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Well you’d better building something somewhere
Not a convincing argument for building another runway at LHR.
Britain has horrible productivity and that’s down to lack of investment.
More to the point, it's down to 12+ years of exactly the opposite - systematic austerity and asset-stripping plus 4 years where absolutely bugger all got done because the UK was busy arguing about how best it should cut its own arm off.
If it’s not viable as a commercial project without tax-payer input, it’s not a sensible investment. Come back with a better plan or offer a meaningful stake in the plant/facility to the tax-payer.
Trouble is as per the AZ plant discussion, without Gov support there's other options available. And the 'meaningful stake' of jobs, corporation tax, etc., that flows back is the supposed reward. Doesn't mean all bets are off and name your price, it has to be value for the taxpayer spend but the viability as a standalone project is not the right metric.
National infrastructure like railways - privatised rail operators should be paying at least their share, OTOH country benefits from the additional infrastructure.
Heathrow's a tricky one. Because unlike railways, but like a vaccine plant, it's a competitive market. If you build a railway line in the main it serves the towns it serves and joins the country up better. You can't choose to put it elsewhere. One of the big issues with the third runway at Heathrow is that it limits being a hub airport for flights to connect to and from and Frankfurt and Amsterdam are winning the battle - although it's the world's largest hub airport it can't get bigger. And it's not as easy to just say that Manchester or somewhere else in the UK is as good, almost by definition you can't have two hub airports in a country our size. So while I think Heathrow Ltd as a commercial enterprise needs to fund it, pragmatically if it takes some Gov support to make it happen and that support is good value overall for the country then it is justified.
almost by definition you can’t have two hub airports in a country our size.
You can, you just need effective public transportation between the two. And Heathrow has nothing.
Maybe for people, for cargo the handling infrastructure duplicated would be an issue.
One of the big issues with the third runway at Heathrow is that it limits being a hub airport for flights to connect to and from and Frankfurt and Amsterdam are winning the battle
And...? I'm not interested in whether Frankfurt or Amsterdam airports have a greater market share.
What's the compelling national interest in having the biggest airport in Europe? And what's the cost? And why invest in that instead of the infinite number of other projects the state could invest time and money into?
Don’t feel qualified to comment on the runways or airports.
but the need for the M25 tunnel - the nearby M3 and M4 have spent literally years as roadworks for them to convert the hard shoulder to another lane, add some refuges, briefly open it properly, decide there aren’t enough refuges, put it back to 3 narrow 50mph lanes for another couple of years while they work on adding a few more…
Similarly down at the 25 - A3 junction they have taken years to add a much needed bigger junction, but with the roadworks queues backing up onto the motorway any time it is remotely busy…
Im never quite sure how they calculate these things but I’m going to wager the cost to the economy for the years worth of traffic jams is going to dwarf any benefit ever realised by the runway.
What’s the compelling national interest in having the biggest airport in Europe?
Doesn't have to be the biggest but as freight volumes continue to grow, we need to remain competitive. Freight, warehousing and distribution is a market in its own right, and we risk falling behind. IANAE, just reporting the supposed rationale.
And what’s the cost? And why invest in that instead of the infinite number of other projects the state could invest time and money into?
Fair question. Depends what side of the Rone argument you stand, but if the cost-benefit is positive then we can afford it irrespective but if you subscribe to the balanced spend / investment then yes, its cost-benefit has to be positive AND more attractive than the other things we could spend it on.
I've got a feeling that the runway will open just a week after Boris's 40 hospitals do, could be a bumper sales week for giant scissors manufacturers and ribbon sales people.
Trouble is as per the AZ plant discussion, without Gov support there’s other options available. And the ‘meaningful stake’ of jobs, corporation tax, etc.
Then why should the taxpayer spend public money on a private company of there are better options. I’m still off the view that if the business case is that compelling the airport owner should have no problem getting investors on board without the help of taxpayers. If they can’t then why should taxpayers fund a poor investment
I mean there are other options for the investors, etc. They don't necessarily need the hub to be the UK, just as AZ can build their plant elsewhere.
Doesn’t have to be the biggest but as freight volumes continue to grow, we need to remain competitive. Freight, warehousing and distribution is a market in its own right, and we risk falling behind. IANAE, just reporting the supposed rationale.
