When we look back at the Victorian era, one thing that puzzles us is how, with an economy a fraction the size of ours, they managed to build so much infrastructure. Well puzzle no more, because John Kay has an answer (and it’s a remarkably simple one): they paid a lot less for it:
- “The earliest underground railway lines in London – and the world – cost half a million pounds a mile to build. The cost of the Victoria line, built in the 1960s… came in at about £7m per mile.
- “This, however, now seems an astonishing bargain. A decade later, the Jubilee line cost £36m per mile to build and its extension in the 1990s 10 times as much. The tunnels for Crossrail, the newest underground railway connection in London, are budgeted at almost £1bn per mile…
- “The Forth Bridge, an engineering marvel that connects Edinburgh with Fife, was completed in 1890 at a cost of £3.2m. The parallel road bridge erected in the 1960s cost £19.5m… The budget for a third crossing is currently £1.6bn.”
Isn’t this all explained by inflation? Actually, no – as you can work for yourself by applying the following rule of thumb:
- “Roughly, you can assume that average prices in Britain multiplied by 10 between the Victorian era and 1960, and by another factor of 10 in the 50 years following.”
As can be seen from the above examples, the costs of major infrastructure projects rise roughly in line with inflation between the Victorian era and the 1960s, but then massively exceed it. Why should this be?
Could the breezy – that is to say, psychopathic – Victorian disregard for health and safety be the explanation? Again, no:
- “The Victorians were cavalier in their view of human life and the rights of – most – people who lived near these huge schemes, in a way we could not now accept. Perhaps 100 people died building the first Forth Bridge and many more were injured. The major change in social attitudes occurred long ago, however; for the second bridge, casualties were reduced by more than 90 per cent.”
So, even though the grotesque exploitation of workers had stopped by the 1960s, project costs remained in line with inflation. It seems that the cost explosion that took place subsequently was due to different kind of exploitation – that of the tax payer:
- “A plethora of consultants is attached to every modern project, and although the purpose is to ensure more cost effective management, it would appear that this hope is not fulfilled. Only a few global firms are now perceived as capable of running mega projects, and they are hired by often inept public sector purchasers. These clients change their minds frequently and are prone to insist on idiosyncratic specifications.”
This is compounded by a further factor:
- “Perhaps the principal culprit is technological overkill. The argument that we need the best and latest is powerful in political decision making, even among people who would never behave that way in their everyday lives…
- “Perhaps technological advance has reduced rather than increased productivity, by offering enhancements that do not represent value for money. The result is that major projects cannot be afforded or, if they are afforded, squeeze out smaller advances that would add more to human welfare.”
Alternatively it may not be “technological advance” that is reducing productivity, but the profligate incompetence of politicians and civil servants. After all, why should contractors invest in cost-cutting innovation when the state is so willing to pay through the nose?