot of cash that will, undoubtedly, give endless opportunities for back handers, consultancies, directorships and donations? To understand politics you just have to follow the money. Just like the Olympics and every other grandiose scheme concocted by conmen. Who benefits and who hopes to benefit from this colossal white elephant? One thing for sure is that it won’t be the tax serfs of Britain.

    1. Lifelogic
      April 29, 2014

      Exactly. It is certainly not the economic interests of tax payers driving this.

    2. Lifelogic
      April 29, 2014

      Rather like the “green” energy subsidies scam – certainly not driven by the interest of the public that is for sure.

  3. Robert K
    April 29, 2014

    I still have not seen anyone outside a small circle of ministers supporting this ridiculous scheme. I do not want my money spent on it, or my children’s either for that matter. How do we stop it?

    1. lojolondon
      April 29, 2014

      Er – yes, there is one other group, the Biased BBC supports the scheme. So BBC employees can get to Salford faster. Nevermind the cost, the taxpayer will pay the inflated railfares.

      1. Lifelogic
        April 29, 2014

        Indeed the good old BBC with their trains, bikes, buses good planes & cars bad religion. They all use energy to convert to motion planes and cars are often more efficient, convenient, safer, quicker and cheaper too.

  4. Mike Stallard
    April 29, 2014

    “The main political parties have all decided that nonetheless it should go ahead with borrowed public money. ”

    What worries me, above all the accounting shortfall, above all the disturbance to people’s lives in the Conservative areas, above all the sheer pointlessness of the entire project is this:

    Whose idea is it really?
    1. The Government.
    2. DG MOVE.
    “In the last 20 years the Commission has been very active in restructuring the European rail transport market and strengthening the position of railways vis-à-vis other transport modes.”

    The fact is that nobody – even you, Mr Redwood – can tell us all how we are presently governed. Good ideas and good business are not at all the same thing. Remember Tony’s Millennium Party? (Booze-up in brewery?)

    1. Hope
      April 29, 2014

      Fabricant has pointed out it follows Lord Adonis plans exactly despite Cameron’s original objections- no surprise there. No difference between Labour and Tory as ably demonstrated with the economic stupidity of HS2.

      If it is as claimed why is a report still held in secret? IS Cameron not able to spin the details away?

      As we discovered on this blog site, this is borrowed money with interest that has to be paid back by tax rises because the Tories will not make spending cuts in real terms to cut the deficit despite Osborne telling us otherwise in the Chancellor debates prior to the last election.

  5. Leslie Singleton
    April 29, 2014

    If (which, as you know, I think ridiculous) HS2 is not to be joined to HS1; and if the problem getting to and from Birmingham is (which I do not believe) capacity, why not start HS2 in Birmingham and bring back the Great Central at small cost, minimal damage and very quickly? I am unimpressed about the baloney spouted about businessmen working 20 minutes more and it is almost amusing to read your wondering whether the borrowing will be paid back–fat chance.

  6. The King is naked !
    April 29, 2014

    On various regions what the public are crying out for is more carriages.

    These carriages could be produced in Britain creating jobs in skilled manufacturing that can be sold abroad.

    Instead we get mis-spending on HS2 – and various other things on the wider railway – which will not help the passenger get their seat or reduce their ticket prices at all.

    All political it seems. Petty jealousies and egos at work rather than what’s good for the nation.

    1. Iain Gill
      April 29, 2014

      Re “skilled manufacturing” didn’t you know Camerons idea is that we earn money through the financial services industry and nothing else?

  7. Aunty Estab
    April 29, 2014

    Thanks for setting out the cost details of this project in clear terms, you would think even your government colleagues could read it and understand it`s a waste of money,but I suppose to Cameron & co. it`s only tax payers money, so if it buys him what he thinks is a bit of glory it`s money well wasted.

  8. sm
    April 29, 2014

    My head has been in a spin for some time about HS2, but some of the pro-arguments have seemed convincing; I also wondered if the anti-argument was over-influenced by nimbyism. However, having read this analysis, I now accept that the project is financially unviable. Are we allowed to mention that the project is part of an over-arching EU scheme?

  9. Lifelogic
    April 29, 2014

    As you say the scheme is economic lunacy numerically but it seem MP are not numerate. The vote for absurd green crap subsidies, the climate change act and all sort of other economic insanities. I listen to some of the dismal stream of comments from MPs yesterday. Perhaps a basic maths test before MPs can stand for parliament? Not a single sensible argument in favour of the project.

    Frank Dobson sensibly pointed out that a few million in schemes like the Francis Crick Institute would probably produce far better return than £50 billion in this white elephant. £50 billion that ultimately will be take from tax payers and prevent them from investing it far more wisely.

    It is a huge net destroyer of growth and jobs like so very much of what government does.

    1. Richard1
      April 29, 2014

      Basic maths but basic economics as well. The key concept missing from this discussion is opportunity cost of capital – what else could the money be spent on. Its not just about what interest rates will be, assuming we agree there is a limit to total issuance of debt its about potential returns on different possible projects. HS2 wouldn’t be considered for 5 minutes on this basis. It is clear ministers have had consultants back-solve into numbers which justify the conclusion they want, which is why we end up with absurdities like £31 ph saved for business Travellers and higher growth.

      This project is an illustration of how a political establishment can paint itself into a corner with an irrational policy and find it very difficult to get out. The ERM and the Euro was an earlier example, green crap is a continuing one.

