Alexander Jan: Government handled HS2 decision like Brexit for the railways

Alexander Jan: Government handled HS2 decision like Brexit for the railways

Whether you were for or against HS2 being completed, it’s been a bad week for anyone who cares about Britain’s railways. The decision will, as “levelling up” Prime Minister Boris Johnson put it, further “mutilate” the line by removing the Birmingham to Manchester section, though don’t forget he himself had already lopped off the leg to Leeds. It has led to an outcry from all those with an interest in the project.

Who can blame them? But a bit like the ill-fated London Underground PPP, HS2 had become what former transport minister Steve Norris might call “the only game in town”. It was on course to become perhaps the world’s most expensive railway, with some estimates putting the price tag at more than £100 billion – roughly the cost of five Elizabeth lines. It was becoming so costly, it risked crowding out every other major transport project on the horizon.

However, in many ways, the real story of HS2 is about the failure of the machinery of central government. HS2 is now assured immortality in transport academia alongside London’s disastrous motorway building programme, Concorde and the third London airport saga.

In a Liz Truss, mini-budget style, “we’ve had enough of experts” moment, the decision to axe the railway was apparently taken without consulting Network Rail, the National Infrastructure Commission or indeed the Mayors of London and Manchester. And in a move that could have been taken straight out of the Vote Leave playbook, no sooner had the PM made his announcement, than his government’s “how to spend it” offensive began.

Out came a laundry list of hundreds of projects that would be funded from the £36 billion, “every penny saved” from HS2. Though not quite the £350 million a week that leaving the EU was supposedly going to generate for the NHS, it was reasoned that £135 million a week for other transport projects was worth having.

Within hours, the list became a target for ridicule. The go-ahead for an extension of Manchester Metrolink to the airport was trumpeted. The only problem was that it has already been built. The Department for Transport has since had to clarify that it was referring to an extension of the line to Terminal 2, currently a five-to-ten-minute walk from the current Metrolink station.

Then it emerged that the widening of the A1 axing HS2 would enable was, in fact, a revival of a scheme George Osborne gave the go-ahead to in 2014. A “fairytale” new pledge to reopen the Leamside line from Gateshead to County Durham didn’t fare well either, lasting all of 24 hours before being pulled. An on-line pledge to provide £100 million to “revolutionise mass transit in Bristol” was subsequently deleted. At the time of writing, its precise status is unknown. An analysis by the Labour Party concludes that 85 per cent of the projects in Sunak’s announcement have already been promised or committed to during the government’s 13 years in power.

Perhaps the most audacious attempt at spin was the shock announcement that the link to Euston would be saved, albeit with a smaller terminus. After confiscating that part of the project from HS2 Ltd for bad behaviour, Sunak announced some sort of development corporation will take over the blighted site.

This new body will be tasked with delivering “up to 10,000 new homes” in an area “five times the size” of King’s Cross. The risk is that rather than the value created at Euston being spent to improve London’s public services and tackle deprivation in one of Camden’s most deprived neighbourhoods, it will instead extract revenue to spend in other parts of the country. It probably means Euston will be used for building vast amounts of high-end housing to generate levies for the government and be transformed into a Nine Elms-style commercial zone with numerous office towers, again to help bail out the government.

In presentational terms, the government no doubt thinks this will go down well outside of London: they are providing a link to Euston only grudgingly, making London pay for it through extra taxes. This may be true. But the proposal will also end up bolstering the London economy by opening up a new swathe of private sector-led development – possibly over-development – which is precisely the sort of thing other cities in the country are desperate for.

What the combination of the HS2 announcement and the spending promises that followed – promises at best rushed, at worst, partly made-up – tells us most of all is that we need a radical reform of our over-centralised, one size-fits all form of government. It is hard to imagine a system of strong, fiscally-powerful regional leaders, working in close partnership with government on selecting and then executing both major infrastructure projects and more modest ones, would not produce better outcomes than the Henry VIII-style system we have now.

If Prime Minister Sunak or Sir Keir Starmer want to fix Britain’s “broken” political system, they should look no further than devolving real powers to our major cities and beyond. In the words of the PM, that wouldn’t be an easy decision, but it would for sure be the right one.

Alexander Jan is chief economic advisor to the London Property Alliance and former Chief Economist of Arup. X/Twitter: Alex_Jan_London and On London. If you value On London and its writers, become a supporter or a paid subscriber to Dave Hill’s Substack for just £5 a month or £50 a year. Photo from HS2 Ltd.

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