HS2 Failure - Why is UK so Bad at Building Infrastructure?

after years of delays and Rising costs hs2 has been severed by the government the most valuable part of the route which was going to Leeds in Manchester has been cancelled leaving the least attractive part from a suburb of Birmingham to a suburb of London it risks being a 50 billion pound white elephant a monument to poor planning and the UK's inability to build infrastructure it was supposed to be a project that revitalized the UK economy and UK infrastructure but has become symbolic of a failing economy what went wrong why is it so expensive to build in the UK and more importantly can the UK learn anything from other nations when the channel tunnel opened in 1994 the French had already built a high-speed link from Paris to the channel he flew from Paris to the channel but then slowed to a crawl as a US star ended onto ancient Victorian lines it took the UK another 13 years to build a high-speed counterpart hs1 cost 5.8 billion cost 51 million per mile but despite being late and running over costs it gave significant economic advantages 90% of local business in Kent said they felt that the economy had benefited from HS one's existence the relative success of hs1 led to the dream of a highspeed Network across the UK linking not just London to Birmingham but going all the way up to Edinburgh and Glasgow it would increase capacity reduce Journey times and connect Britain's major cities if France Spain and Japan could build highp speed rail why couldn't the UK the initial cost for hs2 was a mouthwatering 40 billion but his bold Vision was supported by both the outgoing labor government and also the incoming conservative ative Coalition despite wielding an ax of austerity to education welfare and public sector investment the chancellor George Osborne was quite excited by This Magnificent new project it was reported the long-term benefits could be over 100 billion giving a good benefit to cost ratio however with depressing predictability for UK investment projects it took longer to build than expected and we started to see a surge in the cost of building it estimates of the costs of building Rose from 37 billion in 20110 to 106 billion in 2020 and the recent rise in inflation pushed that figure towards 130 even 140 billion with costs seemingly out of control and many voters ambivalent about the project the government cancelled first for Section to leads and then the section to Manchester now I would like to partly defend hs2 if inflation is 10% then everything is rising also by 10% not just for costs but also for nominal benefits inflation should not be a reason to cancel infrastructure but even if we arej just for inflation costs have risen exponentially £130 billion is around 90 billion in 2010 prices still more than double the initial estimate the UK is just very bad at building infrastructure Britain remade report that underground tunneling costs in the UK are much higher than elsewhere in Europe in the UK and underground tunnel costs around 676 million per mile compared to just 113 million per mile in Spain Madrid managed to build an 81 mile underground for 61 million pound a mile nine times cheaper than the London Jubilee line extension France has been building highspeed lines for around £50 million per mile but the 140 M Journey from London to Birmingham could be a mouth watering 356 million pound per mile so why is it so expensive at least part of the cost is due to the UK's population density Spain and France with more open Countryside can build more cheaply in the UK land is more expensive and of course house prices have soared in the UK since 2010 but also the UK's population density means that high-speed Railways are less beneficial than in bigger countries like France Spain or the United States High-Speed Rail becomes more desirable when it's an alternative to Flying no one takes a plane from Burmingham to London is too close so highp speed is not providing alternative toad this also brings us on to another valid criticism of hs2 it is over engineered aiming for eye-catching speeds of over 200 mil per hour when lower speeds could save a lot of money but only marginally increase Journey times one of the secrets for low costs in Spain is that they use standardized techniques geared towards keeping costs as low as possible hs2 by comparison had an extravagance of wanting to be the best not necessarily the best value and maybe this is a fault of politicians been drawn to eye-catching big projects they can put their name to rather than small scale projects which help to be more effective but on a small scale the former technical director of hs2 Andrew McDon agreed that hs2 was over engineered needlessly increasing cost another big issue behind the soar costs of hs2 is the government's own tinkering with designs just to appease local MPS who live in the path of the Railway and it just so happens he's happened to be influential conservative backbenches now understandably the Chilton uh commuter belt didn't like the idea of all the disruption of a new Railway just so people could get from London to the north a bit quicker from a local perspective it was all cost and no benefit so to protect the beautiful children Countryside and it is very beautiful there a lot of