      The Conservatives need to find a way out of HS2, Labour have probably got the political sense to drop it and will then come up with £50 bn of electoral bribes from the money ‘saved’.

      1. Lifelogic
        April 30, 2014

        Rather like the mad report that said pissing billions away on renewables was a sensible investment using .1% discount rate for future value!

        It is hard not to think that there should be some criminal action for the deceptions, quack science and other scams by the AGW climate scare scam.

        1. Richard1
          April 30, 2014

          Indeed the Stern report was extraordinary and absurd in the discount rates it used. Another piece of high profile political analysis designed to back solve into the desired conclusion. Rubbish in rubbish out.

  10. Nick
    April 29, 2014

    Table an amendment.

    No subsidies for tickets on HS2.

    1. Lifelogic
      April 29, 2014

      Indeed kill subsidies on trains and wind, PV and you kill the who absurd industries dead. Reduce subsidies for the feckless and they will diminish in number too. Stop distorting the market it makes everyone worse off.

  11. Mick Anderson
    April 29, 2014

    It always seemed to me that HS2 was a ruse by Mr Brown to “commit” Mr Cameron to wasting money; part of what looked like the scorched earth policy. It would give him something to get excited about when the stupid plan was dropped. Unfortunately, vested interests have become involved, money has already been spent. and Mr Cameron and Mr Miliband both intend to see it through.

    I’m not sure if I think less of Mr Cameron for not being able to recognise a white elephant when he sees it, or for being too politically cowardly for failing to refuse to spend money that should never have been committed.

    To answer your title; no, I would chose not to invest in HS2, and resent the political determination to waste my money. I will be voting against any party that supports HS2 at every opportunity.

  12. Lifelogic
    April 29, 2014

    What stuck me most about the pro HS2 contributions in the debate was the way most of them seemed to believe HS trains were “green”. They are actually very energy inefficient they stop infrequently, so you have longer connection journey and go at high speed using more energy. In addition you have the track construction costs and disruption, stations and large numbers of staff all using energy. They are far less efficient than full cars or coaches and far, far less flexible.

    A few numbers as you show above show it to be nonsense economically and environmentally too.

    How can any sensible MP who thinks about honest think it is green or a good investment of £50Billion +.

    1. zorro
      April 29, 2014

      John, for the reasons you state, I would not commit any finance to it. However, no other sane person seems to want to either, hence the taxpayer commitment. I suspect that the issue of ‘votes’ is caught up there somewhere. The promise of jam and economic growth in the North one assumes is why the main parties are proposing this, and so the grateful masses will duly mark their cross.

      What I do not understand is why the Conservatives are going along with this cunning plan. It is, of course, nonsense that it would make any improvement in Conservative voting patterns there, and just reinforces their reputation as Blair lite with profligacy on the public finances.


      1. zorro
        April 29, 2014

        This is the sort of ‘pork barrel’ spending you expect in other countries in dire straits to try and generate economic activity. We don’t need it, there are far cheaper ways to generate the conditions to encourage economic growth.


    2. Anonymous
      April 29, 2014


      I’m not entirely disagreeing with you here and I have no brief for HS2.

      I wish to challenge your bias towards cars.

      So you’ve capital outlay in your car, paid out the insurance and the tax. All there is to add is the petrol – a bit on maintenance too.

      Stupid not to use it for unnecessary journeys and invent other uses for it, eh ? I mean – what’s the point of spending all that money up front and leaving it to stand outside the house ? Join that fitness club 10 miles away rather than use the local one – go out-of-town shopping and make the supermarket look cheap – and let’s not forget: cars run ’empty’ fifty percent of the time too. Oh yes. They may be occupied by the driver but the load they are intending to carry is invariably there only in one direction.

      Main roads may well be covered by road tax but little used residential ones aren’t.

      1. Lifelogic
        April 30, 2014

        People want to carry stuff, go door to door, take the family with them without taking out a mortgage, travel in the small hours and on Christmas day and boxing day, travel to properties no where near stations, call at IKEA, Tesco, school pick up or something else on route.
        Trains do not really work unless you have say 300 people wanting to go from A to B and back to A at the same time carrying little (mainly commuting). It is not that common and still the train is empty for most of the rest of the day.

  13. alan jutson
    April 29, 2014

    I viewed some of the HS2 debate with dismay, and yes I did see you ask some questions, sensible in the context of the debate, but which quite honestly were batted away with such disregard as to the content, that no real answer was forthcoming, as were indeed were the many other points made by other people.

    All that this debate showed, like many in the past, was the actual sham of debate.

    Less than a quarter of the house were present, pre scripted speeches were simply read out, lots of weasel words, if this, if that, we must make sure of this, we must make sure of that.

    The most laughable one of all, was the member who suggested that a tight reign on costs would be implemented and calculated EACH YEAR year to make sure it did not run over budget.

    Pay tell me what is this idiot going to do when it overruns the budget for a particular year when the project is half built, abandon it, make it shorter.

    Surely the whole point if it is to be built at all, is to get a fixed price contract upfront.

    The problem with this is the extras and overs, and the cost of design changes which happen with every government project.

    I really do think it is time that a debate did mean something.

    Why not only allow those who attend the debate vote, at least that may make some people listen to the points being made.

    This line will suck the talent from the north to London, not the other way around.

    Simple reason:

    Houses are cheaper in the North than in London, and the wages are less, thus you do not travel from a high cost living area (London) to a low wage area (The North) you do it the other way around.

