Is every food parcel a nail in HS2's coffin?

[whole diary]

[grahame]

"Is every food parcel a nail in HS2^▸ (The next High Speed line(s))'s coffin?" asks Patrick Burns of the BBC^» (British Broadcasting Corporation - home page).

[l-o-n-g snip] ...

But eventually ministers will have to do the sums and face up to the immense challenge of repairing the economic damage that their own "unprecedented intervention" has caused.

It follows that there will have to be a new day of reckoning for all those big-ticket services and projects.

And that could well include High Speed Rail, whatever ministers may have decided in February.
That was before the dawning of this "new normal".

[Bob_Blakey]

"Is every food parcel a nail in HS2^▸ (The next High Speed line(s))'s coffin?"

It may very well turn out that way, but such an approach will just provide me with more evidence that our current administration is not worthy of my vote. Permitting a transient, albeit serious, difficulty to derail ( ) a major part of the government's infrastructure programme would, in my view, be a major abrogation of political responsibility.

[RichardB]

"Is every food parcel a nail in HS2^▸ (The next High Speed line(s))'s coffin?" asks Patrick Burns of the BBC^» (British Broadcasting Corporation - home page).

[l-o-n-g snip] ...

But eventually ministers will have to do the sums and face up to the immense challenge of repairing the economic damage that their own "unprecedented intervention" has caused.

It follows that there will have to be a new day of reckoning for all those big-ticket services and projects.

And that could well include High Speed Rail, whatever ministers may have decided in February.
That was before the dawning of this "new normal".

 

That's a pretty extreme comment from Patrick Burns about blaming the economic damage on the Government's "unprecedented intervention".  In my view, it's plain wrong too.  The Government needed to step in otherwise the damage would be much, much worse.

As for HS2, I don't see any change.  It's a long term project, to be paid for over the long term, and has already been included in the Government's budget calculations.  It provides a lot of work for individuals and companies.  Opponents can hope but I'm confident those hopes will be dashed.

[SandTEngineer]

We seem to have two topics discussing HS2^▸ (The next High Speed line(s)).  The latest news (03 April 2020) is here: http://www.firstgreatwestern.info/coffeeshop/index.php?topic=5138.msg285406#msg285406

[TaplowGreen]

"Is every food parcel a nail in HS2^▸ (The next High Speed line(s))'s coffin?"

It may very well turn out that way, but such an approach will just provide me with more evidence that our current administration is not worthy of my vote. Permitting a transient, albeit serious, difficulty to derail ( ) a major part of the government's infrastructure programme would, in my view, be a major abrogation of political responsibility.

For "transient, albeit serious" read "biggest challenge the Nation has faced since 1940" - any responsible administration will by necessity have to re-examine all big ticket expenditure projects in the aftermath taking into account the new economic landscape, and £100 billion + is big ticket by any definition.

If you find such an approach unworthy of your vote, you may struggle to find a party to vote for.

Events, dear boy, Events.

[Robin Summerhill]

"Is every food parcel a nail in HS2^▸ (The next High Speed line(s))'s coffin?"

It may very well turn out that way, but such an approach will just provide me with more evidence that our current administration is not worthy of my vote. Permitting a transient, albeit serious, difficulty to derail ( ) a major part of the government's infrastructure programme would, in my view, be a major abrogation of political responsibility.

For "transient, albeit serious" read "biggest challenge the Nation has faced since 1940" - any responsible administration will by necessity have to re-examine all big ticket expenditure projects in the aftermath taking into account the new economic landscape, and £100 billion + is big ticket by any definition.

If you find such an approach unworthy of your vote, you may struggle to find a party to vote for.

Events, dear boy, Events.

Well that is certainly one way of looking at it.

The major difference between HS2 and the current economic situation is that it is not being funded by a pot of government money that is just sitting in their bank accounts (not that cirrent levels of expenditure is, either, but don't jump down my throat just ye!), but by long term loans that will  eventually see some return on capital investment by way of fares. This is not necessarily the case at the moment with the crisis, because much of the money that the overnment is spending is unlikely to be seen again.

My first thought when I saw the article that started this threa off was "beware the bandwagon-jumpers." A couple of weeks ago our local BBC^» (British Broadcasting Corporation - home page) news programme interviewed somebody who was saying that work on Hinkley C Power Station should stop because of covid-19. The only thing was, he was part of the "Stop Hinkley C" campaign.

Well well well, who'd a thunk it?

[IndustryInsider]

No point at all speculating on whether the current crisis will change the recent government decision to proceed, as we have absolutely no idea how long comprehensive travel restrictions will be in places and how travel patterns will settle down after it's 'over'. 

I agree with TG that many things will have to be re-examined, but an initial fall off doesn't necessarily make it sensible to cancel in the longer term, especially when you consider the boost to engineering, construction and supply companies that it gives.  After all, it didn't take too long for the airline industry numbers to recover from the September 2001 attacks, see the first graph here: https://data.worldbank.org/indicator/is.air.psgr?end=2018&start=1970&view=chart - though, depending how long it lasts the effects of the virus are quite possibly going to be far more profound.

[Sixty3Closure]

It's unlikely but I'm hoping the recovery might see more responsible corporate governance. No more 8 figure bonuses for Executives whilst they complain about paying people a living wage.

Some companies have responded by cutting exec salaries but others like the banks have had to be forced into it so I'm not hopeful.

The last financial crash didn't seem to make much different to the excesses of corporate culture.

[Bmblbzzz]

It will depend on political decisions and as mentioned on post-covid travel patterns, which are likely to develop in the long term. Governments spending money now doesn't mean they can't spend it later; quantitative easing / magic money tree / new deal policies / whatever you want to call it, is the choice around the world right now.

