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You’ll find it’s you who needs to do the reading. I have a university degree in economics. I do understand that it’s difficult to understand the truth when listening to your average politician or journalist. How do you think the banks were bailed out in 2008 without the markets collapsing? Suggest you start here:
Rachel Reeves posted this on Twitter this lunchtime: This means 70% of all pensioners are going to have the winter fuel allowance restored after not having it for one year. 30% will miss out. How is she going to find out who they are? Given the complexity of many taxpayers' affairs, there...
I know full well what QE is. The problem with QE is that it devalues your currency by diluting what's in the market - basically the same as if a business issues additional shares without being worth more. You CANNOT "just print money" unless everyone else is doing it so relative currency values stay the same (which is why countries doing it for COVID mattered less).
Sometimes there's no choice but to do it - had those pension funds collapsed, for instance, it would have potentially bankrupted the UK entirely. But it shouldn't be done to build a railway, not even the best railway in the world.
What completely freaked the markets was borrowing masses of extra money to fund tax cuts and the fuel subsidy, i.e. revenue expenditure not capital expenditure.
And my point is that a lot of HS2 expenditure is way in the future. The markets won't be freaking if we need to borrow £5bn a year between 2030 and 2035 to build Section 2b, it's the next 5 years which are crucial.
Correct, and for people to want to do that at a low interest rate, markets must have confidence in the Government, which is where Truss-Kwarteng failed miserably.
So its either spend countless billions on an already out of date project, or nothing? Or how about spend just a couple of billion on a few decent infrastructure enhancements and a decent fleet for XC. Maybe make some of GWRs 5 car 802s 9s and maybe improve commuter services into northern conurbations. All much cheaper and more desirable to the public than HS2.
We live in such a different world to when HS2 was conceived. To many people, 2 hours on a train from Manchester to London is able to be used productively.
Unfortunately no longer true. Ever since BR, then Virgin, and now Avanti, each progressively squeezed up the seats to get more and more in, and replaced facing bays and tables with bus-style seating, it has become increasingly impossible to do meaningful work in a modern train.
I can't even open my laptop now to work on when there is someone sat next to me. Last trip from Manchester I couldn't even get the ticket out of my pocket without the chap who had sat next to me stepping into the aisle.
Unfortunately no longer true. Ever since BR, then Virgin, and now Avanti, each progressively squeezed up the seats to get more and more in, and replaced facing bays and tables with bus-style seating, it has become increasingly impossible to do meaningful work in a modern train.
The people from 55 Tufton Street who seem to get a lot of media airtime, despite having sod all mandate (how many tax payers are members of the “Taxpayers Alliance”?)
But now that politicians are generally “on message”, and the media needs outrageous/ provocative commentators to generate lots of phone calls/ tweets etc, it’s more common to get someone from (e.g.) the Institute For Economic Affairs on one side of the table and a fairly unrepresentative left wing voice like an Owen Jones on the other
I still think that an opportunity was missed when it was decided not to connect HS2 to HS1, and allow through passenger trains from Birmingham Curzon Street (and elsewhere) through the channel tunnel to Paris, Brussels and Amsterdam.
The construction of a completely new station would provide the opportunity to build the necessary border control and security infrastructure, and you could possibly have the situation that exists at Lille Europe where platforms can be opened up for domestic use, or closed off for international use.
A journey time of around three hours from Birmingham to Paris or Brussels would make it competitive with the airlines, in the same way that Eurostar services from London to Amsterdam seem to be weill patronised.
There are probably reasons why it wasn't done, and it is too late to amend the situation now, but as I say it is a missed opportunity.
In theory I’d like to agree, but then I remember how poorly used the “regional” services to Waterloo were in the 1990s, intended to give Manchester/ Cardiff etc a simple connection to Eurostar
So if we could have incorporated HS2 alongside HS1/ allowed through running then I’d be in favour, but I don’t think that I’d pay a billion pounds for that functionality
What HS2 seems to be now is a way of turning Manchester (and perhaps Birmingham) into dormitory towns for London. With that , eventually you'll see the same crazy property prices and see young locals forced out . So be careful what you wish for, as places like Manchester could soon have all the personality of Milton Keynes, and all the priceyness of London
The above two points are a great example of the way that people approach HS2 from the other end of the telescope to other projects
There’s no point in speeding up journeys, because people are so productive on trains that arriving any earlier is off no use? Imagine if we applied that approach to other projects?
