Cuts to investment in rail infrastructure.

[Ianno87]

The public's scepticism is quite right because outside of London, around the rest of the country, there are many rail and infrastructure improvements which cost a small fraction of that, just noise in the scheme of the HS-2 budget, which are popular with local communities but go absolutely no-where for decades because the funding isn't available.

So we have a general public who had it drummed into them for so long that money simply isn't available for even minor things in their communities, who then suddenly find there's a near bottomless pit of money for HS-2. Their local council can't afford to fix the bus shelters, but the bus services have been cut to the bone anyway, the roads are full of pot holes and there isn't even a normal train service to their local towns, but suddenly central government has shaken the magic money tree and hey there's £100Bn for a new high speed rail line. There's nothing for you and your community, but heck it's only £150 a year per person.

The whole line about 'releasing capacity' is fundamentally flawed, firstly because there's no direct capacity effects for large parts of the country outside the HS-2 catchment area, secondly because HS-2 by-passes many towns along its route and that extra capacity is coming from removal of services which currently stop at some of these towns (some towns will get a worse service post HS-2) and thirdly because there's the naivete of the HS-2 enthusiasts in believing that the £100Bn spent on HS-2 won't be part funded from funding cuts to the rest of the rail network. Ultimately there's only so much rail funding to go around and a sizeable chunk of that £100Bn for HS-2 will come from the existing network, so there won't be the cash to fund some huge growth in new services from al of the 'released capacity'.

HS-2 is an example of the huge disparity we see, where local projects get starved of investment but major government project get blank cheques.

But it's not a "blank cheque" for HS2. It is financed by borrowing set against its future revenues, underwritten by the Tresury. Not that most of the public understand that, of course.

 

[NoRoute]

But it's not a "blank cheque" for HS2. It is financed by borrowing set against its future revenues, underwritten by the Tresury. Not that most of the public understand that, of course.

Rail services lose money and require public subsidies to operate, so it's unlikely HS-2 will ever turn a profit and repay that debt. It's government funding.

It is a blank cheque - it started at £33Bn, then it jumped to £56Bn now it's heading toward £100Bn, the only thing speeding along faster than a HS-2 train is the cost of HS-2. For any project to increase in cost by that much and not be cancelled, by definition has been given a blank cheque.

 

[Ianno87]

Rail services lose money and require public subsidies to operate, so it's unlikely HS-2 will ever turn a profit and repay that debt. It's government funding.

Rail services generate ecomonic activity and wealth for the economy. Far beyond just the farebox

It is a blank cheque - it started at £33Bn, then it jumped to £56Bn now it's heading toward £100Bn, the only thing speeding along faster than a HS-2 train is the cost of HS-2. For any project to increase in cost by that much and not be cancelled, by definition has been given a blank cheque.

No it hasn't. It's £82bn. That is, by definition, a finite amount. You're just repeating the same tired hyperbole.

 

[Bald Rick]

Rail services lose money and require public subsidies to operate, so it's unlikely HS-2 will ever turn a profit and repay that debt. It's government funding.

Most do lose money, some considerable amounts. However not all lose money.

Of those that do turn a profit on a replacement cost basis, many are highly efficient high speed services on high value corridors.

It is financed by Governement, funded by future profits (which are very likely to occur) and economic benefits.

 

[NoRoute]

Rail services generate ecomonic activity and wealth for the economy. Far beyond just the farebox

Quite, but why doesn't that same logic and yardstick apply to smaller transport and infrastructure projects around the country. If as a country we can't find the money for even basic and essential spending in local communities, it seems hard to understand why certain projects should receive such a hugely, unjustifiably disproportionate amount of funding. Quite rightly most the general public also doesn't see the logic.

No it hasn't. It's £82bn. That is, by definition, a finite amount. You're just repeating the same tired hyperbole.

£34BN was a finite amount, then it turned out it wasn't enough. It became £56Bn, that wasn't enough. Now you say it's £82Bn. That's the definition of a blank cheque, start with a figure and keep increasing it as much as you want.

It is financed by Governement, funded by future profits (which are very likely to occur) and economic benefits.

Which raises two questions, firstly if it's likely to be profitable then why are no private sector investors willing to contribute toward its construction to own a part share of the asset? (I think we all know any investment in it would never be recovered, hence why the private sector isn't touching it). Secondly, why don't we see a similar logic to other, smaller schemes which are starved of cash?

