Friday, October 29, 2010
FORTH BRIDGE SCANDAL - a guest post by Tom Minogue
I have spent a lifetime in the engineering industry including 25 years running my own company, Kingdom Engineering, which carried out several structural contracts on the Forth Road Bridge. Kingdom fitted the 4 Crossover Points that allow traffic to be diverted from one lane to another. This work was carried out in difficult working/access conditions on a firm fixed-price basis and to the high standard and it struck me that to have a 5th central lane on the entire length of the bridge allowing for inflation would cost the taxpayer about £10 million.
So I know something about construction costs and that is why I was astonished when the estimated price for a new bridge started at £500 million and in a short space of time rocketed to £4.6 billion before settling at its current extravagant level of £2.3 billion. By any comparison this price is astronomically high.
Given my concerns I tried to find out the hourly rates of pay of the various grades of professionals (without revealing their identities) involved in the £100 million Management contract that has already been awarded for the new Forth Bridge only to be informed that this information was “environmentally sensitive”.
That such a sum of our money is spent secretly before a blow is struck on the construction of the proposed new £2.3 billion Forth Bridge is alarming considering that this bridge is priced at many times more than any comparable bridge worldwide!
This exorbitant pricing was evident in 2007 when John Swinney rejected a 1 mile long tunnel under the Forth on the basis that it was too expensive as it would cost £6.6 billion. Yet just this week the 36 mile long Gotthard tunnel broke through the Alps—cost for this massive 17 year project? £6 billion!
It seems as if any public works carried out in Scotland is subject to a multiplication factor that defies logic.
Perplexed by this anomaly I attempted to persuade the Scottish Parliament that we should get value for money on the construction contract for the new Forth Bridge by proposing the introducing of an amendment to the Forth Crossing Bill to ensure fair competition and anti-corruption/price-fixing clauses. However my objection to the absence of such measures in the Bill was overruled on a legal technicality by the parliament’s lawyers.
Secret Scotland, supported by teams of sharp lawyers is alive well it would seem. But I know who will pay for it at the end of the day in terms of money and damage to our reputation, and you wouldn’t need a Philadelphia lawyer to tell you who that will be.
Editor emphasis added. Note that by making a 5th lane tidal (ie taking the southward rush hour traffic in the morning & northward in the evening the maximum capacity of the bridge is raised by 50%. Also in their previous letter the government asserted that recabling with associated "lane and carriageway closures, would potentially result in:
economic output falling to a level in the order of £1 billion below that anticipated were the bridge to be operating normally" etc.
If this is truthful then not only could the cost be removed by first building the 5th lane but such a lane, using these same calculations of traffic change, would immediately increase Scottish GNP by £1 billion. Personally I am coming to doubt the total truthfulness of anything government says but if it is even 10% true that means £100 million & since a fifth lane could be added quickly while a new bridge will take 9 years Mr Minogue's option would create at least £800 million for the economy (£8 billion if the government is being truthful). Work on that could start immediately & clearly should.
Britain’s economy grew in the third quarter by twice as much as economists forecast ... Gross domestic product rose 0.8 percent in the three months through September after increasing 1.2 percent in the previous quarter... Services, which make up 76 percent of GDP, grew 0.6 percent on the quarter, the statistics office said. Industrial production rose 0.6 percent, driven by a 1 percent jump in manufacturing. Construction increased by 4 percent on the quarter and 11 percent on the year, which was the fastest annual pace since 1988.Taken together that is 2% for 6 months, equivalent to 4% annually, which is indeed rather better than the 2.5% previously.
Bear in mind that just over 50% of the UK economy is government spending. This means we have seen 8% growth in the productive parts of the economy, even without (or before) any serious reforms & when business confidence was still low. The 9% growth which I once believed to be the target is clearly achievable. Since then I have calculated that a growth rate of 23.8% is perfectly possible in theory. If the will were there (& without bad luck).
Which brings us to the other good news (depending). A few days ago David Cameron gave a speech to the CBI which contained almost everything I could want. Including this promise
That forensic, relentless focus on growth is what you will get from this government.The entire speech, which has been reduced by the media to the "relentless" remark & a promise (which isn't there) for lots of parasitic "green" jobs, is worth reading.
