Willy Hutton on economics

Yes, he will talk of grave mismanagement, saving money and maybe reshaping the project – but it will get the green light. He has been influenced by the Treasury recognition that, given the sunk costs, there is no cheaper way of creating vital extra north-south rail capacity.

But Willy, the entire point of the very concept of sunk costs is that they’re not an influence upon current decision making. Because they’re sunk, d’ye see? Whatever we do they’ve been spent already, we can’t get them back. Thus whatever the decision now about the future they’re irrelevant.

Sigh.

Plus, of course, we don’t need more north south passenger (freight being a different matter and freight not needing that speed) capacity because the internet, 5G, autonomous cars and working from home are all going to cut rail travel rather than increase it.

25 thoughts on “Willy Hutton on economics”

  1. It’s very unlikely that rail freight traffic will grow in the future. Bulk loads (dominated by coal and iron ore) are largely gone – what remains is carrying chipped wood to Drax, a few quarries, and spoil from Crossrail that has now finished (I understand spoil from HS2 tunnels and cuttings will be taken away by road). That just leaves containers which would have to grow enormously to replace all the above.

  2. Bloke in North Dorset

    Its a bold claim to make that rail travel will decline, it continued to rise along with rise of the car, although if anything will drive/take passengers away it will be nationalisation.

    Anyway, fully autonomous cars for individuals are 30 years away (that was a quote from one of the senior engineers working on the problem), we might get to the point where lorries and even cars can be controlled on motorways to pack them in to tighter convoys but that’s going to mean a lot of infrastructure to separate them from the other traffic.

  3. Chris; what might happen to “freight” if they stuck the guards van back onto the passenger units?

    The rail and road networks are not interoperable.

  4. Christ, Hutton is thick, isn’t he? Is he a member of some sort of brotherhood that has advanced his career?

  5. “Its a bold claim to make that rail travel will decline, it continued to rise along with rise of the car, although if anything will drive/take passengers away it will be nationalisation.”

    The last 3 years statistics are that rail use has risen, but peak travel into London has fallen for 2 years. In general, Season ticket sales are down. The journeys taken on each season ticket are down to 8.5/week. That’s close to every season ticket holder doing 1 day a week at home. That’s going to have an effect on how busy trains are.

    Maybe there’s a blip, but there’s definitely a culture change going on. I’m seeing it happening. I’m a contractor. Every so often, I have to find work. And more and more, companies are accepting some level of working from home. We’ve got the tools to build software or agree marketing text with a team spread across the country. Don’t care when and where you work if you get the job done. And not just working from home, but remote offices. Set up an office to do the accounts in Devizes and hire a couple of temps. You don’t need people to be in London to do that now.

    And I don’t know what other roads are like, but the M4 around Reading is a whole different thing to what it was. It’s still busy, but it’s not the car park it used to be. I’m travelling right into the town at peak hours now, parking at Tilehurst station and taking a train to the office. About £30 in petrol, parking and train rather than £50~ direct by train.

  6. more and more, companies are accepting some level of working from home.

    Mine basically insists on it, as there are too many people for the number of desks. Its great. Can’t believe I used to put up with crowded trains five days a week.

  7. Bloke in North Dorset

    When I worked for DCMS they moved to pushing people to work from home, I thought it was great but then I’d been doing it for years, but it was surprising how many didn’t want to for various reasons. Mostly I think they came in for the company judging by how much time was wasted in pointless meetings and discussing social lives.

  8. BiND,

    I once worked at Wiltshire Council who allow you to work anywhere, but I preferred going to Chippenham than working from home, most of the time. It’s only 10-15 minutes by train and costs about £7.

  9. “Plus, of course, we don’t need more north south passenger … capacity”

    The canny thing about the HS2 marketing is that you’d think it was all about North/South services when it isn’t. The y-shaped route for HS2 is intended to get as much London bound traffic as possible, from Birmingham and north of there, off the West and East Coast Main Lines and onto a dedicated express line. This will allow the WCML & ECML to carry more local and London commuting services. If only Phase 1 is built only the WCML will see the benefit.

