‘Fraud’ is the only word to describe the overall action and effect of government briefing on this recent article about High Speed 2 in The Guardian.
The effect you get from reading the article is to believe that – after a summer in which this massive proposed project to build a high-speed rail network had come under attack for costing too much and not having proved itself worthwhile – the government had suddenly hit upon a way of reducing the net cost to the taxpayer by nearly one-quarter, thereby making it that much more worthwhile for the cost. A saving of £10 billion? Who wouldn’t want that?
Unfortunately, it is not that simple. Well actually it is childishly simple, but in the opposite direction. The supposed cost saving, according to the article, would come from selling a concession – a contract to operate and maintain the line for several decades, in return for collecting revenue from train operators who use it. This would of course happen after the line was built and ready to use, so it would recover costs that had already been incurred.
As I’ve already blogged, this idea has been the working assumption behind closed doors at the Department for Transport for at least as long as the current government has been around, i.e. at least two and a half years. Once the HS2 project was sufficiently worked up to settle on a delivery model, there was never any question of not selling a concession, and if Labour were still in power, I’d bet my last pound that they would do the same.
So the idea that Transport Secretary Patrick McLoughlin has just come up with a wizard money-saving wheeze looks like a cynical piece of spin designed to lessen criticism about the cost of the project and help secure Labour Party support for the parliamentary bill that must be passed if HS2 is to be built. Insofar as HS2 has a projected cost (remember that the budget was increased by nearly – oh what a coincidence – £10 billion this year), the effect of selling a concession should already have been factored in. The article cites a “government source”: note, not a minister, so probably a special adviser and most likely one at the DfT.
As also previously blogged, it’s not hard to see why the government is going down this route – building the line with public money and then selling the rights to it – instead of trying to secure private finance to build it. The project is so huge, costly and full of near-imponderables that, in my experience of writing about large rail projects, the private sector would consider it too risky to deliver in the UK. Plus the huge financial resources required would be difficult (though not impossible) to raise on the international markets, would perversely inflate the financial cost by requiring lots of other rainy-day loan facilities in case things went wrong, and would require the government to still provide billions of pounds in subsidy – assuming that the private sector would be expected to recoup its investment from track revenues, because they wouldn’t be nearly enough to cover the cost of HS2 even if they were spread over 50 years. (Remember when HS1, the Channel Tunnel Rail Link, was built, the government provided over one fifth of the project cost in subsidy.)