Borders railway decision 'insane', says Institute of Economic Affairs
- 21 November 2013
- From the section South Scotland
The decision to build the new Borders railway has been described as "insane" by the Institute of Economic Affairs.
The think tank said the project was "exceedingly poor value for money".
But the claims were rejected by Transport Minister Keith Brown, who insisted the line would provide a major economic boost to the Borders.
The railway link between Edinburgh and Tweedbank in the Borders is due to be completed by 2015 and will cost £294m to construct.
The IEA's criticism is focused on the benefit cost ratio (BCR) for the project contained in Transport Scotland's own business case.
The figure is 0.5, which means that for every pound of taxpayers' money invested in the scheme, there will be a return of only 50p.
Dr Richard Wellings of the IEA told BBC Scotland: "Even looking at the official figures, this is just about the worst value project you can find.
"The whole project's insane. The average strategic road scheme has a benefit cost ratio of around five, which is ten times higher than the Borders railway, so this is a gross misallocation of resources, particularly when there are still huge problems on the road network in Scotland."
The transport minister, Keith Brown, described the IEA as a "right-wing think tank", arguing the benefits to the wider economy generated by investing in public transport would outweigh the costs.
He said: "I think the clue is in the extreme language which is being used.
"In my view (the IEA) tend to put a price on everything, but don't understand the value of these things. We think there are far wider benefits and values to this project.
"Although the BCR is important, and we have to have regards to the return on investment, I think we also have to understand the wider benefits which we have."
There is already some evidence of an upturn in the property market along the route of the new railway, with buy-to-let investors showing interest in the type of homes which would appeal to commuters travelling to Edinburgh for work.
Carolyn Bowick of the property company, Orchard and Shipman, said: "Even with the railway a couple of years from completion, we're already having inquiries from landlords who're looking for portfolio investments in the Borders.
"There's a really strong demand because of the opportunities here to buy maybe 10, 12 or 15 properties and see an excellent return on your investment."
Transport experts have urged caution on claims that schemes like the Borders railway do provide a wider economic boost than the official calculations suggest.
Prof Tom Rye of Lund University in Sweden, who has given evidence to the Scottish Parliament on the subject, said: "It is immensely difficult to show empirically that investment in transport schemes leads to economic growth overall.
"It may redistribute growth towards certain areas by changing patterns of accessibility, but that depends on whether poor accessibility is the biggest constraint on economic growth in the area.
"Since the new railway will not radically improve the accessibility of the Borders, except to central Edinburgh perhaps, but not to other major employment locations such as West Lothian and West Edinburgh, then it is difficult to see how it will improve the Borders economy, even if accessibility is a major constraint on the area's economic growth."
But rail industry commentators have praised the Scottish government's transport policies, arguing it is important for politicians to look beyond benefit cost ratio calculations.
Nigel Harris, the managing editor of Rail magazine, said: "Wherever you get decisions made closer to the people, you get better railways and better transport.
"In Scotland you have a fantastic record on being bold on railway re-openings. You've built it and they have come.
"Scotland has been bold in the past and it should continue being so."
The Campaign for Borders Rail said it was "extremely sceptical of this grossly pessimistic forecast".
Chairman Simon Walton said: "I cannot think of any region or community that has failed to benefit from a rail project, and I cannot think of a rail project that has not gone on to greatly exceed expectations of patronage.
"The railway has overwhelming support in the Borders - business and community groups already express great anticipation."