HS2 is a solution in search of a problem

An anti-HS2 cow. Image: Getty.

Escalating costs on a large infrastructure project in the UK is hardly news. But reports that the High Speed 2 rail line (HS2) might now cost up to £106bn, almost double last year’s estimate, is extreme even for this country.

Perhaps we should not be surprised. Industry experts have warned for years that HS2’s costs would overrun, with some forecasting that it could cost between 20 per cent and 60 per cent more than the £56bn sum the last government signed off.

Work on HS2 has hardly started and yet, throughout its 10-year political life, cost projections have more than tripled, from £33.3bn to today’s sum, if the Financial Times’ reports of the government’s review of the scheme are to be believed.

Without seeing the full review, it is hard to make firm assumptions. But when we analysed the economic and strategic case for HS2 at the New Economics Foundation (NEF) last year, we calculated that if the cost of the scheme went up by 60 per cent (which took the total to around £90bn) with no increase in benefits, it would no longer pass the government’s value-for-money tests.

Infrastructure schemes that are not good value for money but are viewed as strategically important, can still be given the political nod from the Treasury – but then the problems they are solving have to be important ones, and the solutions rock solid. In HS2’s case they are not.

Proponents of HS2, including the Department for Transport, will say that it frees up capacity on the existing West Coast Mainline that can be used to relieve overcrowding on trains and line congestion. It will, but it’s not at all clear to what extent it will do this or to what extent this is needed.

One reason for this is that, because of our privatised railways, the data you’d need to draw firm conclusions – about numbers of passengers on specific trains and where and when they board and alight – is owned by train operating companies and not released publicly. To get round this problem during our research, we conducted an informal census of passengers getting off at evening peak time on London to Birmingham trains in Milton Keynes. We found that around two-thirds of passengers leave these trains at Milton Keynes. 

Even if every single passenger that doesn’t alight at Milton Keynes on peak time trains out of Euston is going to Birmingham or beyond, does this relatively modest thinning out of peak time west coast trains really merit spending more than £100bn and building thousands of miles of high-speed line? Probably not, especially given that trains are only overcrowded at peak times, and that similar overcrowding happens on other lines into London and around other big cities, most of which HS2 will do nothing whatsoever to address.


HS2 has also been billed as a project that will help ‘level up’ areas of the UK outside the south-east, bringing much needed jobs and growth to the north and midlands. But London’s inexorable pull and economic might means that starting the line in the capital skews the possibility of this happening. In fact, according to HS2 Ltd’s own economic appraisal – buried in an appendix on page 75 – 40 per cent of the benefits of HS2 will flow to London, compared to 18 per cent to the north-west, 12 per cent in the West Midlands, and 10 per cent to Yorkshire and Humber.

Investment in the UK’s railways – and in its bus network – is very sorely needed. For instance, none of the three critical east-west lines across the Pennines is currently electrified, which is not only essential to make transport low carbon, but also to speed up services and make them more efficient.

There are massive problems almost everywhere on the rail network and big, public-led investment is certainly going to be needed. But taxpayers should demand value for money, which HS2 does not deliver. The best solution would be to share out the investment capital of HS2 between the regions of England, and Wales and Scotland. Governments local and national should spend the money on solving the transport problems that affect the most people, which is generally the daily commute.

HS2 is a product of decision-making that begins and ends in London. It’s no surprise that with this approach we’ve ended up with a railway project that looks like a solution in search of a problem.

Andrew Pendleton is director of policy and advocacy at the New Economics Foundation.

 
 
 
 

Amid housing and climate concerns, Australians find more to love about Tasmania's capital city

A AU$200 million expansion is planned for Hobart's international airport to further connect the city to the world. (Steve Bell/Getty Images)

The city of Hobart, with its population of 250,000 people, sits on the southern coast of Tasmania, Australia’s island state. Compared to the hustle and bustle of Sydney or Melbourne, it’s serene and spacious, with expansive views, striking 19th century architecture, and a world-class food and wine scene. The one-of-a-kind Museum of Old and New Art creates yet another draw for tourists; so does the island’s extraordinary natural beauty.

Over the past decade, Hobart has also become increasingly popular as a permanent destination, too: its population increased by about 10% between 2011 and 2018. 

Formerly Australia’s poorest state, Tasmania has sometimes been the butt of jokes, especially among those who have either never visited, or grown up and left for good. In a recent domestic skirmish, where Queensland was left out of Tasmania’s “travel bubble,” the state’s deputy premier declared: “I don't see any reason why anyone would want to go to Tassie.” 


People outside of Australia may know it only for its unique fauna, including the Tasmanian devil, or via the Australian comedian Hannah Gadsby, whose Netflix series Nanette touches on the challenges of growing up there. (She describes it as “a little island floating off the arse end of mainland Australia,” known for its potato farming and “frighteningly small gene pool.”)

But, as a place to live, Tasmania has become increasingly attractive to Australians and foreigners alike in a way that might have seemed unlikely even a decade ago. In 2015, the state had its first positive quarter of interstate migration in four years; since then, a steady trickle of migrants have made their way to the Apple Isle, as it’s sometimes known, often citing climate change concerns and lower house prices as reasons for the move. Many, particularly in Hobart, are international students. 