East Midlands Airport handles way more dedicated freight flights than Heathrow, it's the de facto freight hub of the UK plus it's a lot easier to access the motorway network from there as well as the East Coast Main Line.
Heathrow's freight capacity comes from freight within the cargo hold of regular passenger flights, it's not a freight hub as such.
Expanding Heathrow is just the wrong answer to the wrong questions.
And yet in spite of that Heathrow handles about 4x as much freight overall as E.Mids.
You can't uncouple freight on passenger flights from dedicated freight, I just googled and seen estimates of 30-50% of a commercial airliners cargo is freight; if they aren't joined up you're wasting a huge amount of capacity. Dedicated freight flights are 7% of flight volume.
Air freight accounts for about 1% of the volume of freight carried but 35% of the value - it's a huge market and without it the position as a passenger hub falls down quickly.
if the cost-benefit is positive then we can afford it irrespective
1) you're ignoring that those costs won't all be coming out of the same pockets the benefits are going into
2) you're ignoring there are some things that can't bear a meaningful price tag - like the climate
3) you're ignoring the fact there are non-financial constraints (like labour and administrative capacity) that means the UK can't pursue every project irrespective and needs to prioritise among them
I apologise - my language was unnecessary provocative. I could have said something like "we shouldn't forget that...".
Turns out the report saying how wonderful it would be to expand Heathrow was commissioned by… Heathrow.
What matters is whether the report is truly independent, which the report writers have insisted is the case.
Frontier Economics says,
Frontier’s analysis found that expansion would lead to a positive net benefit for the UK, in line with similar analyses carried out by the Airports Commission (2015) and the DfT (2017).
The Airports Commission 2015 report was chaired by Sir Howard Davies,
In 2009 Sir Howard was appointed as adviser to the Investment Strategy Committee of GIC Private Limited, formerly known as Government of Singapore Investment Corporation. Two years later he joined its international advisory board. He resigned from both positions in September 2012, on appointment to the chair of the Airports Commission (GIC Private Limited is a part owner of Heathrow) https://en.wikipedia.org/wiki/Howard_Davies_(economist)
The 2017 analysis by the DfT is a continuing in-depth environmental and economics study for the Heathrow proposal.
Frontier's "starting point was to review the AC’s CBA" (Airports Commission CBA) from the 2015 report chaired by a former adviser to one of Heathrow's current owners. (
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I apologise – my language was unnecessary provocative
That's on me too - for not realising that when people use you and we it isn't always directed at me singular, we do use 'the royal you and we as it's easier than the passive tense which is often what's meant. So even more than 'we shouldn't forget' - 'it mustn't be forgotten'
And FWIW I agree in the main - to your points
1/ that's the whole question of Gov subsidy for private initiatives. It's feels a bit murky but it is just how it is. If it was just (depersonalising from Heathrow or AZ) "how much will this project cost me and how much will we earn from the extra capacity it gives us? - yep, stacks up, we'll do it' then would be simple - they should pay for it.
But then they go to Gov and say that as a result of it they'll be paying more taxes, employing more people who won't be on benefits and paying tax themselves, attracting inward investment as a result of now being a centre for doing whatever it it....etc and by the way, if you don't want to we could build it in Vulgaria or Oz and they're VERY keen to discuss. So the Gov does stand to benefit from putting some in, and have their own RoI calc to do alongside that of BigCo.
2/ absolutely, some stuff no matter how much VFM can be made, if it destroys the planet then it's not worth doing. But that's a grey area too - destroys a wetland where some unendangered newts live? Is it THAT important? Destroys some critical natural land that will have knock on effects that are hard to analyse? etc. This is where the conservationists IMHO need to get into the debate but (and a big but) there seems to me to be a tendency that any slight issue is then made into a massive concern, and there's a bit of cry wolf that doesn't help.
3/ Totally - and it's not just construction type stuff. It's not possible turn a tap on and overcome a decade and more of underinvestment in areas that are critical to UK success and resilience. So absolutely, no matter how good the RoI for the country is, if we can't do it let's do things with lower RoI that can be.
Unfortunately there's still a category of stuff that 'can't be done' but still has to be done - somehow - so shooting ourselves in the feet over collaborating with partners that can help us deliver together, and making it hard for non-UK nationals to come and deliver work is an act of national self-harm.
