Blog 27th August 2019

Blog 27th August 2019

In this week’s blog, I refer to: HS2; Grant Shapps; Boris Johnson; Ministry for Housing, Communities & Local Government (MHCLG); HM Treasury; Right to Buy; Council Housing; Local Government Association (LGA); Leeds City Council; Children’s Commissioner for England; Service Charges; Seminars & Training.

The government’s decision to review the HS2 rail project is in the news this week. This review was announced by Grant Shapps, Secretary of State for Transport, who said that he was asking the enquiry to advise on whether to continue or to terminate the project and to:

"Go and find out all the information that's out there… genuinely what it would cost to complete this project, and then we'll be in a much better position to make that decision - go or no-go by the end of the year."

He also commented that:

"Just because you've spent a lot of money on something does not mean you should plough more and more money into it... we need to have a look at HS2, we need to make sure that it is under control, that the money is being well spent.”

Boris Johnson, the Prime Minister said that:

"I want him to look at it. I want him to look at the profile of the spend, to establish if there’s waste and whether it could be re-profiled in any way… But I want to stress to everybody that, look there’s no-one more fanatical about major infrastructure projects than me ... I’m going to hesitate for a long time before scrapping any major infrastructure project."

An HS2 Train

HS2 Ltd is a public company, set up to build a new high-speed line linking London, Birmingham, Manchester and Leeds. It is funded by the taxpayer. The line was due to be built in two phases, beginning with a new railway linking London and Birmingham. This would be followed by a second phase taking services from Birmingham to Manchester and Leeds. Phase one of the development was due to open at the end of 2026, with the second phase scheduled for completion by 2032/33.

In my view this issue exposes some fundamental weaknesses in the way the United Kingdom is governed:

• First, a lack of understanding. High speed rail is about long distance rail journeys. For example, ICE trains connect all major cities in Germany and many cities in neighbouring countries; SJ high-speed trains travel directly from Stockholm to Copenhagen via the longest road and rail bridge in Europe - the stunning Öresund Bridge; while China has more high speed railways than the rest of the world including one that connects Beijing with Shanghai (a distance of 1,300km) in 4½ hours. However, British politicians and policy makers don’t appear to see the potential focusing instead on reducing journey times on the 200km trip from London to Birmingham that already takes less than 1½ hours and would be reduced to just over one hour. High speed rail is not about journeys such as London to Birmingham, it is about journeys such as from Glasgow to Berlin or Leeds to Rome!
• Second, a lack of ambition. While the rest of the world already has high speed rail, timid Britain hopes to open the 200km of track between London and Birmingham in 2026 and to open a further 140km to Manchester in 2033. This is a pathetically small scheme being delivered on a timescale that would look slow in a snail race. It is suspected that one reason for the review is to manage politically the ‘nimbys’ who live near the proposed route in the home counties. It underlines the small-minded, ignorant, parochial, insular, short-term and penny-pinching approach of the United Kingdom state. The idea that Britain has any ambition to be ‘modern’ or ‘global’ is laughable.
• Third, a lack of project management skills. As already noted, Britain is already well behind the field and is falling further behind. The project started over ten years ago but progress has been slow and it has now stalled. The original budget was for £33billion, but this has already had to be increased to £56billion. Latest estimates are that the actual cost will be between £75billion and £85billion, but Boris Johnson has also said that he expects costs to reach £100billion. Already £7.4billion has been spent but the government is still dithering about whether it wants to see the project through to its conclusion. As noted above, the Secretary of State admits that the government still doesn’t know how much the scheme would cost and is prepared to write off the £7.4billion already spent depending on the outcome of their review. However, the government wants to carry out a detailed review during the impossible timescale between August and the autumn. Yet again the United Kingdom state is demonstrating its inability to manage large-scale infrastructure projects effectively.
• Fourth, a lack of operational skills. Anyone who, like me, travels often by train, will know that Britain’s railway companies struggle to run trains on time; not only on inter-city routes such as Glasgow to London; but on local routes such as Liverpool to Manchester or Leeds to Carlisle. If there is a lack of expertise to run the existing rail network, what evidence is there that there would be enough expertise to run a high-speed rail network? Would the high-speed train from Birmingham to London be thirty minutes late and therefore take longer than an existing train that ran on time?

I think this is yet another example that illustrates that the United Kingdom state is not ‘fit for purpose’. We need radical reform!

In my response to the Ministry for Housing, Communities & Local Government (MHCLG) Green Paper on Social Housing last November, I argued that Local authorities should be given more flexibility over the management of ‘right to buy’ and ‘right to buy’ receipts should be localised. Currently, councils must offer tenants the ‘right to buy’ their homes with large discounts with most of the proceeds being taken by HM Treasury and not being available to fund new council homes.

I am pleased to see that the Local Government Association (LGA) has joined me in calling for reform of ‘right to buy’ so that councils would keep all the receipts from homes sold under the scheme. As the LGA points out, the number of homes councils can build ‘continues to dwarf’ the homes sold under ‘right to buy’. During the last quarter of 2018/19 local authorities in England sold 2,612 homes under ‘right to buy’ but only 1,406 were started on site or acquired as part of the ‘right to buy’ replacement policy, according to the MHCLG. This is despite councils building 2,560 homes in 2018/19, the most since 1992/93 when they built 2,580 homes, but far fewer than the 100,000 to 200,000 homes a year that were built in the 1950s, 1960s and 1970s.

Leeds Civic Hall, where Leeds City Council is based. I worked in the Finance Department at Leeds City Council in the 1980s.

Councillor Judith Blake (Labour, Leeds City Council), the LGA’s housing spokesperson, told the ‘Public Finance’ magazine that:

“The number of new council homes being built is not able to keep pace with those sold under Right to Buy. (The policy) continues to enable many families to achieve the dream of getting on the housing ladder and owning their own home, but it urgently needs reform.”

She also said that if councils were able to retain all the receipts from ‘right to buy’ this would:

“Allow them to replace the social rented homes sold, which would help avoid families being pushed into the private rented sector, reduce homeless and housing benefit and enable people to save up for their own home.”

This follows a report from the Children’s Commissioner for England that found that children were living in unsuitable accommodation, including shipping containers, because local authorities did not have enough temporary accommodation. The commissioner called on the government to invest ‘properly’ in housebuilding to reduce homelessness.

A copy of my response to the MHCLG consultation on its social housing green paper can be viewed or downloaded by clicking here.

Our next seminar is on ‘All You Want to Know about Service Charges in Social Housing’. It will be held in London on 1st October 2019. This is a very useful introduction and overview of this very important subject. For further information or to make a booking, please click here.