  14. Iain Gill
    April 29, 2014

    Again it points to the lack of real world experience amongst the political class, and their lack of respect for the people of this country who earn the money.
    Out of interest what would have been the result in parliament if only English MP’s were allowed to vote?

  15. The Prangwizard
    April 29, 2014

    On what basis was the M1 from London to Birmingham, for example, financed? Would you have voted and campaigned against it? I don’t know if it would have ‘paid’ or not, or indeed if any road development ‘pays’. I live not far from the M4, it’s very noisy of course and fields would be much nicer, but I wonder what the A4 would be like now through Hungerford and Marlborough for example.

  16. alexmews
    April 29, 2014

    Thx John

    I also don’t believe there is an economic case here – or large investors like pension funds would be queuing up to invest.

    the government seems to take the view i guess that they can print the money and it is therefore free.

    there is a handy tool in Excel –> ‘goal seek’. any model magically gets you the numbers you need. Done!

  17. Ex-expat Colin
    April 29, 2014

    No I wouldn’t: (all for 20 mins?)

    Its a CO2 scare outcome – more 21st century junk!
    Its not new technology (25KV OH line) – not green at all!
    Its on wheels and dangerously fast
    Its going to destroy landscape/living
    Its too expensive
    It’ll run over time and money (borrow again and again)
    Too much interest to pay.
    It’ll have loads of teething problems for a long time
    Compensation to property/land owners
    Fares…. as you state
    Usage…as you state
    Maintenance/Repair…dunno ?

    May get to some return when its scrapped…not much though.

    The Channel Tunnel was enough for me and that was a good idea I thought – at the time.

    Maglev was my preferred, but of course we are way out on that and its very expensive. We could have been there though.

  18. John E
    April 29, 2014

    Is anyone working in a Plan B ? It’s always more attractive to be offering an alternative than just opposing.
    Perhaps those opposed could draw up a list of sensible projects that are more affordable – say £30 or £40 billions worth?

  19. Bert Young
    April 29, 2014

    The HS2 project is ill-conceived and very badly timed for the Conservatives . Being shot in the foot by the referendum promise and going out on a limb on this ridiculous waste of public money is akin to committing suicide . HS2 cannot add a fraction of value to the economy ; the alternatives are straightforward and without further disruption to the countryside . A sensible leader who had any business background would never have allowed this to proceed in the first place .

  20. Stephen Norris
    April 29, 2014

    As I look at the UK today, I see a struggling health service in dire need of funding. I see a future increase in a long living aged population that will require help and support.
    I see that HS2 is backed by people looking to make a short term name for themselves and with no regard for cost (whatever they announce you can at least double it) or the taxpayers who will pay for it.
    The current rail infrastructure could be vastly improved at a much lesser cost.
    Banks are robbing us all of our hard earned cash while paying out millions in compensation, fines and bonuses.
    We see high profile people fiddling expenses and taxes and yet no criminal and little fiscal action.
    We somehow need to press a reset button and start again without whipped politicians forced to pay homage to a party.
    Our Politicians are supposed to represent us the people not the party they belong to.
    I commend you for having the guts to vote against the HS2.
    Let’s get back to what sensible people do, spend our money wisely where it is needed.

  21. Brian Tomkinson
    April 29, 2014

    JR: “Would you invest your money in HS2?”
    Certainly not, but your colleagues clearly have no qualms about borrowing and wasting such a colossal sum on behalf of taxpayers, regardless of the latter’s opinions. They show that they care not one jot for the public finances believing no doubt that the chickens will not come home to roost in their poltical lifetimes. Pile on more debt and interest charges, after all that is what your party in coalition with the LibDems and Labour have done and seem determined to continue despite the election pledges. Glad to see this time you voted for what you believed in and not the party line. Keep it up, you may then discover that your party isn’t worthy of your support at all.

  22. A.Sedgwick
    April 29, 2014

    Economically, logistically,politically and environmentally HS2 is stark, staring bonkers. It is a classic example how our current politcally hierarchy are so out of touch. As you point out the acute transport problems are significantly in the South East and involve commuting. There are no doubt similar commuter problems elsewhere where money could be better spent with vastly more immediate effect with benefits to local economies.

  23. JimS
    April 29, 2014

    EU Rail Directive: You WILL extend the TGV network.

  24. formula57
    April 29, 2014

    I see you were joined by the Prime Minister in not voting in favour of HS2 last night! :-)With a bit more encouragement (hopefully he sees this blog), Dave might join you fully next time and vote against. He certainly ought to, if his government wishes to make any claims for itself about financial and economic competence, never mind acting in the interests of the taxpayer.

  25. stred
    April 29, 2014

    The argument seemed to have shifted to a need for capacity rather than speed, and might make sense for freight. If a lorry carrying train could take some heavy long distance traffic off the motorways this could possibly work. It would have been much less expensive to build a new lower speed freight line to the north and around London. This would have created capacity for passenger services and a TGV could have been run up adapted lines at 150mph instead of 250, saving much energy and arriving a few minutes later. The distances to the Midlands and North are much shorter than between continental cities. The line could have been designed near existing or along disused routes.

    How the railway designers came to chose to start HS2 from a different station to HS1 is one of those questions that could only be asked in this country. If there was ever a reason to build a high speed railway it would be to link long distance journeys, enabling rapid uninterrupted travel.

