‘HS2 was always designed to be much more than just a high-speed railway and today we can see the opportunities it brings right around the country – spreading prosperity, acting as a catalyst for investment and rebalancing our economy 10 years before the railway even opens,” said David Higgins, chairman of the high-speed railway, as the first construction contracts were awarded on Monday.
We’ll have to get used to self-serving boasts in this style. The most irritating part is the invitation to think that it’s OK to spend £55.7bn on a high-speed railway – the last official budget – if the construction spreads a little peace, love and rebalancing on the way.
The better question is to ask is whether HS2 is the most effective way to pursue such goals and whether the promised “jobs bonanza” – another pet phrase of the HS2 fans – could be delivered more cheaply by other means.
Last year, the House of Lords economic affairs committee and the Treasury committee in the Commons came to the awkward conclusion that the economic case for HS2 had not been made conclusively.
One can add Michael Byng to those sceptical voices. He is the rail consultant who has calculated that each mile of the initial section from London to Birmingham will cost more than £400m, almost twice the official figure.
Transport secretary Chris Grayling told the BBC the calculation is “just nonsense”, but let’s hope his department bothers to publishes a transparent reply, including workings.
Better still, Grayling could order some worked-up examples of what else you can buy for £55.7bn. Railway experts look to smaller-scale upgrades of track and junctions and wonder how many won’t be built as the HS2 mega-project dominates transport spending for the next decade.
Ask the public, and one suspects 90% of respondents would happily settle for a conventional railway to expand capacity on the west coast if the savings could be spent on the NHS. Or perhaps they’d prefer a serious housebuilding programme.
Don’t hold your breath, though. The engineers have won the battle for HS2, and they are determined to persuade you that theirs is the only possible way to spend £55bn, or whatever the true cost turns out to be.
No departure tax for easyJet’s McCall
Is moving from the chief executive’s berth at easyJet to the same post at ITV really an upgrade? One could argue both cases. ITV is bigger by market capitalisation and television probably wins over budget airlines in the glamour stakes, even if the current buzz is about Love Island.
On the other hand, easyJet is a “structural winner” in its market, as Carolyn McCall put it as her switch was finally confirmed. It would be hard to say the same about ITV. A near-monopoly on mass-audience commercial TV advertising spots offers imperfect protection in the era of audience fragmentation, digital downloads and Netflix.
Whatever one’s view, nobody seems surprised by ITV or McCall’s choices. The company gets an executive with a strong record at easyJet (a trebled share price, £1.2bn in dividends). From her point of view, seven years counts as a long innings for a chief executive at a FTSE 100 company. If she wanted another big job, this was the moment to make her way to the departure gate.
But there was, perhaps, another factor to make her decision easier: there is no financial penalty whatsoever for McCall in quitting easyJet early.
That is because ITV will simply pick up the tab for her unvested share awards, a sum that will likely run to a few million pounds depending on easyJet’s performance and share price at the end of the year. Whatever the cost, ITV has guaranteed to pay.
Is that right? It’s a fact of life in the executive recruitment game but it makes a complete nonsense of the idea that companies must shower their executives with long-term incentive plans to keep them locked in and loyal. At easyJet, McCall has earned £30m over the years, an extraordinary sum, and won’t forfeit a penny by jumping. She can switch from one £5m-a-year package to another without a jolt.
EasyJet, if it opts for an outsider to replace McCall, will probably play the same buy-out game with its next chief executive. Many companies do. The notion of incentive awards being subject to future employment is slowly being eroded: a forfeit at one company just becomes a signing-on award at the next.
Companies could at least be honest about why they are paying their executives such fabulous pay packages in the first place. It is not to “recruit and retain” their services, as the slogan goes, because the power of retention is roughly zero.
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