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Thursday, 19 March 2020

COVID-19 Impact on HS2

COVID-19 impacts HS2 in several ways.

Teleconferencing

Firstly, there is the long term effect of home working and teleconferencing, which may reduce the future demand for rail travel.


Complete article:


There's a similar, though more in depth, article about the long term effects of home working and teleconferencing in The Telegraph.


Compete article:
https://www.telegraph.co.uk/politics/2020/03/20/working-home-could-popular-ever-huge-consequences/

The Telegraph article is a Premium article so you may not be able to read the entire article. Some interesting paragraphs are:
The healthier of our railway franchises depend on the sale of season tickets to maintain their farebox (one of the reasons why the East Coast franchise has consistently run into trouble is the low demand for season tickets on that service). And yet, in the third quarter of the 2019/2020 financial year, despite constant and record-breaking growth in overall passenger numbers across the network, season ticket sales were at their lowest since 2010/2011. Season ticket revenue accounted for 33.7 per cent of all franchised journeys between October and December 2019 – the lowest share since records started being kept in 1994.
In other words, even before this current crisis, home working had become popular enough to start making a difference to season ticket sales: why pay thousands of pounds a year to travel Monday to Friday when you know you’ll be at home on at least one, perhaps more, of those days every week?

Economic Impact

And then we have the economic impact.

The government had been intending to raise the £100bn to pay for HS2, not from taxation, but by borrowing. Until very recently the UK government had been able to borrow money on international markets at very attractive rates of interest (almost zero).

That situation has now changed. This is a clip from BBC News, explaining that rates of interest charged on UK government borrowing have suddenly increased, giving the Chancellor a big problem: :