    I had suspected that the highly paid experts had not done the sums and you have confirmed the unbelievable. Perhaps they knew that the answer would never justify the project.

  26. Atlas
    April 29, 2014

    As somebody who supports the railways, I nevertheless agree with John’s analysis. I reckon that the money (if it should be spent at all) could be spent more profitably for the taxpayer on other parts of the railway system.

    HS2 has all the hallmarks of a vanity project.

  27. Mark B
    April 29, 2014

    John Redwood MP said;

    “Everyone agreed that the private sector would not finance this big scheme.”

    The very fact that ‘PRIVATE MONEY’ will not back this, tells is own story.

  28. English Pensioner
    April 29, 2014

    If they need more capacity to Birmingham, the Chiltern Line could be improved at a fraction of the cost. Passing loops which used to be used so that the passenger trains could pass the slow goods trains were removed when there was no longer any goods traffic, but they could easily be reinstated to allow for fast non-stop trains.
    By the time HS2 is built, there will probably be alternatives for much of the business travel; in spite of high fuel prices, cars are still more economic if more than one person is travelling and they provide the door to door option, with no taxi or parking costs or, in the case of oldies like me, baggage handling problems. Another issue is whether there will be so much business travel with the advent of modern electronic communications and things like video phones and video conferencing.
    And of course, if Scotland gets its independence, there would be no case whatsoever for the HS railway to go beyond Liverpool, unless, of course, the Scots are prepared to pay for it!

  29. Gary
    April 29, 2014

    This is a case study why govt is useless.

    They spend other people’s money without having a clue what they are doing. There is a very good reason why private investment wont touch this project.

    Govt is the biggest money looting machine ever devised.

  30. petermartin2001
    April 29, 2014

    The question “Would you invest your money in HS2?” is interesting. The implication, behind the question, is that if no individual would put up their money then the project must be bad thing and if they would then it must be good.

    Is this a valid comparison? Is it evidence based? Would anyone have invested their money in the development of the transistor in the late 40’s and 50’s? Why would they when electronic valves were then so successful? It took a research grant from the US navy to get those available to to the wider world. There are lots of other examples too, including the present day internet which was the result of the requirement of the US Pentagon to link various computer sites together in such a way as to be resistant to any one being knocked out by a nuclear strike. Would any investor have put up the money to achieve that aim?

    Would any investors have put up the money to provide the Thames Barrage? It can probably lay claim to have prevented at least one catastrophic flooding of London. So, in theory, it could have been constructed by a conglomerate of insurance companies all acting together to reduce their potential losses on such an event. In theory, maybe. In practice, no it would not have happened. It did require Government to make it all happen.

    Having said all this , I’m still not sure that HS2 is the best use of available resources. There is is lot to be said for putting those into the existing infrastructure. Make trains longer. Increase the lengths of the platforms to take them. Put more money into signalling, so that the present day tracks can take more trains.

    You and I may not wish to put our money into these projects either. But, that doesn’t mean that Governments shouldn’t. Different considerations do apply.

  31. Larry LowTax
    April 29, 2014

    Thanks for explaining your reason for the way your voted.

    “HS2 follows in Brunel’s great tradition”

    The media was keen to use many “Brunel” sound bytes, but the media an HS2 fanatics gloss over the sobering fact that Brunel’s railways were not funded by tax payers.

  32. Lifelogic
    April 29, 2014

    I suspect non of the MPs who spoke in favour of this white elephant project would put their personal money into it. Yet they are happy to piss taxpayers’ money away on it.

    Is this moral, they should surely look after other people’s money with the same degree of care?

    Perhaps the same degree of care they give to claiming as much as they are allowed to (and often rather more) on their MP”s expenses.

  33. Roger Farmer
    April 29, 2014

    An excellent clear analysis of the reality of HS2.
    That politicians can wantonly spend taxpayers money on this glory project is, I find, beyond belief. All those who sign up to it should be held financially responsible for all costs involved. A threat to the pockets of the profligate might bring a veneer of common sense to the fore. It would seem that only a massive vote for UKIP in 2015 will bring an end to this insanity.

  34. Peter Stroud
    April 29, 2014

    I was a confirmed supporter of HS2 on long term economic grounds, and feeling that the UK needed to keep in the forefront of transport technology. However, reading your well reasoned case, against the project, has caused me to stop and think again. Thank you.

  35. acorn
    April 29, 2014

    Try removing “HS2” and substituting “NHS” in your post. Since when did a sovereign fiat currency issuing government, have a real “cost of capital” charge; it pretends to have one so it can fool the little people. You will be saying they forgot the VAT on the estimate next.

    Still, you could keep the whole thing off the government balance sheet by doing an NHS style PFI. They will cost £65 billion and only cost the government £1,2 billion a year, 1.5 at most in 20 years time, less than 1% of the NHS UK budget.

    Better still, you could use the same scam as “Funding for Lending” and make a government spend “off the deficit sheet”, look like a BoE monetary operation.

    Private sector investing is totally different to government investing. The private sector can’t print new money, the government can. The private sector is a currency user, the government is the currency issuer, it doesn’t have a balance sheet, it just has to worry about inflation. The government can pay any bill, now or in the future; including any interest on any bill, in its own currency.

    Don’t worry about the so-called national debt, it is safely tucked away in household and business savings accounts; pension funds and life funds; and it pays interest. The governments Debt Management Office (DMO) is the equivalent of the DWP, but for rich people and big corporations.

