Thursday, October 17, 2013

On RBS privatisation

With my friend and sparring partner over the Centre for Policy Studies, Ryan Bourne, I've got a letter in today's Times, on what we should learn from Royal Mail's privatisation when it comes to privatising RBS. As there's a paywall, it's available on the CentreForum website.

Friday, September 20, 2013

The Capacity Case for HS2

 (Pointy shiny trains leaving Birmingham at 225mph. Most sensible!)

Few of those who know me will often accuse me of being indecisive on public policy issues in which I take an interest. I am also unashamedly enthusiastic about railways, and can therefore normally be counted on to be in favour of rail investment, whether it is rebuilding steam railways in Snowdonia, or righting the wrongs of Marples* / Beeching in the 1960s.

So, faced with a £42bn programme to build a UK TGV from London to Birmingham, Manchester and Leeds, I should be entirely on board with it, and indeed pushing for it to be built faster and further (to Edinburgh and Glasgow).

Well, not quite. Yes, clearly superfast trains that can get me from London to Edinburgh in 3h 38m almost an hour faster than the 4h 21m best today, and half an hour quicker than the (once a day) best time to Glasgow of 4h 08m. Indeed, London - Scotland would be significantly faster if a high speed line is built north from Manchester to Edinburgh, a distance of approximately 420 miles which at an average of 180 mph would give a journey time in the order of 2h 20m. Wonderful!

(331 miles in a straight line. Well within range for transformation by High Speed Rail.)

Indeed, with a 1h 15m flight time, plus getting to and from the airports, along with faffing around time at the airports, any time under 3h 00m from central Edinburgh / Glasgow to Euston would almost certainly decimate the domestic aviation market, especially as the high speed route will go via Old Oak Common with an interchange for Heathrow for international passengers, and to Crossrail for the City and Canary Wharf. (Better yet if it went via Heathrow, but we're not there yet). A significant reduction in the 299 flights / week from Edinburgh to six London airports (along with lots from Glasgow to London) will make a major reduction in CO2 emissions. Good.

But not at any cost.

The recent Institute for Economic Affairs (IEA) paper arguing that HS2 will cost £80bn has been widely rubbished, as it included all sorts of unrelated costs (e.g. Crossrail 2, which has precisely nothing to do with HS2 and needs to happen anyway for London and the South East) and ignored the fact that the current estimate of £42bn includes £14bn of contingency funds. And though the anti-HS2ers had a good political summer whilst there was nothing in the media, the reality remains that leaders of the Conservatives, LibDems and Labour are all more or less behind the project, though Labour has put a limit of £50bn on the cost.

All very sensible.

But what of the arguments that £42bn is a totally disproportionate cost to shave 30 mins off a trip from Euston - Birmingham and 60 mins off London - Manchester? And that the business case that treats all of these savings as "productive time" as people don't work on trains? These are risible messages, and are probably causing some sleepless nights in HS2 HQ.

(The perils of a mixed-traffic railway - comparatively slow freight trains...)

But they are also irrelevant in that the proper rationale for HS2 has always been one of capacity. The southern end of the West Coast Mainline (WCML) between London and Rugby, is, to all intents and purposes, full. And as a result, as demand rises - for passengers commuting to London, and for freight (largely containers) from the new port at London Gateway, capacity needs to be found from somewhere, or demand needs to be priced off the railway (a bad plan).

Thus, if something must be done, the question "What?" is next. And here's where the real rationale for HS2 kicks in. In the 1990s and 2000s, the WCML was effectively rebuilt at a cost of roughly £10bn. Though now complete, the cost and disruption of widening the southern end of the WCML from four tracks to six at least as far as the Trent Valley is so vast - you'd end up buying a 50 - 100 meter strip of England all the way up the line - including through the towns.... - that it is much easier to build a new line. And if you're going to build a wholly new line, the cost differential in building it for 250 mph operation and 140 mph operation is marginal, and therefore you go for the highest speed credibly possible.

This leads to a second pair of related points - high speed rail does two things very well. First, it is great at out-competing airlines out to around 500 miles with city centre-city centre connectivity. Beyond 500 miles, the faffing about with airports begins to be compensated for by an airliners speed. In other words, it will work brilliantly from London to Edinburgh / Glasgow.

