Britain’s plans for a high-speed railway are deeply flawed. Spend the money on boring stuff instead

Britain’s plans for a high-speed railway are deeply flawed. Spend the money on boring stuff instead

Nov 2nd 2013 |From the print edition

THE Victorians did Britain a favour by building such a terrific railway network. A map of the country’s lines resembles a dense tangle of blood vessels, clotted around London, the West Midlands and the urban north-west. France’s, by contrast, looks like a lazy spider’s web. But the Victorians also bequeathed to their successors a powerful sense of inferiority. Surely the nation ought to be able to build like that again?So argues Britain’s coalition government, which wants a new high-speed railway line between London, Manchester and Leeds. On October 29th it unveiled a new business case for HS2, as the line would be known. This is an improvement on previous efforts (see article). Still, the project is in trouble. A Conservative rebellion was expected in a Commons vote shortly after The Economist went to press. Labour, which once supported HS2, is wavering. It would distress the decisive Victorians. But in this case the bold visionaries are wrong and the shilly-shalliers are right. HS2 should not be built.

High-speed rail has beguiled governments around the world. It is appealingly high-tech, greener than flying and promises to revitalise depressed regions. Besides, other countries have it. But bullet trains have generally proved far costlier than officials expect—and are often little used. As case studies of bad investment pile up, it is beginning to look like a boom-era phenomenon. France and Portugal have scaled back their plans. Californians approved a high-speed railway in a plebiscite in 2008, but most now oppose it.

The case for Britain’s line has twisted and turned. At first it was all about faster journeys. Businessfolk were wasting time on trains, the government argued; speeding them to their destinations would boost national output. But this assumed, ludicrously, that people do not work on trains. With that argument in a siding, two others are rattling along. A high-speed railway, it is said, would rebalance the economy away from London and the south-east. And it would add much-needed capacity, making it possible to run more commuter trains.

The notion that HS2 would transform the Midlands and the north is nonsense. High-speed railways in other countries have mostly benefited central cities by alleviating the need for regional offices. Existing long-distance routes would probably see fewer trains, harming some of the cities along them. So Birmingham’s gain could be Coventry’s loss. And the north is bigger than London-based ministers seem to think. Leeds and Manchester might do well, but the north of England stretches well beyond them.

Down the train

Britain’s railways are indeed groaning under the weight of people, particularly in and around big cities, where commuters add to the pressure. But a high-speed, cross-country railway is a mighty expensive way of reducing overcrowding on the outskirts of London and Birmingham. And London’s commuter lines are overcrowded in every direction, not just northward out of Euston station, where HS2 might provide some relief. By some measures, trains from Euston are unusually empty.

Britain should certainly spend more money on transport infrastructure. It just should not spend it on a folly like HS2. Cheaper, better solutions abound, albeit not of the kind that politicians might want to cut ribbons to open. Trains can be made longer. Signalling can be upgraded to enable trains to run faster and more frequently. New tracks could be laid at pinch points. Half-empty first-class carriages can be turned over to hoi polloi. Pricing could easily be made smarter: the current, crude distinction between peak and off-peak often produces a crush on the first cheap evening train. A sober report on infrastructure spending in 2006, just before Westminster caught high-speed fever, found that returns on such small, unexciting projects were almost always higher than on big ones.

This newspaper opposed HS2 two years ago, saying that £32 billion was too much to spend on one railway line. The case for it has not substantially improved. What has changed is the cost: that has risen to £42 billion, plus trains. Britain should scrap HS2 now, and get on with more sensible plans.

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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