November 2005 MAGLEV

Edward Simpkin, in the Telegraph of 20 th November 2005, reported on the proposed maglev 500 mph railway linking London to Scotland . The estimated cost was quoted as £30 billion. We comment, if that were to be repaid at the Treasury discount rate of 3.5% over 30 years the annual cost would be £1.63 billion. Adding maintenance and operating costs would increase that bill by (50-100)% providing the range £(2.45-3,26) bn. If there were as many as 20 trains each way each carrying 500 passengers every day then there would be 7.3 million one-way journeys per year. Hence, if the fares were to cover costs the return fare would have the range £660 to £900. Probably the fares actually charged could cover no more than one third of that. Consequently this project, if built will cost the taxpayer around one billion pounds annually forever and ever. Moreover, if usage matches that of ordinary rail, those in the top quintile of household income will use the system four times as much as those from either of the bottom two quintiles. Meanwhile they want £10 million just to study the proposal. What better example is there of how a country may drift into a high tax low productivity state - no doubt making this project an absolute must for any Government that does not do its sums.

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