As with most major publicly funded infrastructure projects, the ever-increasing HS2 budgets are attracting significant attention.
While of course it is always important to continually assess the value for money of such projects, it is by no means an easy task. For a start, the relevant metric(s) for such analysis are not necessarily straightforward. Like the Brexit debate, the metric you favour largely depends on whether you are pro or anti the project to start with. As a result, the figures you cite, by default, support your own position while often ignoring the other arguments.
By way of example, whether the final initial investment, once known, will be capable of generating its own weight in increased region GDP, over any period, is by no means an easy calculation. And, in any event, it often ignores the current ancillary regional and national economic stimulus benefit of what is a current, ongoing project.
For example, the necessary compulsory purchase process has already fed and will continue to feed directly into the local real estate, professional services and commercial financial markets where alternative land and properties have been sought, deals been done and fees been paid. This will have created a secondary market of supply and demand that would not have existed but for the CPO process. An accurate figure of that level of activity and resulting economic growth remains to be produced.
This example also helps demonstrate the problem with either slowing the process down or ceasing it altogether. CPO is but one example of the many necessary aspects of the HS2 project that could not be easily or cheaply reversed.
Another is the myriad of planning and other local authority work that has been completed, is continuing and remains to be implemented, the unwinding of which, even if it were possible, would not be cheap or have a clear discernible benefit other than the fact that any future headline capital expenditure may not occur. I say ‘may not’ rather than ‘will not’ occur as major public infrastructure projects like the trains themselves can often be difficult to stop.
If not stopping, option two (slowing the project down in order for an independent financial review) might also seem a sensibly pragmatic option. However, again while it is clear that there would be an initial additional cost for any such review, it is not clear who or what body would be best to conduct it and at what costs and timetable.
It is also certain that such a delay, of whatever duration, would increase the whole project’s bill from a real-time cost perspective. Hence the benefit of any outcome of such a process, combined with the total costs of project abandonment if that was the end result, might invariably produce a result that is automatically called into question before it has even been agreed.
The net result is that there is a very strong argument, regardless of what you believe the ultimate benefit and costs of HS2 will or should be, that two of the obvious alternatives (stopping or delaying the project) are, from an inherent cost perspective, even less attractive.
Hence, while in our 2020 world there is no obvious or clear answer to the HS2 question, it does beg the question that if Isambard Kingdom Brunel attempted to complete any of his major railway engineering works today in our 24/7 news-cycle world, would the same costs and benefit debate be any clearer?
If you have any questions about your infrastructure project or would like to discuss any of the issues outlined in this Keynote, please contact Simon Murfitt using the contact details below.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.