Paxo stuffing, part 4

(… continued from Paxo stuffing, part 3, posted on 19 Jun 2015).

In my discussion of the letter sent by Sir David Higgins to the Financial Times I have reached the fourth sentence.

Sir David says:

“[Mr Paxman] might also want to consider why productivity in countries such as France, Germany and the Netherlands, which have invested in high-speed rail, is higher than in this country.”

I say:

Mr Paxman may well want to contemplate this matter, but I fear that he is unlikely to come to any supportable conclusions. Sir David is correct in two respects, the three countries that he cites all have mature high-speed rail systems and the table of normalised GDP per hour worked has all three ranked higher than the UK; for the year 2013 the UK holds thirteenth place, and the Netherlands, France and Germany lie in the fifth to seventh ranked places.

However, the implication in Sir David’s sentence is that there is a direct correlation between the extent of the investment in high-speed rail by a country and that country’s consequent rating in the productivity table. If this is what Sir David is claiming, then he is clearly overplaying his hand. Even the Government does not go this far in its document justifying HS2 (The Economic Case for HS2) – not, I think it is fair to say, a publication that is given to understating the advantages of HS2. This document contents itself with the somewhat more modest proposition, in paragraph 8.1.9, that HS2 “could offer the potential for additional benefits … through increased productivity”.

In its report the House of Lords Economic Affairs Committee (EAC) examines the claims made for the potential for HS2 to have a positive impact on economic activity in Chapter 6, Will HS2 stimulate economic growth? and in paragraph 247 of this report, the Committee records its general conclusion:

“Evidence we have heard shows that investing in transport infrastructure does not necessarily lead to economic growth. Improvements in transport infrastructure need to be carefully chosen and linked with other policies to ensure that money is spent where it can be most effective in stimulating growth.”

I would suggest that, if he were to take account of this conclusion when acting upon Sir David’s invitation to consider the UK’s failure to achieve the productivity rates of countries such as France, Germany and the Netherlands, Mr Paxman might well conclude that the reasons are likely to be many and complex. He may be tempted to reflect that, whilst the quality of communications between cities is likely to be a contributing factor in determining the level of economic activity and productivity, rail travel still only accounts for around 15% of trips of 25 miles and over within England (see footnote) and improving the quality of rail links is, accordingly, only likely to have a marginal affect.

Mr Paxman may also be helped in his contemplation of Sir David’s observation by comments made to the EAC by “an expert on French high speed trains”, and summarised in paragraph 246 of its report, as meaning that “it was difficult to attribute increases in economic activity [in France] to the construction of the TGV network”.

Sir David also needs to look at the positions of some other countries in the productivity league table. Surely if developing a high-speed rail network was the key to success then Spain, a country that has invested heavily in the technology, should be higher than its current seventeenth position. Even more significant is the case of Japan, the birthplace of high-speed railways, which is languishing in twentieth place.

The flip side of the same coin can be seen in the cases of Norway and the United States. The former has less high speed track laid than the UK at present, and the operating speeds barely merit the tag “high speed”, nevertheless Norway stands at number one in the productivity league. The United States, where high-speed rail has barely a toehold, is third in the table.

Of course, reasons can no doubt be found to explain the successes and failures of the economies of these four particular nations, but I doubt that the level of development of high speed rail achieved by each will be prominent amongst them.

(To be continued …)

Footnote: Refer to Table NTS0308, Trips by length and main mode England 2013, published by the Department for Transport.

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