It’s not HS2 that’s going to boost the North’s economy

One of the most reliable indicators of meaningless guff from politicians is “rebalancing the economy”. It usually refers to two things, which are connected. One is the dominance of London and the South-east. The other is the importance of financial services rather than manufacturing. The phrase is what the late Philip Gould, the Labour pollster, called a “nodalong”. It would be easy to get his focus groups to nod along with it. It sounds as if it is a good thing.

It is not necessarily so. Depending on what kind of rebalancing you mean, it may not be a good thing at all. And even if it were a good thing in theory, it might be somewhere on the Richter scale of difficulty between the two-state solution in Israel-Palestine and impossible.

Rebalancing the economy away from financial services, for example, is a terrible idea. We are good at banking, and the reason manufacturing has declined as a share of the economy is that labour is cheaper in Guangzhou and Hanoi. Trying to “rebalance” the economy away from things in which we have a competitive advantage and towards those in which we are at a disadvantage is a policy at which we should shake our heads.

The other kind of rebalancing is the attempt to close the North-South divide. People have been talking about this for a long time. For all we know, Hadrian’s Wall could have been an early Keynesian project intended to increase activity in the North. They have certainly been talking about it all my adult life, and although places such as Liverpool, Sheffield and Newcastle are pleasanter now than in the 1970s and 1980s, the income gap between the average person in the North and that in the South has continued to widen.

Hence the immense attraction of the plan for a high-speed rail line from London to Glasgow. Its main selling point is that it would help to rebalance the economy in favour of the North by giving it fast access to London and the Continent – although Peter Mandelson admitted last month that the decisive reason Gordon Brown’s Cabinet backed it in the run-up to the last election was that it is dead modern, forward-looking and shiny. It was, he wrote in the Financial Times, a “politically-driven” decision intended to “paint an upbeat view of the future” after the recession.

Everyone points out that it would be difficult for Ed Miliband to turn against it because he has appointed Andrew Adonis, who launched the scheme as Transport Secretary, to head Labour’s “growth review”. But it is worth remembering that Miliband himself was one those most enthusiastic about HS2 as a symbol of modernity when he was in charge of drawing up Labour’s manifesto.

However, building a new railway just because it will look futuristic cannot be a good enough reason, which is why Labour is now edging away from the project. Maria Eagle, the shadow Transport Secretary, said yesterday that she didn’t like the route of HS2 through north London and wanted to change it, “even if it were to delay the start of phase one”.

On the other hand, the one thing that could persuade me that HS2 was a good idea is that the Institute of Directors came out against it yesterday. This is not because I think the institute may be the official wing of the (so-called) Taxpayers’ Alliance, but because it selectively cited a survey of its self-selected members to make the case. The online survey found only 27 per cent of its members who took part thought HS2 represented “value for money”; but actually 41 per cent said it was “important to their business”, which is a high score.

Let us therefore look at the “rebalancing” argument. It is mistaken. Adding another spoke to the radial network out of London will increase the pulling power of the South-east rather than diminish it.

We have to build HS2, it is said, because north-south rail routes are nearly full: they cannot fit more trains on to the lines. The reason for that, though, is that everyone wants to travel in and out of London, and, if we increase the capacity of those lines – especially as HS2 starts with the bit out of London, to Birmingham – then more people will be able to travel in and out of London.

It is the old “predict and provide” dilemma: that if you build more roads where traffic is busiest, you create more traffic. And just because railways are middle-class and green doesn’t make them any less a generator of economic activity. (Mind you, the green argument for high-speed rail is overdone: it is hardly lower in carbon outputs than fuel-efficient car travel: if Google could put us all in high-occupancy self-drive hybrids on the motorway it would probably be greener than HS2.)

Building HS2 would be like putting the Olympics or the Millennium Dome in London – again. It would be another way of reinforcing London’s pre-eminence. Simply running another railway line, however expensive, and however far into the distant future, between what has been described as the North Province and South Province of the UK is not going to equalise them: it is more likely to suck more life out of the North.

The reason people have been talking about closing the North-South divide for so long is not because London-based governments don’t like Scottish people (although Margaret Thatcher did use them as experimental lab rats for the poll tax). It is because it is up there with the two-state solution in its level of difficulty. London is the UK city where the most people live and so the most people want to live there. It is where the money is, and it has excellent, if overloaded, transport links, including the best mass-transit underground rail system in the world.

I don’t know what the answer is to Britain’s London-centred growth preference. I suspect that there is not much that governments can do. But I know what the answer isn’t, and that’s HS2. I am even in favour of digging holes in the ground and filling them up again as a Keynesian stimulus in these strange times of cheap money and under-employment. But these are the wrong holes. The other wrong holes to dig would be those to provide new airport runways in the South-east. There was a time when HS2 was presented as an alternative to a third runway at Heathrow. The last Labour government scuppered that argument by going for them both. But the right thing to do is neither. Increasing transport capacity in the South-east means increasing the imbalance in the UK economy, not redressing it.

If we must spend public money because it is so cheap – and there is a strong argument for that – then if we are serious about rebalancing the economy we could do so more productively on making northern cities even nicer places to live than they already are, with better local transport, rather than making it easier for their citizens to get to London.

John Rentoul is chief political commentator of ‘The Independent on Sunday’