I bet the Scousers will feel foolish when they realise that , instead of demanding a dedicated high speed spur from HS2 into Liverpool, they’d be better with a 100mph train to the capital instead
Same with the “dormitory” argument. Nobody seems to worry about towns like Galashiels/ Okehampton/ Blyth/ Tavistock etc losing their identity and becoming commuter suburbs for the nearby big city , but you think that HS2 will turn a C large place like Manchester into somewhere like Didcot , where most of the population heads out on a peak train to London in the morning and doesn’t get back until early evening?
One minute HS2 is only for rich businessmen, the next it’s going to be so heavily populated that it’ll drain our biggest cities of hundreds of thousands of people a day?
I’d argue that there are a lot of talented people who graduate from universities like Birmingham/ Manchester/ Leeds etc each year and have to move to London/ Home Counties because Central London is where the jobs are, and I’d argue that making a commute from e.g. Birmingham into London comparable with one from Braintree/ Basingstoke would help “Provincial” cities to retain that talent, making it more feasible to open new businesses outsider London, since there’s a highly skilled local workforce (some of whom have been commuting to London each day, but are more likely to take a job in the city they live in, if possible, much more likely than persuading Londoners to relocate)
It's always been of questionable value to the Tories. Right now I cannot see there is anything in it for them whatsoever, and minimal to no risk of taking the axe to it.
Losing the “business” vote could cost them badly, however tempting it might be for the Tories to become the UKIP-esque party that some noisy campaigners may demand
Or are we going to see complaints that (e.g.) the East West project should be scrapped because it won’t repay all of the infrastructure costs within the first year of operation?
Which is why it’s strange to see a Lot of people on here that are very Keynesian about other investment (insisting that we build new lines to pump jobs into the economy during any recession, wanting to bring forward reopenings to stimulate economic growth) want us to ditch HS2 because the economy is struggling
So we’ve moved on from “HS2 is only for rich businessmen” to “HS2 isn’t designed around rich businessmen” (and we should presumably base the train interior on one return service a day)?
It’s the same as the idea that we should be focusing on leisure demand more, as if there’s no leisure demand between the the biggest urban areas in England!
I know full well what QE is. The problem with QE is that it devalues your currency by diluting what's in the market - basically the same as if a business issues additional shares without being worth more. You CANNOT "just print money" unless everyone else is doing it so relative currency values stay the same (which is why countries doing it for COVID mattered less).
Devalues your currency?! I suggest you look towards other decisions of the past 12 years for the truth behind the decline of sterling there.
It’s not printing money and QE was just a window dressing for what’s been done ever since the inception of the BofE. There becomes a point where there’s not enough money in circulation and we’re now passed that point hence the forthcoming recession. Where do you think the multi-billion energy dividends go? They’re certainly not all back in the day-to-day economy.
== Doublepost prevention - post automatically merged: ==
In theory I’d like to agree, but then I remember how poorly used the “regional” services to Waterloo were in the 1990s, intended to give Manchester/ Cardiff etc a simple connection to Eurostar
Rachel Reeves posted this on Twitter this lunchtime: This means 70% of all pensioners are going to have the winter fuel allowance restored after not having it for one year. 30% will miss out. How is she going to find out who they are? Given the complexity of many taxpayers' affairs, there...
I bet the Scousers will feel foolish when they realise that , instead of demanding a dedicated high speed spur from HS2 into Liverpool, they’d be better with a 100mph train to the capital instead
I've said it before and I'll say it again - by far the most popular and cheapest way to give Liverpool a second train to London per hour would be to extend the LNR Crewe to Liverpool and to 12 cars (or a double 730). The combination of high comfort and low fares is an absolute winner. People even used it when it was a nearly 5 hour run via Birmingham! (And no, for operational reasons that should not return).
There are two possible paths it could go in, depending which it would fit best. The second Avanti path (that isn't happening any time soon if ever), or the second Birmingham path (same, that runs but terminates at Crewe leaving the path beyond Crewe unused).
Long distance daily commuting is NOT to be encouraged. It's bad enough in the South East.
Away from that, how do we make our railways great? Enough capacity, reasonable fares and quality accommodation are the key three. For CrossCountry, for example, an order of 8-car Class 802s with a low density interior would be perfect.
