I’ve been struck in the last 24 hours by the comparisons being made between HS2 and the government’s other flagship infrastructure investment in superfast broadband. £530m has been allocated through BDUK to local partnerships across the country while HS2 is going to cost £33bn for its first phase alone connecting Birmingham and London, with the first trains not running until 2026. Whilst there has been criticism of the speed with which BDUK is making progress, despite its name, HS2 is positively testudinal (I had to look it up too).
This isn’t really comparing like with like. BDUK’s investment is only focused on fibre to the cabinet – not quite steam-age technology but not the ultra-fast fibre to the premises step-change which HS2 represents in railway terms. Estimates are that it might cost somewhere in the same territory as HS2 to provide ultra-fast across the country.
The economic case for neither of these investments has been conclusively made. There are plenty of people doubting the need for trains connecting London & Birmingham in 49 minutes and there are just as many wondering why on earth we need 24Mb/sec broadband to check emails and update your Facebook status. Infrastructure investments need to be both foresighted and level-headed. They must peer into the future using today’s metrics.
Nevertheless, the nagging question about returns on investment remain. The official cost benefit cost ratio for HS2 is 2.0 although CEBR estimate it is in fact likely to be a perilous 0.5.
Regeneris has done a fair amount of work looking at the potential impacts of broadband investment for BDUK pilots and projects across the country. Based on our bottom-up assessments of the local economic impacts attributable to expected FTTC, we believe returns on investment to the public sector might be in the territory of £6-12 of additional economic output (GVA) for every pound of BDUK money invested. This itself is based on pretty conservative projections of uptake and exploitation, and business growth numbers over a 15 year period.
Putting the economics to one side, my guts tell me HS2 is a good idea that just hasn’t been sold well. On reflection, HS2 case-making should perhaps have given greater prominence to long term rail capacity issues rather than the direct economic benefits of shorter travel times.
But the case for broadband is strong:
- the predictable impacts and returns are clearly positive
- the benefits are widespread and not confined to travellers between London & Birmingham
- the business effects permeate right across sectors and processes
- and there are untold innovations yet to emerge which will undoubtedly inflate the impacts from digital connectivity even further.
The irony is that communicating and trading across the globe by digital means inevitably leads to people also wanting to meet in person. Now how could we quickly make that happen????
Perhaps HS2 and broadband are not competing commitments after all. One drives the other and a case can be made for both?
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