Heathrow expansion vs. high-speed rail

The Conservative Party has proposed an alternative to the £9 billion expansion of Heathrow. A high-speed rail line would be constructed along the route London-Birmingham-Manchester-Leeds to reduce pressure on the airport by lowering demand for domestic flights.

Yet there is a fundamental economic difference between the two options. Whereas Heathrow’s third runway will be privately funded by the airport’s owners, the high-speed line will be funded by taxpayers.

Its estimated cost is £20 billion. But given the history of big government projects and the fact that extensive tunnelling will be required – probably in the cities and certainly under the Pennines – £30 billion plus seems like a more realistic estimate.

It will be impossible for fares to cover the capital costs. On current figures, this would require the allocation of more or less all the passenger revenue from the UK’s entire inter-city rail network. In reality, of course, most railways struggle to cover even their running costs with ticket sales and require additional operating subsidies.

High-speed rail also offers poor value compared with roads. £30 billion would perhaps buy 1,000 miles of motorway, which, if sensibly located, could be expected to carry more passengers and freight than the entire rail network. And the funding could be entirely private, paid for by tolls, particularly if competing routes were also priced.

Finally, the environmental case for high-speed rail is greatly exaggerated. Running at 180 mph uses far more energy than at conventional speeds and the saving compared with air travel is likely to be small. While electric trains can be powered using renewable energy or nuclear power (hence the claims of low carbon emissions), given the limited capacity of such generation the additional demand created will almost certainly require extra fossil-fuel consumption to supply existing customers.

23 January 2009, IEA Blog


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