Or are we going to see complaints that (e.g.) the East West project should be scrapped because it won’t repay all of the infrastructure costs within the first year of operation?
I would probably not build the EWR Cambridge leg, personally, it's poor value for money in my view. The other leg is much cheaper as it was a refurbishment rather than total new build.
So we’ve moved on from “HS2 is only for rich businessmen” to “HS2 isn’t designed around rich businessmen” (and we should presumably base the train interior on one return service a day)?
It’s the same as the idea that we should be focusing on leisure demand more, as if there’s no leisure demand between the the biggest urban areas in England!
Rachel Reeves posted this on Twitter this lunchtime: This means 70% of all pensioners are going to have the winter fuel allowance restored after not having it for one year. 30% will miss out. How is she going to find out who they are? Given the complexity of many taxpayers' affairs, there...
Certainly a decision in 2016 has had a big effect. But that aside the last big devaluation was caused by major quantitative easing during the 2008 crisis. That was necessary - few would argue otherwise, but it DID have that effect.
I never mentioned government bonds though it certainly sounds like there is a magic money tree if the BoE buy back more bonds.
the government pays interest to the central bank which now holds the bonds, but the central bank returns this interest revenue to the government. Thus, when the central bank buys the government bonds, de facto, the government does not have to pay interest any longer on its outstanding bonds held by the central bank. The central bank’s purchase of government bonds is therefore equivalent to debt relief granted to the government.
Earlier this month, several major newspapers published a letter from more than a hundred economists calling for the ECB to cancel the government debt it holds. Paul De Grauwe argues that even if the ECB did cancel this debt, nothing of substance would change economically for national...
blogs.lse.ac.uk
THis probably needs a seperate thread so mods, feel free to move these posts.
Certainly a decision in 2016 has had a big effect. But that aside the last big devaluation was caused by major quantitative easing during the 2008 crisis.
Didn’t you earlier say that you can only create money (without devaluation) when other countries do. I think you’ll find 2008 was global and all other nations created new money too.
How do you think France has nationalised EDF and is restricting energy price increases to 4%?
Didn’t you earlier say that you can only create money (without devaluation) when other countries do. I think you’ll find 2008 was global and all other nations created new money too.
How do you think France has nationalised EDF and is restricting energy price increases to 4%?
Not by way of QE. It's not something individual European countries can do, it's a European Central Bank matter because it affects the whole Euro. The inability to do QE is why Greece and Portugal were hit so hard in 2008.
I think the "point" is as ever down the middle. His policies aren't realistic (they're a financial version of what Polly Toynbee would write in the Grauniad, and she wouldn't know reality if it fell on her from 35,000ft, her columns are mostly pure fantasy-land), right wing populism has also been disastrous. A sensible policy near enough always lies in the centre, but the madness of the 2020s is that everyone hates a centrist pragmatist.
You can move a bit left or right of centre (e.g. Blairism vs. Tory-Lib Dem coalition) but if you go too far either way, there lies dragons. Sense lies in closely managed but not austere public spending and tax levels honestly set to properly fund it.
Not by way of QE. It's not something individual European countries can do, it's a European Central Bank matter because it affects the whole Euro. The inability to do QE is why Greece and Portugal were hit so hard in 2008.
Eurostar was ideological - I don't necessarily disagree with that ideology, but it was - it was to bring us closer to an EU we were back then a willing part of. Building an LGV for slightly less than 2tph (as it was originally - the commuter services just use spare capacity) never made financial sense and never will.
So providing good transport infrastructure and services is idealogical now... The LGV and Channel Tunnel network as a whole between London and Paris /Brussels is used by a range of services. Thalys and TGV in France/Belgium, the road vehicle shuttles and general freight in the tunnel and the Kent domestics on HS1 run by South Eastern. The latter have become the predominant 'main line' for the East of the county and probably pay more in track access than Eurostar, considering the relative number of services. 'Spare' capacity IS capacity... period.
One important fact that should never be overlooked is that no matter what a project costs, a major proportion of the cost flows directly back to the Treasury. The workers pay income tax, they drive to work paying fuel taxes, they buy things which have VAT and other taxes. The companies doing the work pay corporation tax and so on... There was a study of the JLE which reckoned that something like 47% of the cost flowed directly back to the Treasury, ignoring the wider effect of all the jobs those people support when they spend their wages etc which increases that even further
Long distance daily commuting is NOT to be encouraged. It's bad enough in the South East.
