Thursday, 12 December 2013

HS2 is No.4

Paragraph 28 in the Commons Transport Committee new report on HS2 is well worth a read, it makes clear that never in the field of British history have so few people been so willing to waste so much of other people’s money on so little (re: Number 4 here).

The BBC, in its bestest Pravda voice, summarised the report as follows: “The MPs heard from bosses of consultants KPMG, who said in a report that by 2037 HS2 would boost the UK economy by £15bn a year. Some economists who gave evidence cast doubt on this figure”

Actually, this isn't quite right. Professor Dan Graham of Imperial College, London, said "I do not think the statistical work is reliable" while Professor Henry Overman of the London School of Economics described KPMG's approach as "essentially made up". And lets be clear, an academic calling something “essentially made up” is more than casting doubt, he is saying it's garbage to an extent where this isn't actually a debate.

So what did KPMG have to say in response to being told their expert assessment, their professional competency even was "essentially made up"? Not much. When questioned they emphasised that their results were provisional and conceded that their methodology "does not have a firm statistical foundation”.

This second bit is worth repeating; the people paid to produce an economic analysis of the benefits of HS2 used an approach even they think “does not have a firm statistical foundation” and according to independent experts is "essentially made up" i.e. KPMG think the benefits will be £15bn, they admit they've no solid evidence to support this let alone a credible methodology for making such forecasts, but they still think the benefits will be £15bn a year. Or more. Or much more. Or perhaps less. How much do you want them to be?

Except we already knew this if only because the whole notion of a £50bn project delivering a £15bn i.e. a 30% return per annum in an age when you do well to get 2% on your savings is inherently ridiculous. We also already know that if it does go ahead HS2, like the olympics, will cost far more than all the early estimates and deliver a lot less because that's just what big government projects do. Tarting this up by wasting money on consultants to construct makey-uppy numbers using a makey-uppy methodology to suit HS2's political supporters is simply an expensive charade gone thru not so much to give the process any credibility – it doesn’t - but to distractingly fill up air time until too many contracts have been signed for this train wreck of a waste to be stopped, which is a shame really given the opportunity cost here i.e. the other things the money could be spent on e.g. say 10 x £5bn projects more fairly dispersed across Britain that would also have spread the risk and start generating benefits within years rather than decades (as opposed to one big super-duper project) isn't even being considered.

As to why, well I guess making massively subsidising a marginally quicker London commute the lynchpin of Britain's transport and infrastructure policies for the next few decades will eventually confer some benefits, but ultimately its because politicians don’t like being seen to be wrong and that’s kind of it really, their egos being apparently worth tens of billions of our pounds.

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