(Bloomberg Opinion) -- To anyone who has followed the decade-long saga of Britain’s ambitious high-speed-rail project, known as HS2, the recent news that it’s at least five years behind schedule and 20 billion pounds ($25 billion) over budget shouldn’t come as a surprise. It should serve as a cautionary tale for policy makers dreaming of big projects at public expense.
Understand at the outset that all such projects — good and bad alike — arouse intense political controversy. That’s inevitable, because many people are affected and they have competing interests and different priorities. The political heat almost always leads planners to exaggerate the benefits and underplay the costs. Nonetheless, big ambitious projects aren’t always mistakes. Often, once they’re built, they’re seen as useful — and sometimes, before too long, they’re seen as indispensable.
Even allowing for that standard pattern of optimism and altercation, HS2 is a notable case. Its problems started early. From its planning phases, it was variously billed as a job-creation strategy, a timesaver for commuters, a way to lighten the load of existing rail links, a carbon-reduction strategy, and a means of regenerating struggling communities. So often did the principal rationale change, as criticism mounted, that the project began to be called a solution in search of a problem.
Such elaborate promises are usually a sign of unclear goals. Around the world, high-speed-rail projects have been sold as a way to link large urban hubs with outlying regions, create jobs, improve the environment, spur economic development, boost productivity and even help with housing affordability. But such projects only make sense as part of a broader strategic vision for infrastructure: Considerations such as population density, distance and available alternatives all must play a role in determining a project’s value and purpose.
Optimism bias is always a factor, but HS2 seemed determined to set new records. The government’s timetable was unrealistic, its business model and traffic forecasts proved unreliable, and its cost estimates were wildly low-balled. In 2016, the National Audit Office found that the first phase has already run 204 million pounds over the forecast, and the estimated costs of the second exceeded available funding by 7 billion pounds. The expense of buying up land and property for the route was also grossly underestimated. As the problems mounted, mistrust justifiably set in.
Difficult as it might be, the best way to avoid such disappointments is to be honest about costs and clear about who will gain and over what time frame. That’s not always obvious many years in advance, or even a simple matter of cost-benefit analysis. But HS2 underlines the importance of communicating policy decisions as clearly and transparently as possible. Documents obtained by the BBC suggest that the government was aware for years that the project had big problems. Had officials been upfront about the costs, the slipping timetable and the disruption the work would cause, the subsequent pushback would have been milder.
Here’s another lesson. Rushing the crucial early stages of feasibility studies is a big mistake. Planners may give insufficient weight to better and more cost-effective options, such as improving existing rail infrastructure or modifying routes. Once a course of action is decided, heels dig in. As far back as 2013, members of Parliament were criticizing the Department for Transport for taking a “rushed approach” to HS2 and “making huge spending decisions on the basis of fragile numbers, out-of-date data and assumptions which do not reflect real life.”
Big public projects are often worth doing. And it bears mentioning that, with interest rates as low as now, there’s rarely been a better time to undertake them. But too often, governments are apt to dream big, promise the world and leave the details for later. Grand visions are surely welcome. But in government work, you should never neglect the tiresome details.
Editorials are written by the Bloomberg Opinion editorial board.
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