The budgetary chaos that has overwhelmed the UK’s High Speed 2 (HS2) project should lead to a period of deep reflection within the transport industry. It highlights a profound lack of economic, and even arithmetical, seriousness among Britain’s political elite. Sally Gimson has done the public a great service by setting out clearly and succinctly the chronology of woolly thinking that has led to the current debacle – a high-speed railway barely one third complete that may actually result in slower journey times for many passengers, the final cost of which remains unknowable.

This is a story of equal-opportunities failure to which every part of the British establishment has contributed. It tells us much about the wider state of the country’s governance structures, leadership class and politics. Gimson’s book features all the ghastly types who have played a part in the decline of Britain’s economy over the last thirty years, from ineffectual civil servants, MPs who think they are local councillors, human rights lawyers, sock-puppet lobbyists and quangos to rapacious suppliers who can’t believe the perverse incentives baked into the system. HS2’s victims include homeowners and businesses forced to relocate, disrupted rail passengers, the landscape of the Chilterns and even the Treasury, which has been forced to write ever larger cheques at a time of economic stress.

After an express run through 150 years of railway history, Gimson details the HS2 story with commendable clarity. The project was hatched by New Labour’s top egghead, Andrew Adonis, a former Financial Times journalist and fellow of Nuffield College, Oxford. Like his intellectual hero Roy Jenkins, Adonis is an ardent admirer of anything ‘European’, though his greatest passion is for trains à grande vitesse rather than the finer clarets. Adonis made the mistake of failing at the outset to set clear objectives for the project, other than the vague desire to modernise Britain’s railways. Long after Adonis’s departure, a lack of clear purpose remained at the root of the project. Thus, HS2 has cycled through periods of being all about economic growth in the north of England and decongesting the east and west coast rail routes, while occasionally having something to do with ‘tackling the climate emergency’ – notwithstanding the enormous quantities of energy needed to build and run a high-speed railway.

The central fact about Britain’s geography is that at least 40 per cent of the population lives in a quadrangle formed by London, Bristol, Liverpool and Leeds. These places are too closely located to one another for French-style high-speed rail to deliver transformational journey-time advantages. The route from Paris to Lyon measures around four hundred kilometres, which is generally considered the optimal length for high-speed rail. The distance between London and Birmingham, by contrast, is only around 160 kilometres, while London and Manchester are around 260 kilometres apart. There are almost no domestic flights within this box and (contrary to lazy media reporting) a high-intensity train service already connects these cities. Transport planners think in terms of ‘generalised cost’ – the sum of all the access, waiting and travel times and fares involved in any journey. If you know someone’s hourly wage rate, you can calculate the ‘value of time’ to them and thus make travel-demand forecasts. It’s the average speed of the passenger, not the maximum speed of the train, that determines economic outcomes. Faster trains at less frequent intervals are unlikely to improve travellers’ end-to-end journey times.

Once the project got under way, the routing and specifications constantly changed in response to endless consultations and lobbying. High Speed 1 (HS1), the line between St Pancras and the Channel Tunnel, may have underperformed in terms of passenger demand, but it was built quickly, using standard French technology dating back to the 1980s. For reasons that are unclear, HS2 has adopted totally different standards and speeds – another contributor to its massive cost, which started at £38 billion and may now stand at £80 billion for the London–Birmingham route (HS1, by contrast, cost around £7 billion). Gimson provides a reminder of the huge economic consequences of Covid-19, which slashed rail demand and revenues, inflated construction costs and killed off HS2’s Yorkshire and Manchester legs. When Rishi Sunak cancelled the Manchester section in 2023, the cost of the London–Birmingham section promptly expanded, soaking up the money saved.

HS2 is supposed to bring national renewal, but those who have orchestrated the chaos seem to have no coherent model of economics, and certainly no conception of planning as an exercise in evidence-gathering and trade-offs. A large part of the blame lies with Britain’s political class, which comprises a narrow pool of upper-middle-class types who share many of the same vague assumptions. As they progress through Oxbridge student politics, via spells as SPADs, to parliamentary seats or mayoralties, they remain untroubled by first-hand experience of private industry, trade unions, supply chains, capital markets and project management. Gimson observes, ‘there are real questions about whether the British political system is conducive to evaluating complex infrastructure projects like high-speed rail. Much of the discussion in Parliament is adversarial, led by humanities graduates and accountants who pride themselves on winning clever arguments rather than focusing on the national interest.’