I'm not against investment in rail or public transport but I am against the huge inconsistency in the way public funding is allocated, which is what my original post was about, that to many of the general public it seems unfair to spend so much on one project, of questionable benefit, when other public transport and infrastructure gets so little.

 

[Ianno87]

Quite, but why doesn't that same logic and yardstick apply to smaller transport and infrastructure projects around the country.

It does - read up on WebTag. It's just they produce proportionately fewer benefits.

And such project are still happening as well as HS2. Transpennine Route Upgrade, new stations,and so forth.

£34BN was a finite amount, then it turned out it wasn't enough. It became £56Bn, that wasn't enough. Now you say it's £82Bn. That's the definition of a blank cheque, start with a figure and keep increasing it as much as you want.

Wasn't £82bn just adding inflation, risks and contingencies onto the £56bn figure? So the cost has become more robust and mature as the project has developed. Importantly, it has done this *before* construction has started. And the Government still considers £82bn a good value investment, as outlined in the economic case for the scheme (as I'm sure you've read in detail)

 

[Bald Rick]

Which raises two questions, firstly if it's likely to be profitable then why are no private sector investors willing to contribute toward its construction to own a part share of the asset? (I think we all know any investment in it would never be recovered, hence why the private sector isn't touching it). Secondly, why don't we see a similar logic to other, smaller schemes which are starved of cash?

1) because the payback period is too long for the private sector, and also the private sector can’t monetise the economic benefits. For example, one of the benefits is increased tax revenue to central Governement. Why would the private sector invest to achieve that?

2) as @Ianno87 correctly says, you do, exactly the same logic. But, many of the smaller schemes simply don’t generate sufficient benefit. If I had a quid for everytime someone said “project ‘x’ is a no brainier” without explaining how the benefits actually arise, I’d have retired by now.

 

[ABB125]

Well, it’s been boiling frogs for project schedules for a long time. Generally driven by an aversion to disrupt the train service either through planned works or overruns. But also an aversion of going over budget, so the level of checking and assurance has increased steadily over the years (which in itself increases costs and schedules). In my view it’s been worse than the cost increases, indeed it has driven much of the cost increases.

Perhaps someone should work out the optimum balance between extra planning/risk aversion and likelihood of cost overruns, ie: if 10% of the planning is removed, saving 10% in costs for every project, will any cost overruns which occur as a result wipe out the savings?

 

[LNW-GW Joint]

2) many of the projects to be delivered more quickly had some / most of their delivery in CP7. Delivering them more quickly brings a proportion of that spend into CP6. Except I have no doubt that Treasury will not permit that, and any such works will have to be funded from within the £9.4m.

One thing worth noting is that the Treasury spending review containing the budget changes is only for one year instead of for the whole parliament to 2024 as was intended.
So next year the Chancellor will have to produce another review which might just put the rail money back (or not: we will probably be reeling from the full Covid costs by then).

 

[Bald Rick]

One thing worth noting is that the Treasury spending review containing the budget changes is only for one year instead of for the whole parliament to 2024 as was intended.
So next year the Chancellor will have to produce another review which might just put the rail money back (or not: we will probably be reeling from the full Covid costs by then).

Sort of.

The CP6 settlement was a five year deal, with separate pots for 1) Ops, Maintnenace & Renewals, and 2) Enhancements.

The Spending review reduced the latter only for the remaining 3 years of the deal. So it is still a 3 year deal, but like all central Govenment expenditure, subject to review next year for the final 2 years.

 

[yorkie]

Glad to see this thread is back on topic but just a gentle reminder to please keep it that way, as we did have a lot of off topic posts in this thread earlier.

HS2 funding is best debated in a separate thread, and if anyone wishes to make any suggestions for cutbacks, please use the following thread: CP6 funding cut by £1Bn: Where should the cutbacks occur?

If anyone sees any further off topic posts, please click the report button on the first off topic post (and if there are further off topic posts, please include details of these).

Thanks


Edit: I have moved some recent posts to: https://www.railforums.co.uk/forums/speculative-ideas.172/ ; I think this thread has run its course but if anyone has anything to add, please report this post and include the proposed post you wish to make and we will consider any request to reopen it.