Space on trains: the only valid argument for HS2

Economic and jobs benefits will be negligible.

The case for the new high speed rail network - the route of which was announced today - is all becoming a bit muddled. Anticipating a backlash against the project, government spokespeople have been defending it all over the place. The trouble is, there are too many versions of the defence, and most of them just don't hold water.

A Department for Transport spokesman told the Telegraph:

HS2 will bring cities closer together, drive regeneration, tackle overcrowding and stimulate economic growth.

George Osborne said the new line would be:

..not just about cutting journey times – although it does cut in half the journey time from Manchester to London – it’s also about the new stations, the prosperity that’s going to come, the jobs that are going to be created around this infrastructure.

Transport Secretary Patrick McLoughlin said:

It's not just about journey times, it is also about capacity. We are finding the railways are overcrowded. We've seen massive growth in rail passenger numbers, so this is taking HS2 so it serves the north.

The key claims for the line have been that a) joining London to the north and Midlands will help redistribute jobs, that b) the UK is behind the rest of Europe in terms of fast connectivity between cities, that c) the line will generally stimulate economic growth, and that d) rail transport is at capacity and we simply need more lines. Let's just unpack each claim:

a) The new HS2 will redistribute jobs.

The presence of a high speed rail will probably redistribute jobs. But it will most likely redistribute them in the direction of London and the South East. While Birmingham and Manchester (which both have stations on the new line) will also benefit a bit, this will be at the expense of the rest of the region. There won't be many stations, and the small towns which miss out on these will miss out economically too.

b) The UK lacks fast connectivity between cities compared to other places in Europe.

Although European trains are faster (France's TGV services have been reaching 200mph since 1981) - our cities are on average closer together. This means that journey times between major cities are actually faster than our European competitors, according to campaigners.

c) The rail line will stimulate economic growth.

The model from which the government is making these estimates is "exquisitely sensitive to small variations in growth assumptions", according to Dr J Savin, whose extensive financial analysis of the economic benefits of the line can be read here. Making broad claims about the economic advantages, he argues, is therefore distinctly shaky. He also writes that the uneven spread of benefits is not desirable either:

"A project that the entire UK pays for but that benefits two regions disproportionately, one of them being the richest parts of London, is hardly equitable."

d) We need more lines, as rail transport is at capacity.

In the final analysis, the only argument for the new HS2 that actually holds is that the rail services are too crowded. Network Rail told the BBC that the southern section of the West Coast Main Line will be "effectively full" by 2024. We do need more lines - but not for all the reasons the government is putting forward.

HS2 route was announced today. Photograph: Getty Images

Martha Gill writes the weekly Irrational Animals column. You can follow her on Twitter here: @Martha_Gill.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.