Oscar Wilde and HS2
In his 1892 play, Lady Windermere’s Fan, Oscar Wilde has the character of Lord Darlington complain that a cynic was “a man who knows the price of everything and the value of nothing”. An enduringly thought-provoking adage, it is especially apt for the UK in the autumn of 2019 as the choice of Go/No-go on HS2 barges back into the centre of the country’s febrile politics.
Its return was signalled by Prime Minister Boris Johnson who, even before he won the Conservative Party leadership contest, had asked Douglas Oakervee to look again at the business case. Then, once in No. 10, Johnson picked the arch-HS2 critic Andrew Gilligan as his transport advisor, and appointed various HS2 sceptics, such as Lord Berkeley, to Oakervee’s team. Politically, Johnson appears to be preparing to outflank the Brexit Party, for whom scrapping HS2 is second in priority only to Brexit itself.
But even before the ascension of Boris Johnson, trouble was brewing for the mega project. On 16 May, the House of Lords’ Economic Affairs Committee raised serious questions about the scheme’s basic justification, that of capacity building. They also expressed “serious reservations” about HS2’s business case, which they found rested predominantly on a calculation of the cash value of the minutes to be saved by business travellers. And they criticised HS2 Ltd’s insistence on high speeds of up to 400km/h, the specifications for which add significantly to the lines’ cost (see “HS2’s moment of truth”, this issue).
Feeding into all this was their concern over the price of HS2, a figure set at £55.7bn in 2015, but which nobody, including HS2 Ltd’s own chairman, Allan Cook, appears to believe any more. Is HS2 worth the price, the lords asked? And can the price be brought down?
These are reasonable enough questions but, on the same day as the lords published their report, the Institution of Civil Engineers released a policy paper that muddied the waters by arguing that our fixation on lowest-possible capital expenditure for infrastructure, coupled with a weak and partial approach to assessing the true value of that infrastructure, makes us habitually blind to the real worth of projects (see “The price of everything and the value of nothing”, this issue).
Consider the intense furore over the relatively minor (to date) cost hikes of Crossrail. The paper’s authors’ rejoinder to that is the Jubilee Line Extension, which drew fire for its delays and cost escalations when it finished in 1999, but whose true worth in catalysing the development of east London has almost certainly eclipsed its capital cost of £3.5bn.
The lords might agree. While their report is relentless in criticising HS2’s business case, they also note that the scheme’s promoters are missing a trick, because established methodology for calculating the projected value of a road or railway does not examine what could happen if land use changed in response to the new asset. Even though it is clear from a glance at history that new transport infrastructure can transform regions, that dynamic is considered too speculative for investment decisions today.
We can but hope that out of the confusion and conflict over HS2, and with Crossrail nearing completion, a more mature and balanced approach to price versus value emerges.
Changes for CRI
Since 2010, the CIOB has published CRI with a mission to chart the emerging challenges for construction. Now a decision has been taken to update our approach in order to make our research available to broader audiences. With that in mind, CRI will be discontinued after the fourth issue of this year, appearing at the end of December.
It will be replaced starting in the first quarter of 2020 with four special reports throughout the year on topics our research suggests are uppermost in the minds of construction professionals, including technical building insights, emerging digital construction techniques, ethics and professionalism, and changing client priorities. By concentrating our resources on a single topic per report, we aim to provide a definitive resource for professionals, company leaders and policy makers.
We’d like to thank you for supporting CRI down the years, and assure you that what’s coming next will be fresh, insightful and useful.