    HS2 didn’t need to be a high speed line and it didn’t need to be as costly as it is turning out to be (especially through putting nearly a third of Phase 1 in tunnels).

  10. What Gareth said.

    As my MP explained it candidly a couple of years ago; the WCML is at capacity, HS2 is there to relieve that.

    You might think that people telecommute (and my office is empty on a Friday) but in the dormitory town where I live they are building thousands of flats with no parking and the assumption that everyone will work in London. Fuckwit Ilib Undem council. None of the developers has thought to ask the train company (we asked the developers, it hadn’t occurred to them) if they could cope with thousands of extra commuters per day. The local station and Euston are barely able to cope with the commuters at rush hour as it is. It can take me 5 minutes to get off my train and though the ticket barriers.

    Personally I think that a fast line in the north connecting Liverpool, Manchester, Leeds and possibly Newcastle would be a better idea but what do I know. I suppose the philosophy of starting in the south and building north was that compulsory purchases would be cheaper before house prices rise.

  11. Working-from-home is a fashion that comes and goes. In general it starts because some high-up manager wants it. For a couple of years it all works fine because everyone knows everyone, they already have a team spirit and good working relationships. After a while there’s some turnover, people change positions, the old bonds are broken. Without a shared office, new bonds are never formed. Productivity takes a dive. A new manager is brought in; the first thing he does is scrap working-from-home. Rinse and repeat.

    Even the big tech companies, the ones who should know best how to manage this stuff, still have huge offices in expensive locations. Google has a massive new building just behind Kings Cross, for example.

    Anyway, back to the article.

    Total estimated cost: £106bn.
    Sunk cost: £7.5bn.
    So that means the next-cheapest method of creating north-south rail capacity would cost more than £98.5bn; something I find hard to believe. A slow freight line could surely be built more cheaply, if that were the goal. Refuse to put 1/3rd of the line in tunnels and you’d see huge savings, at the expense of people living near the line.

    But even the comparator is wrong. The implied question is “what’s the cheapest way to increase north-south rail capacity”. In fact the question should be “what’s the most cost-effective way to boost the northern economy”. (Why? Payback for voting Tory.) The answer might be rail, it might be road, it might be telepresence suites and gigabit broadband in every office. It might also be opening a new port, or allowing fracking or mining.

    Whatever the answer, HS2 isn’t it.

  12. Andrew M,

    “But even the comparator is wrong. The implied question is “what’s the cheapest way to increase north-south rail capacity”. In fact the question should be “what’s the most cost-effective way to boost the northern economy”. (Why? Payback for voting Tory.) The answer might be rail, it might be road, it might be telepresence suites and gigabit broadband in every office. It might also be opening a new port, or allowing fracking or mining.

    Whatever the answer, HS2 isn’t it.”

    Tax cuts, mostly. Encourage companies to move north by making the poorer places (I don’t go in for North/South, plenty of wealthy places up North, plenty of poor parts of Wales). Maybe build some more roads in some places.

    But maybe also ask whether people prefer to live in places like Fleetwood, Blyth, or would rather live near Torquay. I’ve nothing against the people in the north and there’s some lovely places, but the weather is more pleasant in the South of England. People only heavily populated the north because of the prosperity of industry, not for the balmy climate.

  13. The price of a walk-up fare from Manchester to London tells you there is huge demand for more capacity. It’s cheaper to fly to New York at a few weeks’ notice than to do that. In fact, it’s almost cheaper to get a taxi from Manchester to London.

    Why not try and copy whoever is best in the world at any one thing, and if possible, improve on it? For rail, Japan is the obvious model, successful mix of private and (not really any more) public railways, with the high-speed passenger railways almost totally separated from everything else. Their equivalent Manchester-London service, the Tokaido Shinkansen, covers almost twice the distance in the same time with 12 trains an hour, 16 cars apiece. Compare that to the miserable west coast main line.

    Now add British yield management pricing* on top and you’ll have a global winner.