[ellendune]

It will depend on political decisions and as mentioned on post-covid travel patterns, which are likely to develop in the long term. Governments spending money now doesn't mean they can't spend it later; quantitative easing / magic money tree / new deal policies / whatever you want to call it, is the choice around the world right now.

It used to be called Keynesian Economics after John Maynard Keynes a Cambridge Professor who founded the subject of macroeconomics in the 1930's. Keynesian economics was as Bmblbzzz points out the basis for Roosevelt's New Deal and later the Marshall Plan to rebuilt Europe after WW2. It was considered orthodoxy until the monetarists came along in the 1980's.  The failure of austerity was already making it more popular again and I think Covid-19 is likely to seal this.   

The basis of the theory is that if every time someone buys something most of the money is passed on to someone else in wages and they then spend that so that other people get wages.  For this to work we need the money to go to people who will spend it (typically not the rich who will tend to save it) and on things where the proportion of the cost used to pay wages is highest. Also spending it where the wages will be paid in this country. 

So what is the thing governments can spend money on that best meets these criteria?  The answer now as it was in the 1930's is construction.  In the 1930's government built roads  and lent money to the railways to do massive investment in rail improvements.  If the war had not stopped it this would have included the Dawlish cutt-off.

[Bmblbzzz]

Oh yes, J.M. Keynes. Most people think of him in connection with Milton Keynes, "the only town in the known universe named after two economists". I think of him every time I can't remember how to spell Keyn(e)sham.

[TaplowGreen]

It will depend on political decisions and as mentioned on post-covid travel patterns, which are likely to develop in the long term. Governments spending money now doesn't mean they can't spend it later; quantitative easing / magic money tree / new deal policies / whatever you want to call it, is the choice around the world right now.

It used to be called Keynesian Economics after John Maynard Keynes a Cambridge Professor who founded the subject of macroeconomics in the 1930's. Keynesian economics was as Bmblbzzz points out the basis for Roosevelt's New Deal and later the Marshall Plan to rebuilt Europe after WW2. It was considered orthodoxy until the monetarists came along in the 1980's.  The failure of austerity was already making it more popular again and I think Covid-19 is likely to seal this.   

The basis of the theory is that if every time someone buys something most of the money is passed on to someone else in wages and they then spend that so that other people get wages.  For this to work we need the money to go to people who will spend it (typically not the rich who will tend to save it) and on things where the proportion of the cost used to pay wages is highest. Also spending it where the wages will be paid in this country. 

So what is the thing governments can spend money on that best meets these criteria?  The answer now as it was in the 1930's is construction.  In the 1930's government built roads  and lent money to the railways to do massive investment in rail improvements.  If the war had not stopped it this would have included the Dawlish cutt-off.

Given that it's taken a huge uplift in public spending to lift the UK^▸ (United Kingdom)'s growth forecast to 1% this year (prior to Corona virus), and given the colossal cost of the Corona virus to the Government and overall economy, how, and by how much would you say Government spending would have to increase to reach a similar growth figure to that which existed in the period you allude to in the 1930s? (circa 4%), particularly since Business investment is predicted to fall thanks to Brexit etc.

[ellendune]

Given that it's taken a huge uplift in public spending to lift the UK^▸ (United Kingdom)'s growth forecast to 1% this year (prior to Corona virus), and given the colossal cost of the Corona virus to the Government and overall economy, how, and by how much would you say Government spending would have to increase to reach a similar growth figure to that which existed in the period you allude to in the 1930s? (circa 4%), particularly since Business investment is predicted to fall thanks to Brexit etc.

A very good question. The simple answer is it depends what they spend it on. Look for investment in new hospital buildings, roads, rail, and possibly also housing. 

However I suspect the development of and industrial policy will be much more of complex affair post Corona Virus.  The fact that we were reliant on imports from a very few suppliers for some key goods may drive a industrial policy away from the ultra free-marketeers.  More so if the US carries on its reported policy of hijacking of goods destined for other countries in various parts of the world especially where they are made by US companies.  Increasing UK manufacture of essential goods will go down well in the Tory northern wall seats. 

Even before the Corona Virus there have been shortages of some drugs because of quality issues at a single manufacture, because drug companies had consolidated manufacture in one place.   

[Bob_Blakey]

...If you find such an approach unworthy of your vote, you may struggle to find a party to vote for. ...

Correct answer! 

[TaplowGreen]

Given that it's taken a huge uplift in public spending to lift the UK^▸ (United Kingdom)'s growth forecast to 1% this year (prior to Corona virus), and given the colossal cost of the Corona virus to the Government and overall economy, how, and by how much would you say Government spending would have to increase to reach a similar growth figure to that which existed in the period you allude to in the 1930s? (circa 4%), particularly since Business investment is predicted to fall thanks to Brexit etc.

A very good question. The simple answer is it depends what they spend it on. Look for investment in new hospital buildings, roads, rail, and possibly also housing. 

However I suspect the development of and industrial policy will be much more of complex affair post Corona Virus.  The fact that we were reliant on imports from a very few suppliers for some key goods may drive a industrial policy away from the ultra free-marketeers.  More so if the US carries on its reported policy of hijacking of goods destined for other countries in various parts of the world especially where they are made by US companies.  Increasing UK manufacture of essential goods will go down well in the Tory northern wall seats. 

Even before the Corona Virus there have been shortages of some drugs because of quality issues at a single manufacture, because drug companies had consolidated manufacture in one place.   

I guess everyone is a Keynesian in a foxhole