cycling around there more and more of a railway was diverted Underground through long expensive tunnels but don't forget the UK it's very bad at building tunnels not only that but things like the ventilation shafts had to be disguised as a farm bonds just to appease our local sentiment and this is a problem with hs2 there have been lots of minor changes just to few million extra here and there but over 15 years and on such a big project this has become a few extra billion and more and this is a British political system a lot of local lobbying without a coherent National strategy which by the way does have pros and cons it is actually good to sometimes listen to local people it's not always you don't always want a dictatorship telling you what to build but the increase in cost for hs2 is more than this change of scope with building extra tunnels and things like that theuk tends to build infrastructure in fits and starts it has a lack of skilled workers and a lack of experience in building the more you build the better you become you learn how to keep costs low and then you can replicate these techniques the more you build the better you become at it the UK by contrast paused hs2 and this was deadly for pushing up costs as contractors took it as an opportunity to ask for more and there's a big problem with canceling hs2 halfway through and this is it will make it much more difficult for the UK to build infrastructure in the future no one will have faith that the project will be completed and contractors will demand higher payments to get involved and in a typical Act of political short termism as soon as the project was cancelled sunak started to sell off land for the railway at a knockdown price this means it will become almost impossible to revive the scheme at a later date now in 2020 the government's own independent review into hs2 led by Douglas osot said the blea project should go ahead because the net benefits still outweighed the costs despite the increasing costs over the years but the important thing is he said that the scheme was only of value if it went to Leeds and Manchester and later up to Scotland but lat from Birmingham to London gave the least benefit and did not provide good value on its own yet this is exactly what we've been left with the least desirable of a project going from a suburb of Birmingham to a suburb of London the net benefit to cost ratio has steadily been falling since 2010 and we could end up with a project where the long-term benefits never exceed its total cost the esteemed Railway commentator Christian wmer who was always skeptical of hs2 preferring less ambitious and more local projects said that the truncated version of hs2 has left us with the worst of Both Worlds a 50 billion bill but very little uh benefit now back to the increased costs of hs2 another big reason was because contractors said that it was a wrong kind of ground it was too soft and this increased construction costs and for people for British people of a certain generation it will bring to mind the famous excuses of British Rail the wrong kind of leaves which one year led to so many cancellations of trains there are also many other reasons why UK costs are so high for building infrastructure firstly the UK's complex and very expensive planning system secondly contractors who are bidding want to ensure themselves against any potential negative outcome thirdly it was widely known that hs2 had a big pot of money which encouraged firms to put in high bids this compares to say hs1 when the budget was kept more secret and then on top of this there's a widespread report of poor management at hs2 whilst the UK has a shortage of skilled workers and skilled Engineers there's no shortage of white colum management 44 hs2 Executives were paid more than 15,000 a year but despite all this management hs2 got critic size of being too bureaucratic with a lack of responsibility and difficulty in moving decisions forward and the final point about hs2 is what about the opportunity cost what else could we have done with 50 billion P to improve transport links in the UK now as it happens I'm actually a train buff I like train lines and I would have liked to seen hs2 built but even as a train fan I have to admit that the cost of benefit ratio was pretty poor and it's very concerning how the UK finds it very expensive to build infrastructure and the problem is this that many potentially good projects that other European countries would do the UK is not doing and the cancellation of hs2 only makes this worse something needs to change we need to look at planning and regulations to make sure that we're not over engineering um infrastructure and also really Place greater value on training skilled Engineers who'll be able to do this kind of infrastructure and this poor infrastructure is one reason why the UK's economy has been doing badly in the past two decades this video on the long-term decline of the UK's economy goes into more detail lots of other interesting factors why the UK is doing badly and what if anything we can do to change the situation hope you enjoyed this video please do subscribe see you soon

Channel: Economics Help UK

Views: 61,553

Keywords: economics

Id: FQzqWSXxbLM

Length: 11min 49sec (709 seconds)

Published: Sun Nov 12 2023