Legal & General’s Nigel Wilson suggests government “should abandon all the big infrastructure projects beginning with the letter H”
Legal & General chief executive Nigel Wilson has suggested that the government “should abandon all the big infrastructure projects beginning with the letter H” – ie. Hinkley, HS2 and Heathrow. He thinks that instead of these, the UK would get much better value spending its limited resources in areas such as social housing, renewables and more mundane but much-needed projects. Legal & General, an insurance company, is a large and important investor, and accustomed to assessing the prospects of long term projects. Anthony Hilton, writing in the Standard, says Theresa May’s head of policy at No.10 is John Godfrey, who was until July 2016, the head of policy at Legal & General, and thinks along the same lines as Nigel Wilson. He considers HS2 is probably the easiest to ditch, as there are better ways to increase rail capacity between London and Birmingham – and the saving of 25 minutes is not vital. “If, for prestige reasons, we need another high-speed train, then let’s put it where it is needed and link Liverpool toManchester, Leeds and Newcastle, with a southern spur through Sheffield and Nottingham to Birmingham.” There are numerous reasons not to to ahead with Hinkley. And Heathrow costs far too much, with the final sum being perhaps £36 billion, of which around £18 -20 billion to be paid by taxpayers. It is also fiercely opposed and “resisted to the bitter end by some very vociferous people.” There would be inevitable years of legal wrangling and planning to secure it.
Anthony Hilton: Back to drawing board on infrastructure plans
by Anthony Hilton (Evening Standard)
Legal & General chief executive Nigel Wilson delivered some timely advice to the Government last week when he said on Radio Four’s Today programme that it should abandon all the big infrastructure projects beginning with the letter H.
Specifically, he had in mind the termination of the HS2 high-speed rail link to Birmingham, the Hinkley Point nuclear plant and the third runway at Heathrow.
Instead, he believes the country would get much better value spending its limited resources in areas such as social housing, renewables and more mundane but much-needed projects.
Wilson’s comments carry a lot more weight than most because he practises what he preaches. In the few years since he took the helm, Legal & General has become easily the most ambitious of the insurance companies in seeking out the higher long-term returns to be got from infrastructure and similar illiquid investments.
So is he on to something? Is the Government poised to pull the plug on one, two or all three? And is it right to do so?
The Government may well pay close heed to what he says for reasons that may not be widely appreciated. The first is that Theresa May’s head of policy at No.10 is John Godfrey. Until July, when the Prime Minister came to power, he was head of policy at Legal & General — and very much at one with Wilson on infrastructure. Having spent the last 10 years with the insurer, he may not be widely known, but his early career was politically focused. This has given him a better knowledge than most about how the Government machine works and how to get things done.
A second factor — though it is slightly mischievous to point this out — is the influence of May’s chief of staff, Nick Timothy.
Clearly, he has the PM’s ear, which is significant because there is a widespread — though obviously unsubstantiated — view that he harbours a deep loathing for George Osborne, and by extension for the things Osborne promoted when in Government.
Prominent among these, of course, were HS2, Hinkley and Heathrow expansion. So for that reason alone, you might expect a shadow to fall across them.
Alternatively, you may like to believe that ministers would never allow their own or their advisers’ personal likes and dislikes to influence the decisions they have to take for the good of the country. That is probably not the way to bet though, particularly when the PM’s constituency of Maidenhead is just sneezing distance from Heathrow.
HS2 is probably the easiest to can. It is the wrong railway, taking the wrong route to the wrong place — and it seems now to have lost its chief executive, who has decamped to Rolls-Royce. If we need more rail capacity toBirmingham, it can be delivered at a fraction of the cost by upgrading the line out of Marylebone to Birmingham Snow Hill. This would be a conventional train service — but who needs to save a few minutes on a journey in the age of Wi-fi?
If, for prestige reasons, we need another high-speed train, then let’s put it where it is needed and link Liverpool toManchester, Leeds and Newcastle, with a southern spur through Sheffield and Nottingham to Birmingham.
Next, in terms of cost, comes Hinkley. Last week, a clutch of senior business figures — Sir Richard Lambert, Sir Simon Robertson, Lord (Chris) Patten and others — wrote to the Financial Times in support of the project.
