By Tim Montgomerie
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It's been another terrible week for the Coalition's High-Speed Rail 2 project.
It began on Sunday with an IEA report which warned that costs for the project might eventually exceed £80 billion.
Then two days ago the FT reported that Treasury officials (not the Chancellor) were also worried that costs for HS2 might reach £73 billion.
Today the former Chancellor, Alistair Darling, uses an article in The Times (£) to call for the termination of the project. Mr Darling has previously expressed his scepticism about a project he once gave the green signal to but, worried at the latest cost projections, he has now become a firm opponent.
Mr Darling now says he doubts the business case for the project. He worries that the journey time that HS2 will shave off a trip from Birmingham and Manchester to London ignores the fact that people are increasingly productive on trains because of advances in IT and connectivity and that the time saved is not the worth the cost. The former Chancellor, who was also Transport Secretary for four years, questions the decision to route HS2 into the already crowded Euston station. Why not Paddington, he asks, so that it would link up with Heathrow? He then gets to the key point of his piece; money spent on HS2 can't be spent on potentially more urgent and beneficial projects:
"HS2 runs the risk of substantially draining the railways of money vital for investment over the next 30 years. This is £50 billion on current government estimates that can’t then be spent on upgrading the East Coast mainline, the route to Bristol and South West or the lines out of Liverpool Street to East Anglia. Nor can it be put towards improving the much-needed links between cities outside London. Put it another way. If you gave England’s biggest cities £10 billion each for economic development would they spend it on HS2? …It’s not just the railways. Road improvements are needed too, as well as spending to upgrade bus services and cycle routes."
Mr Darling is right. Peter Mandelson is right. Boris Johnson, Cheryl Gillan and Dan Hannan too. UKIP is right. It's an unusual alliance but it is now very clear that HS2 has become too expensive. It risks being obsolete as a technology by the time it is delivered because of advances in telecommunications and even, possibly, the emergence of driverless cars. The danger for the Conservatives is that they plough on with this project for all the wrong reasons – fearing the short-term humiliation of making a U-turn on a flagship project. But the benefits of a U-turn would also be considerable. If the Chancellor and PM can admit that HS2's budget projections are simply too risky they will free up cash for other desperately-needed infrastructure projects.
If the Conservatives don't change position the political danger is that Labour will. Matthew Elliott of The TaxPayers' Alliance and Business for Britain made the case for Ed Miliband blocking HS2 in a recent edition of The Times (£):
"Labour needs to match the overall Tory spending envelope but find other ways of offering some differentiation. The most readily available pot of cash is in the big, expensive infrastructure projects. Of these the one with the biggest outlay and most flaky financial grounding is high-speed rail… The HS2 budget would be better invested in overcrowded and unelectrified commuter routes, and to reduce the cost of the daily commute for people who have seen fares increase by more than 50 per cent in the past ten years."
Matthew is, of course, right. Mr Miliband is probably too cautious to junk HS2 but if he had the courage to do so he could put the Tories on the back foot. He could match overall Coalition fiscal plans but scrapping HS2 would give him huge wiggle room to afford electorally potent spending pledges to commuters, first-time buyers and other key voter groups. Andrew Adonis would probably resign from Labour's team but that would be a political price that the Labour leader should be willing to pay.