Now, with Covid spikes in Victoria and New South Wales, Tasmania – with the 150 mile Bass Strait as its moat – has seldom seemed more appealing. In the past quarter, Tasmania has become Australia’s best-performing state economy for the first time since 2009, with annual growth of about 5%. It ranked first in the country for relative population growth, relative unemployment, equipment investment and retail trade. More than 13,000 people are now members of a “That’s It, I’m Moving to Tassie” Facebook group, for people "considering or dreaming about making the big move to Tasmania”. A planned AU$200 million expansion to its international airport will further connect Hobart to the world.

Even before the pandemic, many Australians had begun what Lisa Denny, a demographer from the University of Tasmania, describes as a “value reset.” Between the bushfires and other extreme weather events, “the cost of insurance, the risks, the interruptions to life, and the devastation that have been attached to it, people have been seeking out safer, more secure, and less expensive places to live,” she says. “For many people, [the pandemic] will reinforce or bring forward decisions to move or change their lifestyle, or change what work they do and how they work.”

Kailey Milroy and her husband had been weighing up a move to Hobart since 2017. In 2018, while they were still living in Milroy’s hometown of Vancouver, Canada, the couple deputised her husband’s parents to travel from New South Wales and view a house for them. They bought it, sight unseen, and let out. Until June, the couple and their two young children had been living in Newcastle, New South Wales, two hours north of Sydney. But when their tenant in Hobart asked to end her lease early, the family decided to take the plunge and relocate. “We really love it,” Milroy says. “We’ve already met some people and our neighbours have been super welcoming.” 

Under normal circumstances, the family might have waited a few more years to move. But the year’s news cycle – first, the aggressive bushfires; next, the isolation from nearby friends and family during lockdown – created new incentives to move. “It just made us realise, all the things we were worried about, with moving to Hobart, we can manage that,’” she says. “And it was somewhere we really wanted to be, so it felt worthwhile to give it a shot.”

With no new data on new arrivals to Tasmania expected for a matter of months, it’s hard to hypothesise accurately about either current or future migration, says Denny. The pandemic will necessarily curtail overseas migration, possibly for years to come, but it’s not clear what effect it will have on interstate migration, particularly if Australian employers embrace remote work with the same enthusiasm as some of their international neighbours. 

Still, for the last few years, around 14,000 people have arrived in Tasmania each year, roughly evenly split between international and interstate migration; of these, about 11% are aged between 25 and 29. Each year, about 12,000 people have also left, however, for a net gain of about 2,000 residents.

The effect on housing over this time has been noticeable. At about $510,000, the median house price in Hobart is a fraction of the median in Sydney ($975,000) or Melbourne ($775,000), but roughly the same as in Brisbane, Adelaine, or Perth. But prices in Hobart are rising and rapidly. Hobart’s median house price has risen more than 50%, from $347,000, in the past five years. (In Brisbane, by contrast, house prices have barely changed; in Perth, they’ve actually dipped). Despite the pandemic, Hobart housing prices continue to rise, with an increase in cost of about 1% in the last quarter and 11% in the last year, exceeding every other state capital.  

Ingrid Boone bought a property in Hobart earlier this year, arriving from Sydney just three hours before lockdown began. For the next six weeks, she says, she took extended leave from her work as a retail merchandiser and renovated the house and garden. “As I was here, even in lockdown, I just fell in love with my house – with the view, with the climate, with the opportunity to garden.” 

Returning to Sydney was a wrench. “This dark cloud came over me – it was a horrible time mentally.” When a job opened up in Tasmania, she lost no time in accepting it and returning. “The word ‘yes’ just came out of my mouth. I couldn’t get back down here quick enough,” she says. “I’ve just been absolutely in heaven.” Though the distance from her two adult daughters, who both live on the mainland, has been a struggle, she’s blissfully happy in her new home. “Every single day, the beauty of the place, it just takes my breath away,” Boone says. “I’ve fallen in love with Hobart, and have not for one single second regretted it.”

Though migrants to Tasmania often mention the lower cost of land as a particular pull, there are other Australian regions that are comparable in price. The clinching factor often comes down to questions of climate and lifestyle. 

For Mike Olsen, an IT worker originally from Queensland, even the mandatory AU$2,800 ($2,000) quarantine fee – and two weeks in a government-appointed facility – didn’t put him off making the leap. “I've been to Tasmania a number of times, I've always been interested in living here,” he said. “And after the first wave of Covid, I chose to quit my job, spend a little time with family up in Queensland, and then come down here.”  

Though he’s currently waiting out his time in a quarantine hotel, Olsen plans to spend around a month exploring Tasmania, with a view to finding work in IT and a block of land to buy, likely a half-hour outside Hobart. He’d been thinking about the move for a number of years, he said: “Mainly because I love nature, and Tasmania is full of nature – amazing hikes, down here.” Lower land prices, compared to much of the rest of Australia, are another draw. “It’s got a lot of things going for it.”

In the past, a lack of jobs has prevented many would-be migrants from moving to Tasmania before retirement. But more awareness around the potential for remote work could tip the balance in the state’s favor. “It might give people the impetus to be able to choose where they live, but we really don't know until we start seeing the numbers,” Denny says. “It’s going to be very interesting to see play out, but I think Tasmania is well positioned to be attractive for people to live in, in a changing world.”

Natasha Frost is a freelance journalist based in New York City.