They are all members of an EDF advisory board — the French firm being the potential builder of the plant — but what was interesting was that, given they hold this position, how feeble and unfocused their arguments were, and how little they addressed specific concerns about Hinkley.
The letter’s most telling point was that we urgently need more nuclear capacity, but it failed to recognise that there are other cheaper designs for proven reactors we could have as an alternative. They also failed to mention that the two reactors being built to the Hinkley design in Finland and France, are massively late, over budget and still not working.
Finally to Heathrow. Most would probably agree with Sir Howard Davies and the Airport Commission that Heathrow makes the most logical case for expansion. The business community by and large agrees, as manufacturers’ organisation the EEF made clear last week.
But then we confront three problems. The first is that it will take longer to build another runway at Heathrow. Completion is possible by 2025 for Gatwick, against the earliest of 2029 for Heathrow. The second issue is cost. At £7.8 billion, Gatwick would be well under half the estimated £17.7 billion of Heathrow, and financed entirely by the private sector.
There are worries, too, that the Heathrow figure may be understated. It should be doubled to around £36 billion, according to Transport for London, to take account of roadworks and other costs of access.
The third issue is practicality. There is no doubt the Heathrow expansion will be resisted to the bitter end by some very vociferous people. Even if the project has the best case, is it so much better that it is worth spending years in legal wrangling and planning to secure it? Would it not me more pragmatic and sensible to take the second-best option that is deliverable — Gatwick — and get on with it?
Part of the deal might even be to build a high-speed train link to cover the 35 miles between Gatwick and Heathrow. If you cut the journey time to about 20 minutes, which such a train could do, the two airports would in effect be one for making connections.
And if Heathrow still needs more capacity, let it buy Northolt — only eight miles away, or four minutes by fast train.
Time to pull plug on pricey projects, says City financier
Marcus Leroux (The Times)
September 6th 2016,
The boss of one of Britain’s biggest financial institutions has called for the government to abandon “the three Hs” of Hinkley Point, Heathrow expansion and HS2.
Nigel Wilson, chief executive of Legal & General, one of Britain’s biggest insurance companies and among the country’s largest funders of infrastructure projects, said that the prime minister should pull the plug on three contentious projects in favour of what he calls the “three Gs”: investing in green energy, expanding Gatwick and building a great northern railway.
His forthright views come as the government weighs up decisions on all three, having pleaded for more time to decide whether to push ahead with the £18 billion nuclear power plant at Hinkley Point.
Meanwhile, Theresa May is chairing a committee that will make a final decision on whether to build a third runway at Heathrow in line with the Davies commission’s recommendation.
Mr Wilson insisted that the government should not shirk from bold undertakings. “You can have big projects but they have got to be the right big projects”, he told the BBC’s Today programme. “Part of the role of government is to choose the right things.” On airport expansion, he said that Gatwick was the more straightforward choice.
Mr Wilson said that L&G would happily play a part in funding the expansion of Gatwick.
However, many in the airline industry have questioned airlines’ willingness to use Gatwick, pointing out that it is only now approaching its capacity.
L&G plans to spend £15 billion on funding infrastructure over the next decade, but has previously said that it would eschew HS2 — the high speed railway between London and the north — because it was of “little economic benefit”.
Forget building extra runways
By Sathnam Sanghera (The Times)
Let’s first fix the appalling transport links to London airports
I can’t help but feel that Nigel Wilson, chief executive of Legal & General, and one of the country’s largest funders of infrastructure projects, rather missed the point when he called this week for the government to abandon “the three Hs” (Hinkley Point, Heathrow expansion and HS2), in favour of the “three Gs” (investing in green energy, expanding Gatwick and building a great northern railway). Which is that we have, as a nation, lost the ability to build anything at all.
The country that was once home to the industrial revolution and kitted out a large part of the world through empire, now cannot embark on any infrastructure project without years of procrastination, handwringing and delay. Let’s face it, we can’t even build enough houses, let alone modernise rail.
Frankly, any kind of decision on any one of the 3Hs or 3Gs within the next five years would count as incredible progress. Though, personally, I reckon we should aim lower: try to IOTLTOLA, if you like, instead of building the 3Gs or 3Hs. Namely, make a decision to improve our transport links to our London airports.