Second, like motorways / freeways, to maximise volume, you need to keep the traffic moving at roughly the same speed to keep it from tripping each other. As a result, removing the high-speed services on the WCML will actually release even more medium speed commuter and freight capacity than you may originally assume. It's not for nothing that the WCML is Europe's busiest mixed-traffic railway.

Which leads to the final point.

Public policy should seek to maximise the benefits and minimise the costs. No great shock there. But HS2 is taking an inordinate amount of time to build as it is being funded on the basis that the money that the Department for Transport (DfT) is currently spending on Crossrail 1 will then be spent on HS2. This suggests that it is not being built in the most economical manner, but rather "how much HS2 can I get of £2bn a year, please?" DfT should urgently show that it is building the line as efficiently as possible - and if it would be cheaper to build it more quickly, then it should do so. As well as hurry up with true high-speed connections to Newcastle and Scotland's two main cities.

*Frankly, when the Minister of Transport also owned 80% of a large road building company, and closed lots of railways whilst building lots of roads, you'd think it was some sort of disgracefully ill-governed banana republic. But no, Macmillan's Britain. Gits.  

Is this the worst nuclear weapons policy ever?

(Actually, pace ConHome, this is one thing that didn't happen)

Despite our leading cartoon (credit: ConservativeHome), the LibDem conference this week didn't actually do anything to contest the policies of the Coalition, with the exception of the Spare Room Subsidy (aka Bedroom Tax). This was especially stark in two areas of nuclear policy - weapons and power, where the LibDems both approved the party leadership's preferred positions.

As a LibDem, I don't have a problem with the nuclear power position. Simply, the UK needs nuclear power to provide low-carbon baseload electricity, though if nuclear is to be subsidised (and it will be), then it makes more sense to me to have this as a publicly owned utility run on market lines. Otherwise, the lights will go out, and that's a problem that would require higher-carbon alternatives to bridge the gap, which is a distinctively bad idea.

But on the issue of LibDem nuclear weapons policy, the situation is rather different. In fact, I'd suggest that the LibDem's new policy position has a solid claim to being the most incoherent - and dangerous - of any party in a democratic nuclear weapons state since the dawn of the nuclear age.

As I understand party policy at this point, LibDems are now committed to:

(Steve Bell isn't entirely wrong.... but we're not saving 10%!)

- Building two or three SSBNs (unclear) at a cost of 93 - 97% of the cost of like-for-like Trident replacement (NPV cost of c. £25-33bn of capital 2018/19 - 2031/32, and running costs of c. £3bn 2030-50)

- Successor SSBNs to be carry 8 SLBM tubes for the Trident II D5LE. Each missile is capable of carrying up to 12 100kt warheads to different targets (MIRV), even if the UK wouldn't normally do so.

- A declaratory policy that the UK would not:
     - Conduct CASD patrols
     - Sail with the missiles
     - Arm the missiles

Let me offer eight grounds on why it is such a poor policy:

First, the UK's conventional forces are in need of very substantial investment in equipment between now and 2030. This is not only because of the bow-wave of procurement costs that has been building up since SDR 1998, but also because the tempo of operations over the last 20 years, combined with an ever shrinking pool of assets means that a significant investment bill is being built up. It is currently unaffordable with Trident in the programme. (See Chapter 4 of "Dropping the Bomb".)

Second, once Successor goes ahead, it will need to receive whatever resources it demands. Nuclear MoD types will smugly tell you that the V-boats came in on budget (true), but only because the budget increased and because of a favourable strengthening of the pound versus the dollar at the end of the programme. Given that two sides of the capability-time-cost triangle are fixed, cost is the only variable, meaning that it can only increase, taking further resources from the conventional forces.

Third, moving away from CASD increases crisis instability. And contra Danny Alexander and Sir Nick Harvey, if I were an aggressor with designs on the UK, I would 

(i) ignore the declaratory policy unless backed up by independent inspections - and therefore assume that the SSBNs were fully armed with max-MIRV Trident (96 100kt warheads), and 

(ii) I would specifically act against the submarines when they were all in port. Faslane / Gareloch is not that hard to get at, and there is only one route out of the Clyde. 

As a result, the non-CASD posture is actually more likely to create a short-notice crisis than to reduce it.