Away from that, how do we make our railways great? Enough capacity, reasonable fares and quality accommodation are the key three. For CrossCountry, for example, an order of 8-car Class 802s with a low density interior would be perfect.
I think the "point" is as ever down the middle. His policies aren't realistic (they're a financial version of what Polly Toynbee would write in the Grauniad, and she wouldn't know reality if it fell on her from 35,000ft, her columns are mostly pure fantasy-land), right wing populism has also been disastrous. A sensible policy near enough always lies in the centre, but the madness of the 2020s is that everyone hates a centrist pragmatist.
You can move a bit left or right of centre (e.g. Blairism vs. Tory-Lib Dem coalition) but if you go too far either way, there lies dragons. Sense lies in closely managed but not austere public spending and tax levels honestly set to properly fund it.
I don’t disagree that going as left as some of his policies suggest at face value are a no no. However, if you read in depth then his key argument is that the UK has not created money for 40 years or more for normal domestic policy (austerity and poverty rule), yet there’s no hesitation when COVID, banks or pension funds come calling.
You can move a bit left or right of centre (e.g. Blairism vs. Tory-Lib Dem coalition) but if you go too far either way, there lies dragons. Sense lies in closely managed but not austere public spending and tax levels honestly set to properly fund it.
Tony Blair was terrible 'we got it wrong on immigration' and 'we didn't know how many were going to come' was a huge contributor to the Brexit vote and the Cameron Osboune austerity failing to invest in the country's future broke down trust more if it couldn't be broken enough anyway. Nick Clegg's countless lies adding to that. Yeah, centrist pragmatists are free of dragons... They are liars just as much as the hard left and right except they have an excuse to flip flop from left to right because they are close to the centre.
One important fact that should never be overlooked is that no matter what a project costs, a major proportion of the cost flows directly back to the Treasury. The workers pay income tax, they drive to work paying fuel taxes, they buy things which have VAT and other taxes. The companies doing the work pay corporation tax and so on... There was a study of the JLE which reckoned that something like 47% of the cost flowed directly back to the Treasury, ignoring the wider effect of all the jobs those people support when they spend their wages etc which increases that even further
Something that somehow hasn't been mentioned in this discussion is that the maximum reasonable government debt is relative to the size of the economy. So for the black hole it doesn't matter if a project increases debt, as long as the project (is predicted to) grow the economy sufficiently. Infrastructure projects, including HS2, are designed to do exactly that. Which is another reason why it isn't just about how much money is borrowed, but also about what that money is then spend on. Tax cuts for the rich (ala Kwarteng-Truss) are highly unlikely to grow the economy, no matter what Truss and Kwarteng believe, which is another reason why the consequences were so severe
Expenditure on infrastructure simply can't be compared with ongoing expenditure on salaries/the NHS. It's also not the case that £5-7bn is spent in one go - it is spread over several years. So really what we are talking about is perhaps £1bn a year for a couple of years. When divided across the 5.74m public sector workers, this would mean a £174 a year payrise - but only for a few years, after which the funding for the continuing higher salaries would need to be found elsewhere.
Part of the problem is people thinking that massive new infrastructure funding comes from the same pot of money as pay rises for public sector workers - it simply doesn't. It's not a choice between giving the whole NHS a pay rise or building HS2. Infrastructure like HS2 will bring economic benefits for centuries - benefits that wouldn't exist without the infrastructure - as has been the case for railways, roads and telecoms throughout the past centuries - and it's cost can be funded from those expected benefits.
If there's no demand for connectivity between London and the Midlands, maybe we should dig up the M1 and turn it into the biggest linear park in the world - would be good for our green credentials at least?
The real problem is that at least some of the people making the decisions need to be seen to be doing something. I'm not disagreeing with you about the economic reality of such projects, but the fact that all Joe Public will see is deep cuts being made. And if those cuts don't also impact on HS2, they are going to ask the politicians why. Is it the right way to do things, of course it isn't. But frankly successive governments have been contemplating HS2 for so long the simple cost of it has risen through inflation, and other rising costs to the point where if the rest of the economy is having to take a hit, few if any politicians will have the stomach to leave it intact.
Its a simple, harsh reality of politics. If something doesn't get off the ground and past a point of no return, it is always going to be liable to fall foul of a shift in economic fortunes. This is why I say I will be amazed if P2 gets even close to Crewe.
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