    We all, will pay it all, back to the government eventually in taxes, for ever and ever. Your kids and grand kids won’t pay anymore back in their time than we do now; unless they decide otherwise. National debt in a fiat currency economy is the nation’s savings.

    Just think about the pure beauty of the system. the government buys our labour and the stuff we make and pays us its own funny money, freshly made every day out of thin air. Then, we give it back some of its own money for a period of time; it gives us an IOU and pays us interest; in its own money, on its own money, that we have just given them back. How crazy is that!

    Anyway it was a good try yesterday but they didn’t want to know. Even though your economic appraisal was perfect neo-liberal conservatism (but rubbish in MMT terms), I agree, HS2 is not needed. I still think we should upgrade the loading gauge on existing track and run off the shelf Alstom double deckers train sets (Euroduplex model). I have travelled on a few of those, lovely kit.

  36. Kenneth R Moore
    April 29, 2014

    A sound and well reasoned assessment of the folly of HS2 by Professor Redwood.
    It almost beggars belief that he stands out so clearly from the Westminister pack for simply telling the unspun truth.

    But since the Lib/Lab/Con stitch up abandoned reason and factual truth decades ago, they will simply brush off Mr Redwood and go steaming ahead.
    It might make them sit up and think if Mr Redwood resigned from the party over the waste of 50bn and battled the CamcleggMilli beastfrom a position where he is not constrained by party loyalty.

  37. Malcolm Edward
    April 29, 2014

    John you talk and write good sense. I am disappointed that so many MPs are not bothered by financial probity and are willing to borrow so much money at our expense, to throw on something that is not essential and will not provide a return. Something like HS2 concentrates far too much resource in one part of the country at the expense of everywhere else. Instead we need any spare resource to be spent on fixing real transport bottlenecks around the country.
    And if they want another railway line why can’t they re-use the old central line route with trains that run at more modest speeds (super-fast trains have to be maintained regularly to a high spec which is a high on-going expense). Though as you say we need extra capacity elsewhere as a priority, such as commuter lines into the big cities.
    Oh for the days of Mrs Thatcher and evidence based decision making.

  38. Colin
    April 29, 2014

    Well done for voting against, JR.

    Can this still be stopped, either in the Commons or the Lords?

  39. DaveHampshire
    April 29, 2014

    Wow. More debt for the country. Just what we need.

  40. Mark
    April 29, 2014

    I was very pleased to see that not only have you written and spoken with honesty and clarity about HS2, but also you voted against the Bill.

    I noted that immediately following your intervention the Minister claimed that the benefit-cost ratio is 2.4 – which is patently untrue for the element of HS2 under consideration in the Bill. It would perhaps help if we had a more honest version of the BCR, as your simple sums show it would be well below 1 just because of the ongoing subsidy. I also recall that KPMG refused to put their name behind the report on “wider benefits”, with a disclaimer saying “use at your own risk”.

    The dishonesty that lies behind hiding the truth of the economic disaster of HS2 is a real blot on the 452 MPs who voted for the Bill and those who promote it.

  41. Martin
    April 29, 2014

    As I suspect you know the government is in a philosophical hole.

    The Conservative led government blocked the private sector third Heathrow runway and then used an inquiry to strangle private sector airports in SE England for years.

    Well you ignored private enterprise being sidelined at home and now you ask about £50 Billions of Westminster public spending. Ed Balls is thought to be concerned about the cost!

    Dubai has now overtaken Heathrow as the biggest International Airport on the planet. All down to UK planning laws and taxes. A great achievement for this government!

  42. rick hamilton
    April 29, 2014

    I have no idea how the financial model for HS2 works, but it seems to me that we have two investments here.

    One is the railbed, tunnels etc which will have a life of perhaps 100 years or more and should be seen as a national project just like a motorway. Yes the taxpayer pays but the country gains a real asset.

    The other is the machinery – trains, signalling etc – which has a shorter life and the ROI calculation is more realistic. In the long run we should be running maglevs or something more advanced anyway.

    There are many HS trains running successfully in other countries without howls of protest and I wonder how they manage to justify it. The UK’s chattering classes are becoming depressingly anti-technology and suffering a sad poverty of ambition and it’s not just the windmill and wood-burning fanatics who think that way.

  43. steve c
    April 29, 2014

    A convincing summary of the folly of HS2 in it’s present form.

    I have yet to meet a person who is in favour of this particular scheme, even with so much positive support for rail travel generally!

    How can it be right that a hard line whip is called on such a project, should HS2 not stand or fall on it’s own merits?

    Quite simply the costs are astronomical and will cost each person in the country £1000 each before trains and interest are included. The real scandal will be the cutting of services to Northern Cities from existing lines to bolster traffic on HS2.

    Sadly, I am sure the Government of the day will continue where Philip Hammond left off and place the high speed train orders with a foreign company.

    The politicians of this country really are becoming increasingly remote and impotent in the face of EU and overseas influence.

    Present company excepted.

  44. Vanessa
    April 29, 2014

    At last the truth! Thank you John. This is exactly why we are in this huge mess with our DEBT (not just the deficit) growing faster than when this incompetent government took over.
    The fares of this “white elephant” will have to be SO high that only politicians will be able to afford to use it. Meanwhile hundreds of people will lose their homes, businesses and farms not to mention our beautiful countryside – some investment ! God help this country with such nincompoops making the decisions.

