The opportunity cost of HS2

October 01, 2010 11:05 AM

Chris Stokes has written an excellent article in Modern Railways (£) about HS2, questioning whether Britain really needs it. As well as reiterating the weak business case for HS2, Stokes makes the point that there is an opportunity cost with HS2:

“Most Government departments’ budgets are expected to be cut by 25% in the current spending review, with transport clearly not an exception… There is an opportunity cost here, both in relation to other public services and rail itself. While construction expenditure on HS2 will not start for at least five years, even before then the development costs will be considerable, and will undoubtedly represent an opportunity cost for the industry. Forget smaller scale improvements, project like East West Rail and additional rolling stock. Some cuts have already taken place, like the £50 million ‘Better Stations’ fund and the uncommitted HLOS1 additional rolling stock, and HLSO2 is likely to be steady state at best, with the risk of route closures looming over the horizon. In this context, and given the downside of the business case, HS2 potentially looks like a vanity project, and I would argue the case needs to be rigorously challenged.”

Of course there is also an opportunity cost with the roads. Drivers already get a raw deal in transport spending with rail receiving ten times more spending per passenger km compared to road transport. Drivers also contribute billions of pounds to government coffers every year in fuel duty and vehicle excise duty. 

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