Fourth, the policy of sailing unarmed SSBNs about and having to return for arming speaks for itself. In a three SSBN world, you could knock out two in the Gareloch and ambush the third on its' return to Coulport. 
This assumes, of course, that the missiles were actually in the UK, which under current operations they wouldn't be; easier still in the two SSBN world. If we were to move to this posture, we would need to include the costs of maintaining a missile store and maintenance facility in the UK - the missiles are currently maintained at King's Bay, Georgia. These facilities were not included in the current Trident programme to save money; such construction isn't going to be cheap, and as a result will cut the (already meagre) savings vs. like-for-like further.

Fifth, despite Danny's frequent assertions of the in-depth nature of the Alternatives Review, the thinking in LD HQ is less clear cut. Whereas the Trident Alternatives Review (TAR) rightly frames a two axis chart of readiness and system technical capability, what the party has done is concentrate solely on the readiness element. 

Let's be clear: in technical terms, the notion that "Trident Lite" is "disarmament" is risible; it is nothing of the sort. What the LibDems are actually proposing is the purchase of half or three quarters of a pint of full-fat nuclear deterrent, rather than, to extend the metaphor to a free-fall option, half a pint of skimmed nuclear deterrent. 

With 2 SSBNs we can operate fully armed CASD for a limited period, and with 3 SSBNs fully armed CASD for an extended period. I would expect an aggressor state to see our position in this light, and make no change in their posture as a result of it. And to claim, as the leadership did, that the UK dealerting and Trident vfm study was causal in the US and Russia adopting New START is fatuous in the extreme - I can't believe that they believe it, either.

However, a free fall bomb programme - far from being "from the stone age" as Sir Nick Harvey told Conference on Tuesday - would be a real disarmament option as it is both less capable and at lower readiness than the Trident options the LibDems are now advocating. 

Sixth, consequently from point five, the fiscal savings that would accrue from going down to a free fall capability were not seriously examined. There are two possibilities: either, because the leadership actually just wanted Trident in some form, and think, deep down, that the UK needs that level of technical capability, or (and, I hope more likely) because the wrong question was asked. 

Based on what Danny Alexander said in his Demos fringe last Monday, it seems that the question asked was:

Q: "How much is a new warhead and how long will it take?" 
A: The TAR claims the answers are "14 years" and "£8-10bn". (Which is only plausible if AWE has lost much of its indigenous design expertise.)

However, to accurately cost the free-fall option, the question that should've been asked is

Q: "How much would it cost and how long would it take to build an existing modern design (US B-61 Mod 11, or if built, B-61 Mod 12)?" 
A: The TAR as published is silent on this question. But based on conversations here and in the US, the answers should be "2-3 years, or 12-18 months if you're in a hurry" and "Even if producing 50 bombs at Aldermaston is twice as expensive as it would be in the US, and we allocate £1bn for the infrastructure and capital works for the RAF, you'll have change out of £4bn."

Less than £4bn vs £25-33bn for Successor is all of a sudden a considerable amount of real money. Indeed, saving £2bn a year from 2020/21 to 2031/32 would increase the equipment programme by 45% in those years.

Seventh, in losing the savings from cancelling Successor, LibDems are at once opening ourselves up to looking "weak" by not backing like-for-like, and also failing to have the fiscal ammunition for the 2015 leaders' debate to challenge the Tories and Labour on where they were going to find £25bn+ on supporting the conventional forces, pointing out that we don't need the technical capability of Trident, but that freefall off JSF off the carriers will provide more than enough deterrence against Iran / Pakistan / DPRK. In neatly turning the question back onto the other leaders, the LibDems would also be in tune with the majority of British (and overwhelmingly of Scottish) voters who want Trident gone.

Eighth, politics is not static. If the LibDems were to move away from Trident, it is less problematic for Labour  - whose own policy is not defined yet - to do so as well. Having opted for this fudged Trident based solution, the opportunity and incentive for Labour to provide a non-Trident package at the next election is much reduced.  

(Get ready for some more of this.)

Sadly, the most likely outcome of all of this is that the UK will be stumble into a like-for-like replacement of Trident after the next election, and will end up denuding our conventional forces of the investment that they need in the 2020s and early 2030s to make good our role as a force for good in the world.

In summary, our new policy is not credible in strategic, financial or political terms. And as a party, we are already being lampooned for it - including by MoD ministers.

We deserve nothing less. 

Thursday, September 12, 2013

Trident - Why I'm voting to retire it

(How many SSBNs in this picture?!)

Ok, so if there were any regular readers of this blog, I suspect that they'd be getting bored of the current Trident focus. But see it through, as LibDem conference is next week, and Tuesday sees the first time in a generation that a major British political party is seriously debating scrapping the UK's weapons of mass destruction (WMDs).