  45. Max Dunbar
    April 29, 2014

    No of course I would not invest in HS2 but then I have no choice in the matter.
    The government are not even spending my taxes on this project initially but borrowed money, as you point out. The entire scheme is bound to be insane as it was Labour who started it. The only reason that I can see for this extra rail capacity is the anticipated tidal wave of humanity that is set to engulf us further in this already overcrowded small island and which is due (word left out ed) to immigration (etc ed|).

  46. Vanessa
    April 29, 2014

    P.S. The £50 billion will, inevitably, mushroom into £250 BILLION before it reaches the tracks.

  47. Denis Cooper
    April 29, 2014

    Would I invest in HS2?

    Well, I’d always be cautious about investing in any major infrastructure project because they very often turn out badly for the investors even if they are beneficial for the wider population. I recall one colleague ribbing another colleague about the latter’s purchase of, and subsequent losses on, Eurotunnel shares, pointing this out as a truth borne out by history not just in this country but around the world.

    But it seems that I will have no choice in the matter; there is strong cross-party support for what seems to be an ill-conceived project; which experience suggests is pretty close to being synonymous with strong cross-party support for a project which has been hatched in the capital of a foreign country, by the new transnational government of the projected new country of “Europe”; and even if the existing national government of our existing country is not legally bound to pursue that project they will insist on doing so.

  48. Demetrius
    April 29, 2014

    In the 1960’s there were diesel sets of Pullman trains run when the West Coast Main Line was being electrified from Paddington to Birmingham and St. Pancras to Manchester and Leeds. They matched up to HS trains in comfort and had better facilities. They were quick, but expensive. They lost a good deal of money because the general travelling public did not use them much and the premium payers were not enough in numbers and in any case had other options. The so-called “economic” case for HS2 is an utter nonsense and as for service tweaking existing ones and track improvements would take care of the timings.

  49. Tad Davison
    April 29, 2014

    There is something fundamentally wrong with the HS2 project, as John’s excellent expose’ shows, yet even he will surely admit that, as with the EU, it doesn’t take much to knock it down. That indicates to me, there’s something the politicians aren’t telling us, but that’s nothing new!

    The only way HS2 can make money (and even then, not on the scale its supporters say it will) is for it to carry a great many passengers. Could it be that they think this extra capacity will needed to cater for the transportation of a much larger population, after our roads become clogged, but are unwilling to say as much?

    And would that not be an admission that their policy on immigration is doomed to failure, and they know as much in advance?

    England’s green and pleasant and is under threat, as is our creaking infrastructure under the weight of an ever-expanding population. As Frank Field rightly says, ‘We’re full up!’

    The Tories always used to be known for good housekeeping, lower taxes, reducing the cost of the bloated state sector, and overall efficiencies. Many of course still do hold by those values, but not all. I have long argued that the Tories’ decline started when they ceased to uphold those values and stopped being Tory, so where the hell did the likes of Cameron come from, and how the hell did they ever get their hands on the reins of power?

    Tad Davison


  50. Elrond Cupboard
    April 29, 2014

    Thanks to the house of buffoons it looks like I’m going to be investing my money in HS2 whether I want to or not.

  51. Paul
    April 29, 2014

    Why not put HS2 to a referendum? After all, it will affect all of us in a big way both economically and socially and is a controversial scheme. Talking of referendums, I read that Mr Cameron will quit as PM if he cannot deliver a referendum. Why not do the decent thing and quit now? – The Conservatives may then have a chance of winning the election in 2015 to actually deliver a referendum.

  52. BobE
    April 29, 2014

    Well every politician along the route will loose their seat to UKIP.
    I wonder if they realise that?

  53. Bryan
    April 29, 2014

    Given that the economic case is so obviously flawed then how come 451 MP’s vote ‘for’ yesterday? Are none of them capable of simple arithmetic?

    Maybe the operative word is simple?

    Consultants are well versed in discovering what the client wishes to have confirmed, and in doing so they get even more consultancy work with the same clients, moving smoothly into the category which Mr Redwood correctly calls ‘expensive’.

    Parkinson’s Law, first promulgated in the 50’s in a series of humorous essays, is as valid today as it was then, and highlights the idiocy of valuing bits of time etc as part of the cost/returns analysis to support a project’s go decision.

    If Mr Cameron and his crew which to keep up with the EU Jones then I suggest they find a project which is beneficial to the UK – like leaving the EU, thus, at a stroke, making us the ‘Jones’.

  54. Robert Taggart
    April 29, 2014

    NO2 HS2 – from wherever the money comes !

  55. Aatif Ahmad
    April 29, 2014

    HS2 is a white elephant and will be a monumental waste of money (assuming they can even control the costs -something which becomes exponentially impossible the larger the project). It will be on a par with the Great Pyramids of Egypt, only less aesthetically appealing. China has tried to build railways to nowhere in order to boost growth and it’s always easy to boost growth by ramping up publicly funded or guaranteed investment in infrastructure. But the costs will eventually have to be paid (and anyone can come up with the hot air of “economic benefits”). Japan’s investment in pork-barrel projects did not enable it to escape the lost decade, nor will China’s. I don’t see how this project will help the British economy. The costs of this blunder will eventually have to be borne by households via higher taxes.

  56. Dan H.
    April 29, 2014

    Over in the USA Google are making great advances in making a completely autonomous, self-driving car. Over here road traffic engineers have long known that cars that travel under automatic control are safer and can travel in very closely spaced groups on motorways at speed, which greatly reduces drag and fuel consumption.

