Thursday, 30 January 2020

Scrap HS2

Boris Johnson's government is, today, likely to confirm that they will waste over £100 billion building the HS2, white elephant rail line. Its likely not to be the only big noticeable infrastructure project they promote, as with the proposal to build 40 new hospitals, and so on. Whether any of them actually do get built is another matter. At the same time, Chancellor of the Exchequer, Sajid Javid, is already writing to government departments asking them to look for “savings”, i.e. cuts in their current, revenue expenditure. As the UK economy goes into recession, as a result of Brexit, its capacity to finance existing expenditures will come under pressure, let alone the need to find the funding for hundreds of billions of capital expenditure, to fund the Tories plans to cut taxes for their rich friends, and, at a time when global bond yields only have one way to go from their current near zero levels, which will rapidly increase UK borrowing costs. The only way the Chancellor can square this circle of increased spending on capital projects, with tax giveaways to the rich, higher borrowing costs, and lower revenues due to a Brexit recession, is by viciously squeezing current spending. He's likely to come to be known as Savij Javid. 

The reason Johnson's government wants to promote HS2, and other such infrastructure projects, is not hard to discern. All politicians like to be associated with such large, sexy projects. Money spent on building a new hospital, a new road, or rail line can be seen by voters. Money spent as revenue, to employ the actual doctors and nurses and ancillary workers in those hospitals, or to finance the expenditure on primary care that would help prevent people becoming ill in the first place, and so not need hospital treatment, is not. The NHS bureaucrats also like such large projects too, because it builds their own personal empires, justifying their own higher salaries etc. For politicians these large projects have the added advantage that, because they take years to complete, they are the gift that keeps on giving. Gordon Brown was renowned for standing up and re-announcing capital projects that had been announced several times over previous years, so as to look as though the government was committed to additional new spending. Johnson's ridiculous claims about building 40 new hospitals, when in fact only 6 are actually funded, is another example. Moreover, because of the fact that these projects extend over several years, governments can save money, in any year, by simply delaying construction. 

HS2 is being sold as a means of regenerating the economies of the North and Midlands, but it does the exact opposite. All experience, not just of the last two hundred years, but back to the time of the Romans, shows that, where new roads or rail lines are introduced, into an existing large conurbation, the effect is to further develop that conurbation's economy, and to drain that of the areas connected to it. It is in the conurbations that the first markets develop, and into which traders and producers converge. It is there that such trading encourages further economic activity and development. In the last two hundred years that has been even more pronounced. The development of better road and rail links, for example, meant that workers could work in the conurbations, but live in the suburbs, where housing costs, at least initially, were cheaper, and where the environment was more pleasant. HS2 simply extends that principle. 

For employers in London, and its environs, labour has become expensive, because the degree of economic activity centred on the capital has driven up housing costs to an even more ridiculous extent than in the rest of the country. The huge asset price inflation that has blown up property prices, in the UK, since 1980, to around four times their long term average level, has blown up London prices to around 4 times the level elsewhere in the country. It means that many workers, even on double or treble the average wage, living in London, cannot afford to buy a house. It means that many cannot even afford to rent without the assistance of Housing Benefit. This effect on housing has a knock on effect into other living costs in London. In order to grow, London needs additional labour, but it needs that Labour to come from further and further outside London, where living costs are lower, and where, therefore, the value of labour-power is lower, so that London employers can pay lower wages. That is what HS2 is designed to achieve. 

Already, London draws in large numbers of higher paid workers from up to 200 miles away. Their travel to London, despite them being higher paid workers, is massively subsidised by the taxpayer, via subsidies to rail fares provided by the government. If London didn't already have a massive economic advantage it is provided with massive further advantages by the state. Much of the £22 billion a year in Housing Benefit goes to subsidise landlords in London. By far the greatest proportion of subsidies for rail travel goes to commuters travelling into London, whilst London gets, again, by far the largest proportion of infrastructure spending on new projects. 

Yet, the truth is that the proportion of people travelling to London from elsewhere in the country is extremely small. Its only if you are one of the minority in a higher paying job that you can afford to commute every day from any great distance. As rail fares on HS2 are likely to be substantially higher than existing fares that will be even more true, unless the state provides even greater levels of subsidy to those fares. And, to be clear what that means, it means that the state collects taxes from workers and businesses elsewhere in the country, and then uses those taxes to subsidise the rail fares of the tiny minority who commute into London, and so, thereby subsidies the profits of companies based in London, who can get away with paying lower wages. It means that higher skilled labour is drained away from the regions to work in London, and that London gets to concentrate even more economic activity, and particularly high value economic activity within its environs. 

But, most of us rarely make that journey. The last time I went to London was 2003, on the Iraq War demonstration, and that journey was conducted by coach. If the government really wanted to rebalance the economy, and promote economic development in the North and Midlands, let alone Scotland and Wales, it would scrap HS2, and use the money elsewhere. The economy of the regions will not be enhanced by providing an additional faster connection to London. All that means is seeing the connection of the rest of the country to the outside world as necessarily having to go via London. That is crazy. If you want to develop the regions, then it involves connecting regional centres of the country directly to the outside world. Of course, Brexit achieves the exact opposite of that. 

In a globalised world, the way to develop Manchester, is to develop Manchester Airport and its links to airports in Europe, North America and the Pacific, and the same applies to Liverpool, Newcastle, Glasgow, Cardiff, Derby and so on, as well as developing new large airports in other areas such as in North Staffordshire. Of course, that is one kind of infrastructure project that politicians are loathe to advocate, because pressure from the environmentalist lobby means that promoting additional airports and air travel is a no-no. Yet, for an island like Britain, it is the only sensible solution. If you are in mainland Europe, the development of existing high speed rail travel, and the possibility, in the next couple of decades, of developing hyperloops is feasible, but in Britain its not. Indeed, with Brexit, even the single rail link between the isolated British island and the mainland, via the Channel Tunnel, becomes diminished. 

If you want to develop the regions, then instead of another route channelling people and resources into London, then, in addition to developing these new regional airport hubs, to connect to the rest of the world, its necessary to build East-West road and rail links in these areas too. In truth the proposals for HS3, and other East-West rail links are also probably a waste of money. So, too are the proposals to put additional money into bus services, other than in the very short-term. Rail services are way too rigid to be of much use to modern day local travel. Even if all the lines closed by Beeching were reopened, it would not be possible to have stations close to where people live and work. Even bus services fail to achieve that, because the huge number of varied routes that people require cannot be easily met by services designed to go from A-E, via B, C, and D, because commuters need to go from A1, A2, A3 …, and to go to C1, C2 and so on. That is one reason that people began to use cars for their personal travel to begin with. The real solution to this problem is a rapid development of electric cars, and particularly of self-driving electric cars that can be called up when you need them, and disposed of when you have completed your journey. If the government wants a real infrastructure project then it should focus its attention on establishing a comprehensive network of fast, free car charging points. 

But, also, in the 21st century, the question is why do many people need to travel anyway? Large amounts of physical work is increasingly being undertaken by robots, and that will increase further with the development of AI. For any kind of administrative work it can more easily be conducted at home using a computer. But that requires those computers to be networked, and that requires a truly fast broadband backbone, of at least 1Gbps, and preferably 2 GBps. That is what Labour's proposal to provide a free, fast broadband network began to offer. Even that was not up to the standard that currently exists in places like Singapore. If Britain wants to compete in the 21st century, it has to forget about 19th century communications solutions, such as railways, and embrace 21st century communications technology. 

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