    * (But not having to stand all the way for £350 when some snotty teenager has a seat for £6.50 – that’s not yield management)

  14. “they are building thousands of flats with no parking”
    Same thing was happening in Sheffield when I was there in the 2000s (and probably still is).
    Me: There’s no parking.
    Planner: It’s on a bus route, they’ll use buses.
    Me: But where will they put their car when they’re not using buses?
    Planner: They won’t own cars.
    Me: Oh yes they will.
    goto line 4

  15. @jgh

    Totally O/T but what I realised is that it is totally classist, which I doubt the planners even thought about. What if I’ve got a trade and need to park my van somewhere? With no parking I’m totally excluded, by inadvertent design, from living in one of the flats.

    Come to think of it, I couldn’t live there and do my last but one job which required me to be based in Cockfosters and drive to High Wycombe, while living somewhere in the middle.

  16. @Ducky McDuckface
    The rail and road networks are not interoperable.

    A great deal of US rail freight is ‘intermodal’ (containers), but that makes sense when faced with a journey of 1,500 miles – a couple of hundred miles by road to the nearest railhead, transship, 1,000 miles by rail and then 200 miles by road to its final destination. Few shipments in the UK are as much as 1/5 that length, so the same scheme doesn’t work here. US rail also sees a lot of ‘piggyback’ traffic with entire trailer units loaded onto freight cars – but the UK’s restricted loading gauge won’t permit that.

    There’s no concept of a guards van any longer. but a few remaining UK rail services have a baggage car – whenever I’ve peeked inside, they’ve been empty (maybe a bike or two).

  17. Bloke in North Dorset

    Andrew M,

    God point about the working from home business cycle. It reminded me of the centralisation/decentralisation cycle of the 70’s and ’80s or maybe even longer.

  18. Vast majority of N-S rail travel is commuting which HS2 won’t help

    Capacity? From 2013:
    Geoffrey Palmer debunks the spin being used to try to justify HS2

    If there was need and demand for HS2 private sector would have already built/building HS2 – they aren’t because it’s not needed and unprofitable

    Meanwhile private sector are willing to build multi-billion pound infrastructure eg LHW R3 (£15-20bn) and LGW R2 (£10-15bn), but Gov’t won’t let them

    Caesar has a seizure as cost of high-speed chariotway doubles ….you ain’t seen nothing yet

    My bet?
    BoJo will approve as Dominic Lawson points out: Cons: “Don’t embarrass/contradict previous ministers/administrations”

    @PJF

    Agree. Javid @HM Treasury believes it – FP FT & Tele on Thursday 31 Jan

    “We’ve wasted £10Bn with nothing to show. We must waste another £100Bn, £200Bn, £500Bn so we have something people can see”

    It’s Edinburgh Trams on hyper steroids

  19. @BoM4

    Ignored in all pro-rail/Hs2 stats is population increase. I’d guess miles pa per capita is declining at a rising rate; add 5-10 million illegals and decline higher

    @Rob February 2, 2020 at 2:35 pm

    +1

    My first post-grad job in 1988 involved hot-desking: each ‘consultant’ had a fit under desk 2 drawers, 1 file drawer thing on wheels.

    @Gareth

    HS2 needs to be HS to comply with EU Laws – that it wasn’t cancelled in June 2016 or by now shows Gov’t real preferences. Words distort, watch actions

    @Battery Chicken

    Virgin Rail boss responded to that by saying WCML lies, HS2 a vanity project

    @Andrew M

    But even the comparator is wrong. The implied question is “what’s the cheapest way to increase north-south rail capacity”. In fact the question should be “what’s the most cost-effective way to boost the northern economy”

    Yes. Or even better “Would reducing tax and Gov’t interference be the most cost-effective way to boost the northern & UK economy”

    @BoM4

    “balmy climate” – Hastings, Margate….

    @BiG

    UK too small and densely populated for HSR. If London, Leeds & Edinburgh were most of GB pop, HSR might be good.

    Also, HS2 is Not city-centre to city-centre – it’s RyanAir Rail

    @jgh

    +1 same crap here too for >20 years

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