The government should ditch Crossrail to help balance the books

The British government unwisely entered the current slowdown with a sizeable budget deficit. Recent bank bailouts are likely to push the national accounts further into the red and increased borrowing may put upward pressure on interest rates. Yet the obvious solution, increasing taxes, would harm businesses and hinder economic recovery. Cutting public spending should therefore be the preferred policy option when the Treasury takes action to balance the books.

 
Crossrail, a project to improve links between East and West London, should be one of the first casualities of tighter fiscal conditions. The cost has been estimated at £16 billion. But given the disastrous history of big government projects this seems likely to rise to £20 or even £30 billion – mostly paid for by taxpayers.

 
Despite the huge sums involved, and even if its very ambitious service targets are met, the scheme will deliver only a relatively small enhancement to the capital’s transport capacity. The time savings are limited in most instances and the project will drain resources from more cost effective incremental measures, such as speeding up existing tube lines by closing under-used stations.

 
The most efficient way of tackling congestion on London’s public transport network is to use the price mechanism. Peak-time fares, including season tickets, should be raised where overcrowding is a problem. This would encourage economic activity to disperse to quieter times and less congested locations, making better use of the existing network. Passengers rather than general taxpayers should also pay maintenance and improvement costs.

 
Having dispensed with Crossrail, the government might also consider whether the 2012 Olympic Games should be run on a wholly commercial basis.

Five of the six large government projects I looked at in ‘They Meant Well: government project disasters’ [Hobart Paper 160, 2007]ended up costing taxpayers about twice the ‘planned’ amount. A similar scale of overspending is not uncommon for large transport projects: the Channel Tunnel cost 87 per cent over budget (though this was not at taxpayers’ expense). One ‘lesson’ from my book was that governments find it hard to abandon projects (the first Channel Tunnel project being an exception).

Agree with comments on Crossrail.However the price mechanism comments on Tube are ridiculous. Your argument is as mis-guided as hardened socialists demanding huge tax increases on the rich.If the cost of travel increases where there is little alternative – this will create wage inflation in central London. Businesses will be encouraged to move overseas rather than change their hours or move to the periphery to keep their costs down.

I won’t comment on whether I agree with Richard about tube prices but it is not a “ridiculous” argument. Space is scarce in London – road space, rail space, office space, tube space. Tube space should not be artificially under-priced. Because the tube is a monopoly and controlled by the same entity that controls its competitors, it is difficult to know whether the price is too high, too low or just right. If it is too low, taxes would be too high – which does not help businesses either.

I understand that govt. is short of fund for Cross rail project , could some explain to me if this the case, then why they keep buying building on Cook’s Rd, Stratford which they only need for temporary basis.

Sonia – the government appropriates property along new transport routes a long time before construction actually begins through the compulsory purchase procedure. Unfortunately this means if the project never goes ahead the properties may remain abandoned or used as temporary accommodation for ‘homeless’ families on benefits. Some houses along the North Circular road have been boarded up for years after the Department of Transport bought them for planned road widening schemes that never took place. The UK, saddled with debt, can no longer afford Crossrail, which is a wasteful, uneconomic scheme anyway – so there is a danger that property will end up derelict for no reason.

Five of the six large government projects I looked at in ‘They Meant Well: government project disasters’ [Hobart Paper 160, 2007]ended up costing taxpayers about twice the ‘planned’ amount. A similar scale of overspending is not uncommon for large transport projects: the Channel Tunnel cost 87 per cent over budget (though this was not at taxpayers’ expense). One ‘lesson’ from my book was that governments find it hard to abandon projects (the first Channel Tunnel project being an exception).

Agree with comments on Crossrail.However the price mechanism comments on Tube are ridiculous. Your argument is as mis-guided as hardened socialists demanding huge tax increases on the rich.If the cost of travel increases where there is little alternative – this will create wage inflation in central London. Businesses will be encouraged to move overseas rather than change their hours or move to the periphery to keep their costs down.

I won’t comment on whether I agree with Richard about tube prices but it is not a “ridiculous” argument. Space is scarce in London – road space, rail space, office space, tube space. Tube space should not be artificially under-priced. Because the tube is a monopoly and controlled by the same entity that controls its competitors, it is difficult to know whether the price is too high, too low or just right. If it is too low, taxes would be too high – which does not help businesses either.

I understand that govt. is short of fund for Cross rail project , could some explain to me if this the case, then why they keep buying building on Cook’s Rd, Stratford which they only need for temporary basis.

Sonia – the government appropriates property along new transport routes a long time before construction actually begins through the compulsory purchase procedure. Unfortunately this means if the project never goes ahead the properties may remain abandoned or used as temporary accommodation for ‘homeless’ families on benefits. Some houses along the North Circular road have been boarded up for years after the Department of Transport bought them for planned road widening schemes that never took place. The UK, saddled with debt, can no longer afford Crossrail, which is a wasteful, uneconomic scheme anyway – so there is a danger that property will end up derelict for no reason.

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