    The net effect of all of this automotive development work will be that all of a sudden, commuters will be freed from the onerous task of driving and will be able to work whilst their robotic car drives them to work. Put bluntly, cars will turn into trains, only much, much more flexible.

    At this point the railways will suddenly get much less popular, and indeed will have to start competing with the newly automated heavy trucking industry (if you can make a driverless car, you can make a driverless truck). At this point the only real bonus to HS2 is its speed, all other benefits will have been lost.

    I wonder if this idea has crossed the horizons of MPs yet, or is this yet another cruel surprise they have coming to them?

    1. Mark
      April 30, 2014

      Entirely right. A forward thinking transport minister should be working out how to optimise our infrastructure for such a world. That will entail converting many rail routes – but also providing direct access to them for road vehicles.

      It’s also likely that we’ll see much greater transport optimisation – automated taxis instead of empty buses rattling around, much more “milk run” delivery of online shopping instead of everyone driving ever larger distances to shopping centres, and much reduced need for commuting as improved broadband reduces the need to have large central offices.

  57. Bill
    April 29, 2014

    I think the point you make about the lack of growth generated by the high speed line down to the coast near Dover is most telling. If this high speed link has made little difference to growth, why should a link pointing in the other direction have a different effect?

    My concern is the failure of London to keep up with the growing airport hubs in Amsterdam and Paris while this farrago with an unnecessary train continues unabated.

  58. ian wragg
    April 29, 2014

    HS2 is the same as the Climate Change legislation. Backed by the majority of MP’s although there is no basis for it. By the time the first train runs, the technology will be obsolete and it will be a huge drain on the countries finances.
    Once again it confirms to me that a degree in stupidity is required to be a politician.
    I do hope in the future that all the people who supported the daft legislation will be stripped of all their possessions to mitigate the cost and be prosecuted for malfeasence
    or whatever in public office. I bet the BRIC countries are laughing at us and rightly so.

    1. Leslie Singleton
      April 29, 2014

      Ian–I don’t know whether they are stupid; but I do know that the fact that they have been elected does not mean that they know anything about Cost Benefit Analysis or if they are even numerate. What they are is telegenic, good at networking, making speeches and kissing babies, plus these days being beautiful or even a clown like Boris helps a lot. Why is that a basis for our caring what they think?

    2. forthurst
      April 29, 2014

      “Once again it confirms to me that a degree in stupidity is required to be a politician.”

      How about the aircraft carrier with no means of launching aircraft so they buy a plane that was designed for marines’ shore based deployment? The F35B is stealth (provided the Ruskies don’t cheat by using low frequency radar) unless it carries drop tanks, but if it doesn’t, the range is short as to put the aircraft carrier within shore-based missile range). The MOD then decides to privatise procurement: what? Well it’ll save cash, wont it? What about state secrets, bidders’ IP etc?

      The problem is that an Arts degree of itself does not endorse a holder’s capacity for the scientific analysis of real world problems.

  59. forthurst
    April 29, 2014

    “Speaking before the Public Accounts Committee, Martin Wheatley, the Chief Executive of the Financial Conduct Authority (FCA), repeated on various occasions that he sees no evidence which would justify an investigation by the regulator into the flotation of Royal Mail. Wheatley explained that around the world most initial public offerings are priced in such a manner that they will rise on the first day. “Typically, they are priced to go,” he said.

    Probably JR was not aware of this; apparently, unless a public offer is undervalued by a minimum of 70%, offering a minimum dividend yield of 7% it is going to be left with underwriters.

  60. Denis Cooper
    April 29, 2014

    As a small aside, when those leading the three old parties all agree about something any opposition will necessarily look for alternative channels so that it can at least make its protest, and while I will not mention its name there is one new party which has made it clear that it opposes the HS2 project, and there are elections coming up.

    1. sjb
      April 29, 2014

      Do you think Nigel Farage will stand at the Newark by-election, Denis?


      1. Denis Cooper
        April 30, 2014

        No idea.

  61. REPay
    April 29, 2014

    The lack of financial rigour in such a major decision is unacceptable…Can you what is driving the desire for a high speed train and extra capacity. I am used to politicians doing foolish things they believe to be popular and which they hope may garner votes, but HS2 is unpopular with many…

    Is there an irresistible lobby at work?


  62. bigneil
    April 29, 2014

    I’m wondering if it will suddenly be put on hold or “cancelled” just before the GE -another cast iron guarantee if he gets elected that the train will be put into the buffers? Which would suddenly be reneged on if he won. If he didn’t get voted in then his buddies would have already got their millions for all the consultancy work.
    In reality it would be built as you say john, on borrowed money, but only a few people would be able to afford to use it. Does DC have ANY idea what anger the majority of people from the real world feel towards him? £50bn is quoted, but has ANY big govt project EVER actually been finished at the original price quoted at the start, or is the attitude of “we can waste as much as we want because it isn’t ours” totally rife throughout Westminster? We are seeing cuts to every part of our systems, NHS, Police, Forces etc. We are importing people just to sit here and sponge off our system, paying them to do so. Yet he stands and says we are all in it together, wanting to spend £100bn (more like) on a train for the rich? and leave the debt to the poor at the bottom – -What an absolute joke. Seriously john -I am glad I am nearer the end of my life than the start, because I would not want to grow up in the hell hole that’s being created. )etc ed)

  63. WitteringsfromWitney
    April 29, 2014

    One has to ask why was this time wasted as the debate was, to coin a phrase, definitely ‘off the rails’. Much was made about the prospects of growth, narrowing the north south divide, the length of time since the UK last built a railway; but the one reason why HS2 was being built was not once mentioned.