Never an option?
I don't understand the question if that's at me?
Reagards the comments on High Speed Rail - I'm not convinced it even needs to be "High Speed".
For a new railway, surely the optimun cost/value/speed ration is around 150mph. So you can still build with the "cheap" ballasted track, for which there is loads of plant/equipment in the UK to construct and maintin it, but requires in-cab-signalling (as its over 125mph) reducing the need for "lights on sticks" and all the cabling/infrastructure that is required to support that.
Bits of the East COast Manline were historically propsed for 140mph running, but the requirement for in cab signalling prevented the investment in infrastructrure. As the upgrade to allow full in cab signalling from the midlands south (from Grantham?) is nearing completion, there may be options to upgrade the linespeed of existing routes (as as trains get cascaded around the network, so the investmetn cost comes down as you are not having to replace trains and signalling equipemtn at the same time).
I do wonder if a new/upgraded/reinstated line to carry freight from south to North may have freed up sufficient capacity on the current mainlines to eliminate the need for HS2, and allowed for an increase in service patterns (more trains per hour) on existign routes... I can only assume it was considered and rejected.
A lot of private stuff is going to need government support. If you don't have these projects then your infrastructure falls to bits and everyone gets poorer fast. Take roads as an example ,- would you leave road construction to entirely commercial interests to prioritise work?
Or as an example of private enterprise - water. Has that been managed for long term good.
If you're going to get private enterprise it needs to be managed, and money might need to be applied to encourage them to make the best long term decisions.
Re. Heathrow or somewhere else, well sadly the SE is very dominant in UK economics. If you tack an extra runway somewhere else, th overall benefit to the country is small as commercial interest is limited. Mind, you need to do something as how do you think economic balance between the SE and everywhere will look in 20 or 50 years? But for the msedium/long term right now, if it's not connected to the SE , it's an uphill fight
A lot of private stuff is going to need government support. ... Take roads as an example ,- would you leave road construction to entirely commercial interests to prioritise work?
Roads is a weird example of private initiatives that require state support as in the UK roads are overwhelmingly publicly-owned.
In fact, are there any important privately-owned roads or tolls in the UK? The M6 Toll Road and Silvertown Tunnel are publicly-owned but privately operated under a concession.
A lot of private stuff is going to need government support. If you don’t have these projects then your infrastructure falls to bits and everyone gets poorer fast. Take roads as an example ,- would you leave road construction to entirely commercial interests to prioritise work?
Not a fair comparison imho. Roads are owned by the government on behalf of the public (excepting toll roads). Therefore it maintenance and expansion is for the government /taxpayer to fund. Whether that is by directly employing people to do it or contracting out to private sector providers is another debate.
This airport is a private company funded by its customers with delivering shareholder value as its overwhelming priority. Why should UK taxpayers fund that for the shareholders? If investors can get a better deal elsewhere then thats fine and their prerogative. It doesnt explain why if they choose not to then UK taxpayers should provide the money. If UK taxpayers were to fund it then they should get shares in the company and the dividends / ROI that were offered to investors.
In fact, are there any important privately-owned roads or tolls in the UK?
Yes and no. There are a lot of roads built under something called DBFO: Design, Build, Finance, Operate.
A private company takes on the job of building the road, paying for it up front itself. There's an agreement with Government that it'll be "public" but the Government will pay the building cost back in the form of a per-vehicle toll.
So basically every car that uses the road is ker-ching for the operator, paid for by Government.
It's a wildly overpriced way for the Government to get a road built without shelling out any money up front but costing way more in the long term.
This airport is a private company funded by its customers with delivering shareholder value as its overwhelming priority. Why should UK taxpayers fund that for the shareholders?
It's more complex than that; as per earlier
But then they go to Gov and say that as a result of it they’ll be paying more taxes, employing more people who won’t be on benefits and paying tax themselves, attracting inward investment as a result of now being a centre for doing whatever it it….etc and by the way, if you don’t want to we could build it in Vulgaria or Oz and they’re VERY keen to discuss. So the Gov does stand to benefit from putting some in, and have their own RoI calc to do alongside that of BigCo.
Yes and no. There are a lot of roads built under something called DBFO: Design, Build, Finance, Operate.
