Update on HS2

[petagny]

The UK National Audit Office has been reviewing progress on preparations for the second high speed rail link.

This is the conclusion on value for money:

Since we reported in 2013 the Department and HS2 Ltd have made significant
progress in preparing to deliver the programme. However, HS2 Ltd has struggled to
meet the overly ambitious timetable set for it by the Department for buidling delivery
readiness, while also developing the programme. This will add to the challenge of
delivering an already ambitious programme over the next few years. The programme is
now facing cost and schedule pressures and, in response, the Department and HS2 Ltd
are considering the impact of extending the phase 1 schedule by up to twelve months.
Unless the Department and HS2 Ltd make forthcoming decisions promptly, with greater
realism about timetables and full understanding of the trade-offs between costs,
schedule and benefits, including the impact on the wider network, value for money
will be at risk.

[John Short]

There is much on HS2 on the PFM Board – search HS2! I have chosen just this one to continue the debate.

First there was the Liz Truss - -Kwasi Kwarteng “mini budget” of 23 September 2022 which would have had mostly D scores in PIs 14 to 16 of the PEFA Framework.

Now there is abandonment of the second phase of HS2 from the West Midlands to the Northern West Midlands with the third phase to the Northern Central Midlands having already been scrapped.  What score on PI-11 Public Investment Management for the biggest investment of a generation?  While this may be a retrospective critique it must question the consideration of alternative scenarios in terms of costs and benefits and alterative investment.  Were these carried out, or has the wisdom of Petagny been prophetic in his various posts? 
And of course the Northern Powerhouse Rail connecting the West and East of the Northern Midlands is a misnomer to satisfy political expediency or really to create a camouflage.


To ensure political equality: has the Labour Party found a novel way of increasing spending on education by proposing that fees for private education be subject to VAT.  It may be if the receipts are added to the education budget as proposed, but a bigger contribution would be from the tax expenditure resulting from the continuation of no VAT on publicly funded school expenses!  Is that ever measured?  Is this a good way to increase spending on health with a similar proposal?  Or is this a fudging of basic tax policy principles?

[Napodano]

'fees for private education be subject to VAT'

Interestingly this fiscal option is currently considered in Albania.

I see it as a way of 'earmarking revenues' which in the past was a no-no option. Yet, in these times of current and future increasing public expenditures, revenue earmarking may be palatable as part of a fiscal contract with citizens: 'we tax you more in exchange of better services'. That seems one of the messages coming from the recent ODI conference.
On this subject go and check Marc Robinson's speech at 
https://www.linkedin.com/posts/marc-robinson-4012081b_do-we-need-a-new-public-finance-agenda-for-activity-7115340823218507776-Ka8d?utm_source=share&utm_medium=member_desktop
   
The issue for me is the credibility of a fiscal contract, which implies long term commitments, in a such divisive and unstable political environment