    Most noticeably, not even one supposed eurosceptic mentioned the real reason for the need to built HS2 – no doubt due to the fact that that would have entailed acknowledging that there was, indeed, an elephant in the chamber.

    TEN-T guidelines were initially adopted on 23 July 1996, with Decision No 1692/96/EC of the European Parliament and of the Council on Community guidelines for the development of the trans-European transport network (TEN-T). In April 2004, the European Parliament and the Council adopted Decision No 884/2004/EC (added to the list by Decision No 884/2004/EC), amending Decision No 1692/96/EC on Community guidelines for the development of the trans-European transport network. The April 2004 revision was a more fundamental change to TEN-T policies, intended to accommodate EU enlargement and consequent changes in traffic flows. For the avoidance of doubt that means the UK accepted the proposals and thus becomes bound to implement them.

    In 2013 9 ‘core-networks” were announced, included in which was the North Sea-Mediterranean Corridor which includes the UK and Ireland. On 12th March this year the European Commission announced, in a press release, the appointment of European coordinators for each of the nine core network corridors of the trans-European transport network (or TEN-T), as well as for the European Rail Traffic Management System (ERTMS). It will be noticed from the press release that the Member States and the European Parliament have been fully involved in the process of nominating the coordinators.

    During the debate in Parliament much satisfaction was expressed by some Members of Parliament that the link between HS1 (Channel Tunnel) and HS2 had been scrapped; but this will have to be built at some stage. Whenever a new line is built, under EU directive 96/48, it must connect “interoperably” with the rest of the network. This is why those trains from Birmingham and the North will have to connect directly with the continent (see Article 2:b which defines the word ‘interopability’). I quote: ” interoperability means the ability of the trans-European high-speed rail system to allow the safe and uninterrupted movement of high-speed trains”

    That there is EU involvement in HS2 must surely now be obvious. What is also obvious is the denial of our political class to acknowledge that involvement – something which can only be due to: (a) they are unaware; (b) they are aware but choose not to acknowledge that fact, because: (c), to so do would make public their inability to govern this country.

    Members of Parliament are forbidden to mislead the House of Commons, yet it seems they can mislead the country with impunity.

    Comment, Mr. Redwood?

    Reply THis railway remains the UK’s decision which is why we did not discuss the EU involvement. The fact that the current scheme does not include a link with HS1 gives the lie to the idea that HS2 is an EU plot.

  64. John Chaytor
    April 29, 2014

    It seems obvious to me that the real long term effect of HS2 will be to increase the catchment area for commuters who are willing to bear the commuting distances to London and the South East for higher paid jobs while they benefit from relatively lower house prices – which in turn will then increase.

    When I worked in Surrey I did just that by commuting from Brighton each day as the road journey was acceptable (just) and the house prices were cheaper than South London.

    HS2 is utter madness

  65. Chris S
    April 29, 2014

    I simply cannot understand why so many presumably intelligent MPs are prepared to spend £3000 of my money on this lunacy when my county of Dorset doesn’t even possess a single mile of motorway. As a result, our journey times are ridiculously long.

    Nobody in Dorset is ever going to use HS2 as it will always be cheaper and much, much more convenient to drive to Birmingham and Manchester despite the hopelessly inadequate road network.

    We badly need a motorway link from Dover through Brighton, Southampton and on to Exeter and Plymouth yet none is in sight.

    I’ve just driven from Limoges to the ferry port near Caen today and, as usual in France, I passed another huge road improvement program with a whole new Autoroute being built near Tours.

    I would be happy to pay Autoroute-style tolls to use new motorways as long as your colleagues in the Dept of Transport don’t try to charge me for using the roads we taxpayers have already paid for !

    1. alan jutson
      April 30, 2014

      Chris S

      Yes one thing the French have got right.

      Decent roads, or at least a choice of use them or not.

      To pay or not pay that is the question, depends upon time you have or need.

      But the essential point is you have a choice, because the Route National roads are also reasonable and no where near as crowded as ours for they most part.

      1. Lifelogic
        April 30, 2014

        Indeed and providing road in a smaller country is actually easier as you need less mileage. You just need flyovers, tunnels, fewer bus and bike lanes and fewer anti car policies and traffic lights.

        Less congestion means people do the journeys spending less time on the road and more doing their job.

  66. Neil Craig
    April 30, 2014

    The problem with the “count the economic benefits” argument is that almost any investment by anybody has spin off benefits for others. They are probably a bit higher for investments in transport or education & much higher for those in technological progress (in all cases where the investment is in the optimum method, which excludes trains, teaching Gaelic and windmills).

    If they wanted to maximise economic benefits the political leaders should just minimise taxes on investment; use X-Prizes up to & only up till they reward inventors proportionately to their contribution, stop “choosing winners”; end the regulations that prevent any new technology (fracking, GM, nuclear) & get out of the way.

    That would cost considerably less than HS2 and contribute far more to the entire economy than HS supporters falsely claim they would do for the “North”.

  67. botogol
    July 10, 2014

    government push WIFI on trains.
    which is great, but made me smile as the business case for HS2 is dependent on the assumption that people don’t actually work on trains.


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