High Speed 2 (Economic Affairs Committee Report) — House of Lords, 2020-01-23
Topic: Transportation
Meghnad Desai (Labour, Centre-left): My Lords, as an economist, I know that economists have never found a rational basis for making long-term investment decisions. As Keynes said in chapter 11 of the General Theory, when a businessman invests for the long run it is animal spirits that count. You have to more or less say, "I’ll take this risk come what may." What we are discussing is very much the same sort of phenomenon It is no secret that the UK has underinvested in infrastructure for several decades. When I arrived here 55 years ago there was a regional problem. London was getting all the stuff and the north or wherever it was—we in London did not quite know—was not getting anything. Nothing has changed. The Treasury is a cheeseparing accounting body—I apologise to noble Lords from the Treasury. The only way to convince the Treasury to spend money is to invest not in small projects in the Midlands going east to west but in a huge project. Everybody will sign up to a huge project and, like all huge projects, including the restoration of your Lordships’ House, the final money spent will be a multiple of the original estimate, and the delay will be enormous. That is the law of large projects. On the whole, given all this, since we have started, we might as well get on and finish this thing, because we must do the northern powerhouse. Now that the Conservative Party has got a few northern MPs, it has finally discovered the north, so we will get some investment up there I will say one more thing. I was shocked by the cost-benefit analysis cited in the report. I have not done this stuff for ages, but was it on the same basis as the Victoria line was chosen? In a classic article by Foster and Beesley in the Journal of the Royal Statistical Society in about 1964, they counted the time saved commuting and valued it in terms of the average earnings of the commuter. That gave a money sum of the benefit against the cost of building the line—and the Victoria line was built. We are still doing this 50 years later. As my noble friend Lady Young of Old Scone pointed out, there are many other aspects of the cost-benefit analysis that should have been included—and hopefully will be included in the future. It is not only the time saved on commuting; what we really want to find out is what alternatives the commuters would have if they were not taking the train? Would they be flying? Would they be driving? What is the net saving in environmental terms from them being provided with this mode of transport, which takes them off the road and out of the sky It is also very important that when you go up north, east to west and so on, the benefit is not just in time saved but in the number of journeys that has increased because of connectivity, and the economic and employment benefits that will follow from the newly established connectivity between towns For a comprehensive cost-benefit analysis, including the environmental costs that my noble friend described, we have to do a total accounting. Maybe it is too late for this, but we could do it for the northern powerhouse, or whatever it is. We need to be more intelligent than we have been, especially given the urgency we now put on climate change and the environment, which is a much more serious problem than it used to be So those two aspects are important. I would urge the Government not just to worry about HS2 but to start the northern powerhouse as soon as possible. There is no need to wait until 2050 or whenever it is. Things are urgent, and you can do two infrastructure projects together; you do not have to separate them I do not need to say anything further. I urge the National Infrastructure Commission, or whoever looks after these things, to examine seriously the cost-benefit methodology of big projects.