There, I said it. WMD.

Enough of the euphemisms of "independent nuclear deterrent"; we're talking about 100kt thermonuclear warheads mounted on long-range, highly accurate rockets; truly, a WMD. And "deterrent" implies a positive value judgement - a good thing if it keeps the "bad people" (or, if you're George W. Bush, "evil doers") away. But unless it deters something or someone, it can't be a deterrent. Who is UK Trident deterring?

So, cross-posted from LibDemVoice. Happy to discuss, as ever.


Amid general agreement on the thrust of Julie Smith’s Committee’s excellent paper, and gratitude that Nick Harvey and Danny Alexander have delivered unprecedented transparency on the UK’s nuclear options, next Tuesday’s debate on defence offers two sharply differing views of the future of Britain’s nuclear future.
On the one hand, there is Nick Harvey’s proposal to retain the Trident missiles, their warheads and associated infrastructure, but reducing our purchase of new Trident submarines from four to two. This means that from the early 2030s, the UK will no longer be able to mount the standing patrols of Continuous At-Sea Deterrence (CASD) for the first time since 1968. Styled as a step “down the nuclear ladder” it was endorsed by Julian Huppert on Lib Dem Voice this week, though the Trident Alternatives Review dismisses Julian’s notion of new dual-role submarines.
The alternative view is being put forward by George Potter, and would see the UK withdraw Trident from service, reinvest the £30bn in capital investment that the new submarines would require in the UK’s conventional forces, whilst retaining the capacity to build nuclear weapons if future scenarios require it, and putting the UK’s scientific expertise to address the technical challenges of verifying nuclear disarmament.
Having written Dropping the bomb: a post Trident future for CentreForum and a primer for BASIC, I have strong preference for the second of these two positions. There are three reasons for this:
First, as there is no territorial threat to the UK or its dependencies in which Trident would be relevant, the case for an independent decision making pole that was the Cold War justification for the UK and French nuclear programmes is removed.
Second, after 20 years of close to continuous operations in the Balkans, Afghanistan and Iraq, Britain’s conventional forces are in need of major reinvestment. Between 2018 and 2032, this includes new armoured vehicles for the Army, frigates for the Navy and fighter-bomber and maritime patrol aircraft for the RAF. Additionally, there will be costs for achieving full operating capability out of the new army structures, the new aircraft carriers and the ambitious integration of the reservists outlined at the last defence review. This currently looks unaffordable.
Yet according to our analysis at CentreForum, replacing the Trident submarines will absorb between 25% and 33% of the defence procurement budget in these years, meaning that we are mortgaging the useful, conventional forces’ future in favour of a political weapon that we don’t need.
Third, I remain to be convinced that Nick Harvey’s proposal is strategically, politically and financially viable.
Strategically, two submarines instead of four will provide rather less than half the capability, and does mean that there will be periods when both vessels would be in port. A short notice crisis could require the UK to sail a missile submarine in a period of profound tension, increasing it just as we would be looking to de-escalate – a position avoided by CASD. The argument that sailing a submarine in a crisis would be a "demonstration of British resolve" is neither convincing nor comforting.
Politically, this proposal makes the Lib Dems appear as a caricature – sitting on the fence, without the courage of their convictions either to back like-for-like replacement on a strategic basis, or to present the British people with a clear narrative about why Trident is unnecessary. 
Financially, the proposal saves almost no money. Launching the Trident Alternatives Review, Danny Alexander estimated the savings of three submarines instead of four at £4bn out of the £110bn through-life cost; the savings for going to two submarines will be proportionately smaller as the research, development, basing and engineering support will merely be amortized over a smaller fleet. Worse, the savings are backloaded, meaning that a compromised Trident force will still mortgage the future of the conventional forces re-equipment plan. Far better to reject Trident, reinvest the savings and then challenge the other two parties to explain how they will be able to fund the conventional forces’ as well as Trident.
Given the choice, the party should back George’s amendment because it is more strategically, politically and financially coherent than the motion’s text.

Friday, September 6, 2013

Trident policy briefing

(We can get it to do something more useful, you know....)

I've been beavering away with the British American Security Information Centre (BASIC) to put together a short primer for the Liberal Democrats' autumn conference on the choices available for Trident. It's now done, and is available here