Faith in received opinion is not confined to one side of politics. HS2’s cheerleaders – Adonis, George Osborne, Boris Johnson – share greater similarities in outlook, if not personality, than any of them might admit. MPs of all parties subscribe to the belief that economic growth in the benighted areas of northern England (seemingly anywhere north of Luton) is always and everywhere connected with transport improvements. City mayors like Andy Burnham are equally convinced of this, though their confidence has not so far led them to contribute to the project’s funding. Their motto tends to be ‘send more money’.

As someone who has devoted his entire working life to transport, I remain unclear as to why people hold this view so strongly. The facts are far more nuanced. Harvard types talk of ‘agglomeration effects’ – the benefits of allowing economic specialisms to cluster in large city regions. Gimson, meanwhile, cites Spain, Italy, France and Japan as examples of countries where high-speed rail has proved successful. Yet a moment’s googling will show that Europe and Japan over the last twenty-five years have had anaemic growth and increasing public debt. The USA, which has very little high-speed rail, has outperformed Europe on most economic measures for decades. None of this is to say that high-speed rail can have no positive role in economic development, but it is far from clear that projects like HS2 represent best-value interventions. Improving the economy of northern England is just as likely to come from enhancing intra-regional rail services, raising skills levels and reducing business taxes and red tape.

Gimson points out that in the early years of the project ‘rebalancing the economy or levelling up also slipped in and out of politicians’ arguments for HS2, but was never fully amplified and certainly very little of the public debate centred on the skills and jobs which HS2 would bring to the Midlands and the North’. I agree. The long, slow decline of Britain’s city regions outside London, Edinburgh and Bristol is an under-discussed aspect of economic life. Many British towns now exhibit lower GDP per capita than cities in the former communist states of eastern Europe. Something must be done, but it is by no means clear that HS2 is the answer. We are now long past the age when unemployed miners could be given jobs building roads. The highly skilled construction workers needed for HS2 are far more likely to be imported from Europe than diverted from the benefits hotspots of northern England.

A recurrent aspect of this tale, with implications far beyond HS2, is the insufficient thought given to incentives. The idea that people and organisations might respond to incentives seems quite alien to Britain’s leadership class, who are perhaps too financially comfortable to imagine that anyone would be so vulgar. By far the biggest distortion arises from the ability, described by Gimson at length, of MPs, peers, quangos and single-purpose agencies (like Natural England) to impose massive scope changes and effectively bill the Treasury for them. The cost-plus construction contracts used for HS2 are an economic doomsday machine, bound to lead to scope inflation, waste and delay.

No discussion of railway policy is complete without an attack on Treasury ‘short-termism’, and we get some of that here. Taking potshots at the Treasury is a convenient way of evading clear economic thinking. The functions of the Treasury should be simple to understand: it agrees departmental budgets, raises taxes and issues debt to bridge funding gaps. UK taxes are already at a seventy-year high, but only cover around 95 per cent of planned expenditure. The balance has to be met through borrowing. Around 50 per cent of government spending goes on the NHS, pensions and social services, and 10 per cent on debt-interest payments (there is no debt repayment) – a figure roughly twice the transport budget. Within the Department of Transport, around two thirds of spending goes on railways, despite the fact that 90 per cent of passenger miles are travelled by road. 

Thanks to commendable improvements in transparency, all of this data is easily discoverable. Yet politicians and journalists frequently debate policy in terms – ‘austerity’, ‘decades of underinvestment’ – that suggest government spending as a whole and on transport in particular has fallen, when in both cases it has substantially risen. Gimson occasionally falls into this trap herself, forgetting that the Treasury has no money of its own and must fund not only HS2, but also benefits, the NHS and countless other expenses. The unfortunate fact is that HS2 is in direct competition for taxpayers’ money with everyone from pensioners to doctors. The alternative would be Japanese-style private funding of the railways, something that Labour has been firmly against for a century. The Treasury is a victim of this sorry saga. HS2 has become the ultimate example of the sunk-cost fallacy: so many structures have been built that there is now no easy way out. The Treasury will have to balance the cost of continuing to dig against that of making the incomplete structures safe or demolishing them. 

Off the Rails is not the definitive history of HS2, but Gimson has clearly set out the sequence of decisions that have brought into being the meteorite-sized craters that lie between London and Birmingham, and the equally massive hole in the public
finances. Read this book with a stiff drink.