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A doubled price tag, safety issues, engineering problems and a daft destination. HS2 remains an idea likely to overwhelmingly benefit big business. But the British taxpayer is forking out for it….and a corporate tax avoider is the big winner. The Slog investigates.

The Law approving the HS2 project was passed just over a month ago. Campaigners against HS2 said the report stage and third reading of the bill had been rushed through in less than an hour, leaving little time for amendments to be discussed and MPs to speak.

“With just 37 minutes given to debate a £56bn project, that works out at over £1.5bn per minute, rushing through spending at a phenomenal rate,” said Penny Gaines, chair of Stop HS2. Ah yes, business as usual in Britannica Democraticus.

The £56bn project is backed by both the Conservative and Labour leadership. So Labour has clearly joined the government in ignoring what most northerners want…new and faster links across the Pennines.

Several things about the project, however, already have that shambolic air one has come to associate with personal white elephants.

HS2 is now officially the EU’s biggest project. Sadly, the reason for this is a problem in and of itself: the price keeps going up.

In 2011, an ‘envelope’ was set aside by the Treasury for a cost of £42bn. We do not know whether it was a brown one…but it is filling up with smelly stuff. By 2013, Economists predicted in a major independent report that it would cost £80bn in the end. So far, their predictions are looking good: last November it was weighing in at £50bn. In the last Budget it had gone up to £55.7bn. To date, not a single inch of track has been laid. This one has Connecting for Health written all over it.

Earlier this year, serious train safety concerns emerged. In fact, they’d been around since 2012, when Camerlot commissioned (secretly) some research into derailment possibilities at 225 mph. But the findings only came to light six weeks ago. The report stated baldly that the proposed HS2 rail service speed of 225mph would ’cause significant issues with track instability.’

So the trains may well have to go, er, slower. Bit of a drawback given this is supposed to be about, um, high speed. The clue’s in the name, really.

There are also serious engineering problems that haven’t been addressed. The Sheffield destination, for example, is pencilled in by the Government as Meadowhall. That’s four miles from the city centre, whereas local business firmly believes that the obvious choice is Sheffield city centre.

Just so we’re clear about it, Meadowhall is….a shopping mall. There’s a rail service into Sheffield, but because of planning regulations there’s no taxi rank. At all. What makes Meadowhall an even odder choice is the geological problem of putting track down in the region: there’s a three-mile fault line along the route, followed by more than a mile of land sitting on a dangerous honeycomb of old mineworkings.

So why Meadowhall? Nobody seems to know. But there are clues here and there.
In 2009,the site’s original developer British Land sold a 50% stake in the Meadowhall Shopping Centre for £587.7 million….to London & Stamford Property and an unidentified partner.
In January 2013, the Meadowhall destination was announced. Perhaps not coincidentally,
six weeks ago, British Land announced a £50m refurbishment and development programme.
The CEO of British Land is Chris Grigg. Last year, he earned £6.7m in salary and bonuses. He spent twenty years at Goldman Sachs. He has been the subject of Shareholder wrath on several occasions about his ‘excessive’ pay and shares package.
But it’s hard to fault BL’s profit performance; in fact, one might even call it obscenely outstanding.
Its average gross margin over the last five years has been 83.5% (well over twice the sector average) and its net profit margin is an eye-popping 248%…seven times the sector average.
How do they do it? Take a look at the tax rates they’ve been paying:
BLtaxrates

Nice work if you can get it: last year the company paid under 1% in tax; and since the Conervatives came to power, British Land has not paid any tax at all. As such.

So to sum up, HS2 is an investment likely to cost you and me, in the end, around eighty billion quid. Given it’s rationale is commercial travel and speed of doing business, we the lucky average 19% taxpayers are subsidising the corporate sector…whose most obvious and near universal feature is tax avoidance. Whereas local Sheffield business wants the train to end in the city centre (and thus benefit employers there, while creating jobs) the Government has opted for Meadowhall – a geologically tricky region that’s a nightmare for engineers – where the owners of the site pay so little tax, their net margin is actually higher than the gross.

My question is simple, really: why are we underwriting this?

British Land – which stands to benefit enormously from being the chosen HS2 destination – invests in capex at exactly 23% of the rate of the rest of the industry. Why have they – serial tax avoiders – been chosen to benefit, given the current climate regarding tax dodges?

This is Osborne’s “tough crackdown” on tax avoidance in his own Sovereign territory. It’s a sick joke.

And as usual, Labour just goes along with it.

Yesterday at The Slog: cue The Queue