DBFO, BOT, whatever model - those are all publicly-owned roads projects. None of them is an example of "private stuff that needs government support" or comparable to LHR expansion.
But then they go to Gov and say that as a result of it they’ll be paying more taxes, employing more people who won’t be on benefits and paying tax themselves, attracting inward investment as a result of now being a centre for doing whatever it it….etc and by the way, if you don’t want to we could build it in Vulgaria or Oz and they’re VERY keen to discuss. So the Gov does stand to benefit from putting some in, and have their own RoI calc to do alongside that of BigCo.
So to simplify it’s a game of blackmail and which government blinks last. I’ve never believed those argument anyway. The company won’t pay more corporates as they will all be offshored to their preferred tax haven. I accept there will be lots of low paid jobs and a few well paid ones but how many years will the tax take from them take to recover the investment cost and as we are in debt, service the interest on that money
But then they go to Gov and say that as a result of it they’ll be paying more taxes, employing more people who won’t be on benefits and paying tax themselves, attracting inward investment as a result of now being a centre for doing whatever it it….etc and by the way,
That's no problem so long as it is quantifiable and demonstrated to be happening. Both ROI must be met and if the government/us don't recieve what was promised the company makes up the difference. No tax-payer hand-outs to private concerns without a verified return.
Both ROI must be met and if the government/us don’t recieve what was promised the company makes up the difference.
...which is great but it's an unimaginably large risk for any company to bear, both because of the amount of £ involved and the complexity of the factors that aren't under the company's control. (Traffic predictions and guarantees on "simple" toll roads are absolutely notorious for usually ruining the operator or the state - and sometimes both). You'd simply never get finance for a project structured like that - which goes back to the limitations of the private sector in infrastructure development.
I dont visit very often, but every time all the infrastructure looks like its got flood damage.
But presumably you’ve seen the major storms on the news, which have caused significant flooding around the country…?
Or maybe they’re not significant enough to be on the news in whatever clearly superior country you currently reside?
Thinking about it, it might be done by 2045. I’m 70…
which is great but it’s an unimaginably large risk for any company to bear
Then perhaps it's not a wise investment choice or the managers are unable to deliver value. Were we not told that those that take risks are due rewards for taking them? Our managerial class (from investors downwards) are unable/unwilling to risk or pay for anything it seems.
which is great but it’s an unimaginably large risk for any company to bear, both because of the amount of £ involved and the complexity of the factors that aren’t under the company’s control.
If it’s that risky and given the U.K. government would have to borrow the money to fund any investment why should U.K. taxpayers make suck a risky investment if the private sector doesn’t want to? Any ROI would need to include the cost of borrowing the investment and reward the level of risk involved. If investors don’t think the risk / reward equation makes sense then why should it for U.K. taxpayers
I don't think LHR expansion is a good idea regardless of who funds it.
But asking "well, if it's such a good idea why doesn't the private sector just do it itself?" just fundamentally misunderstands how and why states are different from the private sector:
1) states have an ability and obligation to consider the wider impact of infrastructure projects on the economy as a whole, on society, on the environment... Private entities are "dumb", and can only really consider the private return on investment.
2) states can marshall financial and non-financial resources, and accept financial and non-financial risks, on a scale that the private sector just can't.
If the private sector could do the things the state can do, then there'd be no point in the state doing them.
The third runway at Heathrow will never happen. However I suspect that it will trigger a review of the current planning laws and how we have endless reviews and appeals about any major infrastructure projects. How can we stop the next £100m bat tunnel! As has been pointed out most of our infrastructure dates back to the Victorian era, when planning legislation was almost no-existent.
Just look at how long it is taking to get the Lower Thames tunnel built. So far £800 million has been spent, including £293 million on the planning application. The planning application alone is 360,000 pages long. And most people agree that we need another Thames crossing as the existing ones are struggling.
Just look at how long it is taking to get the Lower Thames tunnel built. So far £800 million has been spent, including £293 million on the planning application. The planning application alone is 360,000 pages long.
Repeat that for every bit of infrastructure. Then repeat for when said infrastructure gets a political reboot, re-scope, budget cut, re-design and re-submission. Then repeat for the next round of legal challenges.
It's why everything in this country costs 5x more and takes 5x longer than other countries.
As has been pointed out most of our infrastructure dates back to the Victorian era
(This is totally untrue).