We’re presented with some numbers trying to persuade us that HS2 should go ahead. The actual lesson from these numbers being presented to us being that we should kill HS2, kill it stone dead right now:
Scrapping the HS2 rail project will cost at least £12 billion in write-offs and compensation and plunge major construction companies into financial peril, ministers are being warned.
Sources close to the beleaguered scheme told the Observer that extra costs of £3bn-£4bn would be incurred even if it were scrapped immediately. £9bn has been spent already.
The £9 billion is sunk costs. Whatever we do we’ll never get that money back. Therefore the £9 billion should have no influence on what we do next. For what we do next has no influence upon the spending or not of the £9 billion.
Actually, if we’re entirely honest about this, this isn’t quite true. For some portion of that £9 billion is land acquisition costs. Which means the project owns some land – which, if we don’t complete the project means we can sell the land and get some money back. This though is not an argument for continuing the project, rather the other way around.
So, we avoid the sunk costs fallacy. What are we being presented with as our numbers then? We can spend £100 billion on building a choo choo set. Or we can spend £3 billion on not building a choo choo set.
Sure, having fast choo choos has some value. Not a lot, the autonomous car is going to make train lines somewhat redundant as a method of passenger travel soon enough. And while rail is just great for freight not so much on a small and crowed island like the UK. Works great across America, not so much here. Oh, and freight doesn’t need to travel fast either.
Technology has also upended the calculations about the value of fast travel for passengers. We value their time as if they can’t work while on the train, that’s just how it is done. Laptops and mobiles – and yes, our time valuations come from before those were widespread – mean this is no longer true. The time value is very much less than what is in the calculations in use.
But this then becomes the question. Is the fast choo choo set worth £97 billion? The answer is no. Therefore kill it, kill it now.