Prestige, necessity and job creation

In good times, a well thought through HS2 project might be a success and it could be a prestige project

January PE Editor’s Comment wrote of projects like HS2 being “essential”. Olympic facilities, Crossrail, a SE airport and HS2 are huge expensive projects with overlapping funding requirements. They might be “essential” to construction companies but are all affordable? The case for HS2 ranges from – prestige (other countries have them) - economic necessity in 20 years time - 45,000 jobs created in a recession.

Prestige projects are for times when they can be afforded.

How realistic are 20 year economic forecasts when the economic predictions of just 6 years ago were so wrong? One group of economists (e.g Steve Keen) seeks to scrap old economic theory and start from scratch. Also, will a 20 minute cut in the London to Birmingham journey time justify the £33bn forecast cost (call it £100bn and added to UK debt). Will fares be affordable? Are state owned subsidised HS trains in other countries really an economic success? Years ago the PE had an article on French targets for nuclear electricity powered trains. What power is planned for HS2? Are the costs in the budget and fare forecasts? Has copper theft been considered or will politicians still be talking about the problem or hoping it will go away 20 years hence?

As for job creation in a recession, the US investment in the TVA dams is a classic example. Built in the 1930s to combat the Great Depression they were to provide cheap electricity to attract industry to the area but also had to maximise use of Tennessee valley labour to cut local unemployment: how many of the HS2 45,000 jobs will go to local labour? Some politicians view opposition to foreign labour as protectionism. Protectionism is not all bad (UK politicians seem to believe it is, hence the decline of UK manufacturing) but it restricts free movement of goods; it does not apply to labour. Free trade areas such as NAFTA certainly do not allow free movement of labour between the US, Canada and Mexico. 

In good times, a well thought through HS2 project might be a success and it could be a prestige project if built by British companies, British labour and with mainly British equipment. France, Germany, Italy, Japan and the US have retained their ability to do this. Tax funded UK projects should ensure we retake that ability.

John Allison, Maidenhead, Berks

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