Feeble government way off track

It is hard to imagine a more vivid illustration of the government’s feeble approach to economic growth than its announcement on high-speed rail (HS2).

It is certain that none of the much-vaunted growth or job creation will happen during the coalition’s term of office. Indeed it is far from certain the project will end up happening at all. George Osborne, the chancellor, boasted that the HS2 network in the north of England will act as “an engine of growth” and create tens of thousands of jobs. However, look more closely and the limp nature of the promises becomes apparent.

For a start, the project, at least in broad terms, has already been announced twice before. In March 2010 I wrote a Fund Strategy editorial criticising the then Labour government for its highly cautious announcement of HS2 linking London and Scotland. The southern phase of the project was then confirmed with great fanfare by Justine Greening, the Conservative transport minister, in January 2012. The latest announcement has simply added some details of planned stations of the northern section of the project.

Look at the project timetable and the truly vacuous character of the promises becomes apparent. Construction of the first phase, linking London and the West Midlands, is not due to begin till 2017. That is after the next election. This section of the line is not expected to open till 2026.

Construction on the segments of the line announced this week is not expected to begin till the middle of the next decade. By then, even assuming it goes ahead, Osborne is likely to be a long way from his present position. That is why it is certain that none of the growth or the jobs he boasted of will materialise during this government’s term in office.

Completion of the northern England section of the line is not scheduled till 2032-33. By then the odds are that Osborne will be comfortably ensconced in the House of Lords.

Unfortunately most of the criticism Osborne has had to face argues that the plans are too ambitious. Many of the greenish critics would prefer that HS2 not be built at all. This makes it easy for the government to present its plans as almost heroic in scale.

Take China as a comparison to correct this misconception. Beijing plans to build tens of thousands of kilometers by 2020. It has already opened the world’s longest high-speed rail line: the 1,400-mile trip from Beijing to the economic hub of Guangzhou. In comparison London to Edinburgh is just over 400 miles.

No doubt many critics of high-speed rail would argue that China, as a wealthy but undemocratic state, has inherent advantages over Britain. But in reality Britain should have a substantial edge over China.

Britain is four times richer than China in terms of income per head, according to figures from the International Monetary Fund. The British government should have far more resources to support high-speed rail than China.

It is also a myth that there is anything democratic about Britain’s cumbersome consultation process. On the contrary, it just gives governments a pretext to backtrack on their promises by pointing to the opinions of unrepresentative pressure groups.

The high-speed rail farce shows that the government is completely off track when it comes to drive and ambition.

This blog post first appeared yesterday on Fundweb.