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Tuesday, 29 April 2014

HS2 – Another IEA Turkey

Allegedly free market think tank the IEA has celebrated the latest Commons debate on the HS2 project by issuing a “Current Controversies” paper entitled “Failure To Transform: High-Speed Rail And The Regeneration Myth”, authored, as with their last steaming pile on the subject, by Richard Wellings, who claims to be an economist. Let us proceed directly to a little analysis.
High speed rail. But not in the UK

Wellings claims the justification for HS2 has changed as criticism has been made. It has not. He claims the “51M” scheme is a superior means of relieving congestion on the West Coast Main Line, but it makes no provision for freight traffic and unrealistic assumptions on path availability. He suggests analysis of wider economic benefits for the project are flawed, but ducks any analysis.

Then Wellings talks of the “tax bill”. This is held to be a “deadweight cost”. The assumption is clearly that HS2 will exist only if funded from taxpayer funds, and will yield no benefit. So let me take this one slowly and carefully, for this economist’s benefit: IF THE BENEFIT/COST RATIO IS GREATER THAN 1.0, THERE IS NO OVERALL “TAX BILL”. End of story.
And so we arrive at the Freight Capacity problem, where, once again, I wheel out the Rail Freight Group’s estimate of excess demand for paths come 2030. This should be borne in mind as Wellings states “there is huge spare freight capacity on existing rail ... networks”. This is, let us not drive this one around the houses too much, a flat out lie. Fire extinguisher for the IEA man, please.

So, as Wellings illuminates the debate by the light of his burning trousers, he gives us “Disruptive Technology”: yes, out comes the “driverless cars” boondoggle. An energy-inefficient – and slower – technology that would only work properly if the UK’s roads had all non-driverless vehicles banned. We are also invited to subscribe to the idea that developments in IT would mean we all work from home.
But we also have Wellings’ opinions recorded on Twitter: he clearly acknowledges the need for more freight capacity by suggesting the HGV weight limit is increased. Did he ask the relevant civil engineers before pulling that one out of his hat? Plus the increased wear and tear on the road network would be paid for by ... the taxpayer. Or does Wellings think roads exist in some alternate universe?

Moreover, his remedy for capacity problems – to remove jobs from northern cities – fails to say where they would go. Whitehall, perchance? And what are the comparative costs of that? Let me put this directly: this report is utterly and totally fraudulent from start to finish. Its author holds the most bizarre and repellent of views. And it is no more than another sign of desperation.

If this is the best those opposed to HS2 can manage, they really are bust.


Richard Gadsden said...

I do think that quoting "there is huge spare freight capacity
on existing rail and road networks" as "there is huge spare freight capacity
on existing rail ... networks" is unfair.

Especially as you didn't need to be unfair. Given the congestion of the M1, M6 and M40 - there's a severe shortage of capacity at the times that it's needed. Sure, more trucks could run on the motorways in the middle of the night. That's not really useful.

Neil said...

May I suggest Mr Wellings gets a job at an actual real-world company, if only to see how his "close the regional offices, they're just scroungers" shtick pans out?

Ian Brooker said...

Does he belong to a professional institute? His shoddy work brings real economists into disrepute.