You might have seen Richard Threlfall on television the other day when he was testifying before a Commons Select Committee on HS2, the proposed fast rail link from London to the North.
He is head of infrastructure at KPMG, the firm that did the cost estimates for the project. A delightful and mild man, he was deeply fed up with the way their work was being casually rubbished – often by people who had never actually read it – and it was rather satisfying to see him give as good as he got.
Anyway, he picked up on something else this week. It was tucked away in the Autumn Statement documents that followed on from Wednesday’s update on infrastructure delivered by the Treasury minister Danny Alexander. Such was its significance, said Mr Threlfall, that it could “transform the debate on infrastructure and change the face of Britain.”
It is the decision to run a pilot project that will share some of the benefits of development directly with the individual households adversely affected by it.
Cutting through the jargon, it means this, Mr Threlfall explained: “Just imagine if the proposals for a new bypass near your house meant that you could be offered twice the market value for it and could move somewhere better that perhaps you could only have dreamt of before.” It would, he said, mark the end of nimbyism.
In contrast, the current system encourages resistance because the compensation system is geared to paying out as little as possible. It therefore guarantees that those living near a proposed scheme come out in opposition and mobilise to delay it as long as possible.
In France, the joke is that people lobby for a bypass to be built nearer to their home, rather than further away, so they will get more compensation – and then move.
But the serious point is that the whole country benefits from an infrastructure project, so it is unfair that all the cost falls on those living near to one. The irony is that if they were rewarded properly, it would probably save money as there would be so much less to pay out on those massive legal bills and all the other costs of delay.
This may only be a pilot project but it is long overdue.
You can safely predict an OBR forecast will be wrong
I had to marvel at George Osborne’s bravado in his Autumn Statement when he announced the biggest uplift in a growth forecast for 14 years. It was a reference to the decision by the Office for Budget Responsibility to increase its estimate from the 0.6 per cent it predicted in March to 1.4 per cent now.
He could equally have called it the biggest forecasting mistake for 14 years. It was only because what the OBR said six months ago was so wide of the mark that this week’s uplift had to be so large – this from the body that Mr Osborne created to lend independent credibility to government forecasts.
Continuing this theme, the Chancellor then focused on the longer-range forecast that Britain’s deficit will have been eliminated by 2019. Again he seemed to persuade his listeners, and much of the media, that because the OBR had said it then it would become true – and that it was a vindication of his policies.
But given that the OBR hasn’t got a clue what will happen six months ahead, it is highly unlikely to be better at predicting what will happen in six years. At the very least we should treat its forecast with healthy scepticism.
On the other hand, one of the bits of the OBR forecast that the Chancellor failed to mention was that progress on the elimination of the structural element of the deficit was likely to be even slower than expected. In other words, the core element of his austerity strategy has been making things worse, not better. But having cast doubt on the credibility of the OBR’s forecasts, it is only fair not to dwell on this.
It does, however, make you wonder what the OBR is for – other than maybe to provide employment to a former economics journalist on this paper, its head, Robert Chote. In the three years of its existence, it has been nowhere near the mark in its forecasts, whereas private sector bodies do occasionally hit the mark. And while no economics forecaster is likely to get it right all the time, a number of private sector bodies, like the National Institute of Economic and Social Research and the Institute for Fiscal Studies, have more intellectual consistency and coherence in their work. It is not just that the OBR is always wrong, but to paraphrase Tolstoy, it is always wrong in a different way.
Fifty years of service, and we may well see his like again
Brian Tora is one of the few stockbrokers with a national profile, largely because he is such a regular on radio commenting about finance. But on Tuesday the story was about him when his current employer, JM Finn, hosted a party to celebrate his 50 years in the business. He started in 1963 aged 16 as a stockbroker’s clerk in Grieveson Grant and rose right to the top – not at Grieveson, which sold out in the 1980s, but at several other broking firms.
The increase in the school leaving age and the popularity of university make it increasingly rare to meet anyone with 50 years’ solid service, so it is a notable achievement … though if the Government continues to lift the retirement age with each successive Budget, it could become quite common again.