HS2 – IEA Report One Huge Turkey

[Update at end of post]

So the much trailed IEA “report” on the HS2 project, whose central assertion that the cost should be more realistically put at £80 billion, has been released (read it HERE [.pdf]). And, as I mentioned yesterday, much of its justification for the shameless inflation of the price tag comes from using the same idea already used by the so-called Taxpayers’ Alliance (TPA), and previously debunked.

High speed rail in Madrid. Four years ago

Much of the text strikes a mildly paranoid tone, telling how politicians of insufficient ideological purity and other proponents of “pork barrel” politics saddled unfortunate taxpayers – and, with a nod to the target audience, these were most unfortunate if they lived in and around London – with enormous bills for projects which the heroic private sector would undoubtedly have delivered for a fraction of the cost.

Thus a kind of loosely defined but omnipresent conspiracy of those nudge-nudge inducing “vested interests” subjugated the will of The Market, which as any fule kno has all the answers, if only it can be left alone to sort them out, aided no doubt by Adam Smith’s “guiding hand”, demonstrating how what Smith meant, and the meaning placed on his words by free marketeers, can be so divergent.

But the way in which the £80 billion figure has been arrived at can be summarised very easily: the cost of the HS2 “Y Network” is increased to £50 billion (no citation is given), and then has, for starters, the whole cost of Crossrail 2 added to it. The only difference between the TPA and IEA is that the latter have taken the TPA number (£10 billion) and doubled it, to make it twice as scary.

That is plainly fraudulent, and twice over, but, as the man said, there’s more. A spur from HS2 to Liverpool is added in (not part of the project) because it is held that more of those vested interests will successfully lobby for it. That the city will see journey times to London cut to little over one and a half hours under the current proposals is not mentioned.

More transport schemes are added to get to the £80 billion figure: as I expected, all the cost of extending the Nottingham tram system to Toton figures, as does a tram extension west to Derby, the business case of which would stand on its own, thanks. Railway electrification in West Yorkshire – already planned – is similarly held to be part of the HS2 cost. And the benefits are talked down to a mere £30 billion.

Would the methodology overstate the economic benefits of HS2? Ah well. The IEA, along the way, has discussed the Jubilee Line Extension, but what it has not told its readers is that benefits were not expected to cover costs. However, after completion, the numbers were calculated again: despite significant cost overruns, the benefits had been underestimated, and by many billions of pounds.

Thus the selective presentation of the IEA. So that’s another one for the bin, then.

[UPDATE 20 August 1150 hours: Richard Wellings, the author of the IEA's report, has responded to my post, giving a perhaps unintentional insight into that mindset of free market dogma, while also bringing equally unintentional hilarity to proceedings.

See - if HS2 is a publicly funded project, it means "deadweight losses", while had it been provided by the free market - not that any significant similar project has been in the recent past - it would have been miraculously transformed into "investment". HS2 cannot, by definition, be a productive asset unless it comes from a source which he deems ideologically acceptable.

Then, despite being aware that he was encountering resistance to his product offering, Wellings called me out for misrepresentation. Yes, the author who dishonestly added the cost of Crossrail 2 to the HS2 business case, along with a host of other projects that may interact with HS2 in some way, says someone else is guilty of misrepresentation. Littlejohn says You Couldn't Make It Up]