Theresa May this week echoed London Mayor Sadiq Khan’s claim that that Britain is now “open for business around the world” despite Brexit, but have you tried entering the country from Heathrow, Stansted, Gatwick or Luton recently? It’s a national embarrassment, up there alongside Jeremy Corbyn.
Though if I had to be focused in my rage, I would rank Britain’s worst airport journeys as follows, in reverse order of awfulness.
The Heathrow Express
Not everything about this service, launched in 1998 and carrying an average of 16,000 passengers a day, is terrible: it is the fastest rail link from London to Heathrow with a journey time of just 15 minutes to Terminals 2 and 3; the carriages are pleasant; the service is reliable; the wifi works. However, it only gets you to Paddington, which is barely central London, and not useful for much beyond fried chicken outlets.
Moreover, it is wildly expensive, with Transport Focus, the passenger watchdog, recently publishing figures showing it is the most costly route per mile in Britain. A standard walk-on single costs a staggering £22 and if you complain about the cost on Twitter, like I have done, the company will tweet to say that a £5.50 ticket is available, if you book three months in advance and travel at the weekend. How many business travellers can do that? Moreover, there is a cheaper option that Heathrow, which made £132 million from the express link last year, does everything in its power to avoid mentioning to travellers arriving at the airport: the Heathrow Connect train service, which costs £10.20 for an anytime single and typically takes only ten minutes longer. An institutionalised rip off.
Car hire from any airport
Travelling to Vancouver last month, I managed to get off a plane and into a borrowed car within 35 minutes. Picking up my own car in Gatwick recently, through a complex system of shuttles and car parks, took two hours. And that’s before the nightmare of tackling London’s traffic began.
The Gatwick/Stansted “Express”
Now airport names are, of course, the biggest trade description offences in the book: “London Stansted” and “London Luton” Airports both being located so far from the capital that it can take longer to get to them than to Paris. But the description of any of these train services as an “express” is even more ludicrous.
The last time I got the Stansted Express, the journey of about 38 miles took 47 minutes, which works out at an average of a pathetic 49 mph. My last Gatwick “Express”, meanwhile, was subject to heavy delays. But then, at least a train arrived after an hour or so: most regular travellers from these more provincial airports have probably had the experience of missing the last train as a result of managers who seem to be unaware that London is a 24-hour world city.
In arguing against the expansion of Heathrow, Simon Jenkins has claimed that London’s airports have “next to nothing to do with ‘business and industry’ and the much-vaunted UK plc” — “they are about leisure and tourism. Some 80 per cent of air travellers in and out of London are not classed as ‘businessmen’, and even those who claim this elevated title are probably on freebie jaunts.” But even if he is right, the fact that 20 per cent of business travellers risk being subjected to such an experience on arriving in Britain is an embarrassment.
Any black cab from a “London” airport
If you follow the official “taxi” signs in any of the aforementioned airports, you will be lead to a rank of official licensed Hackney cabs. Which must be nice if this is your first visit to Britain: you get to ride in an iconic vehicle; the drivers know where they are going, having done the knowledge. Except this is where the fun ends. The drivers work to a bunch of seemingly random official and unofficial rules (minimum fare of £2.60 at all times, refusal to go anywhere other than central London, reluctance to accept credit cards or Scottish pound notes, refusal to listen to anything other than talk radio, etc).
Then, when you arrive at your destination, it is quite possible you will be presented with a bill of up to £100, often more than the cost of your actual airline ticket. There are signs that one of two London airports are trying to accommodate Britain’s higher value minicab industry: a new minicab rank – with space for up to 800 vehicles – is reportedly being created at Heathrow. But at the moment, London airports make it as hard as possible to pick an alternative.
The message to overseas business travellers is clear: Britain is open to business, albeit subject to closed shops, at the mercy of vested interests, and very keen indeed to rip you off.
One comment below the story:
For those who live north or west of the M25 Gatwick might as well be on Mars it’s so unreachable through the traffic . Heathrow is also pretty hopeless. As evidenced by even the Governor of the Bank of England bring late for the prime ministerial flight .
Birmingham makes far more sense. To catch a plane that leaves before noon requires an overnight stay at Gatwick .(To check in at ten am or before. )