: showing or promising no abatement of severity, intensity, strength, or pace : unrelenting (relentless pressure)(a relentless campaign)
That is really all that is required. What is needed for growth is well proven - the problem is that it is often politically easier, at least in the short term, to run the government simply to placate vested interests. If Mr Cameron & his party (& the other party) are genuinely going to pursue growth "relentlessly" they will achieve it.
I previously wrote on 16 points to get out of recession & it pretty well still stands:
1 - Cut the deficit then
2 - Cut Corporation Tax to Irish levels
3 - Cut business rates
4 - Gut the H&S Executive
5 - Allow as many nuclear plants as the free market wants
6 - Improve roads
7 - Adult job training
8 - Automated rail
9 - Quit the EU
10 - Allow housebuilding
11 - End excessively destructive "environmental" regulations
12 - Keep the £ low
13 - An X-Prize Foundation
14 - Put money from further growth into cutting taxes
15 - OTEC powered floating islands
16 - Minimum price purchase guarantee for anybody setting up a plant mass producing nuclear reactors in the UK.
A lot of those would take political courage to stand up against various vested interests but I don't think anybody can dispute that they would significantly promote growth. Mr Cameron has made his absolute promise here & I think all people with the country's best interests at heart should encourage him not to relent, or at least, politics involving real people, not to relent very much & always to keep the target in mind.
Since the previous entry I have a few more suggestions:
17 - Government should recognise that, vital though the free market is, a strategy of promoting technology is at least equally so. Strategy of Technology by Possony, Pournelle & Kane should be required reading for anybody involved, as it has been for US officers for many years. It is about the need for society to promote technological goals to achieve military supremacy, as indeed they did when the USSR found it could not match the technology of the SDI programme. The authors had been decisive in promoting SDI. However the same principles apply equally, if not moreso, in the economic field where our most aggressive competitors are China & India & our only major advantage is technology.
18 - Beyond an official technology prizes foundation (#12) mainly orientated on space technology, the government should give extensive tax relief for any privately funded technology prizes. Prizes mean that though government can choose to have winners, simply by putting up enough prizes, they don't have to try to pick the winners in advance as grant funding does. Private prizes have the additional benefit that people thinking outside the traditional government "box" can come up with ideas & promote them. This is less important for space development where the technological challenges are mainly engineering & the problems well understood. By comparison pure science prizes, like the M-Prize whose importance to aging research cannot easily be underestimated, has achieved repeated successes with funding which government would consider insufficient to carry as pocket change.
19 - Adopt as an aim that 2% of our GNP should be available for these private & public X-Prizes. Most of this could come from a reduction in grants, it would certainly lead to a far more than 2% increase in GNP (probably much more than a 2% increase in the annual rate of GNP growth) & would do far more for British status worldwide & long term security than the 3% of GNP spent on the military. The evidence is that prizes are 30-100 times as cost effective as the normal government grants & advance payments. If they don't produce results obviously no prize is awarded so that is infinitely more cost effective :-)
20 - Stop subsidising windmillery. One major driver of successful economics is inexpensive & plentiful energy. Windmills (& other "renewables") are both expensive & intermittent & are virtually a recipe for economic decline. If there were any truth to the catastrophic warming scare far & away the best way of cutting CO2 would be by nuclear power. That the "environmental"/Luddite lobby is overwhelmingly opposed to nuclear is clear & apparently indisputable evidence (at least they refuse to dispute it) that they themselves believe their catastrophe story is untrue.
21 - Encourage the production of an international HVDC grid. Putting up cables immediately to Norway, Iceland, Canada & Russia could be done faster than completing several new reactors & would prevent the probability of blackouts. Since all 4 of these countries have some of the world's cheapest electricity while we have some of the most expensive the advantages of being able to trade are obvious. In the longer term an international grid would have all the advantages & more* that the national grid had over the 1920s local production. *More being that, because demand is closely linked to daytime, off-peak electricity can be sold across time zones. Starting such a grid would not only help the British economy & put us at the centre of a major new trading market, but keep the rest of the world, or at least all countries that chose to participate, out of recession too.
22 - Hold a top level scientific conference, inviting real scientists, including Nobel winners, not administrators, to produce a definitive position on whether the no lower threshold (LNT) theory on radiation damage, or the competing one called hormesis, which says it is beneficial, is true. So long as it was a real scientific, evidence based, symposium I have no doubt that the LNT theory would be discredited since there is no actual evidence for it. The effect of this on discouraging anti-nuclear hysteria can hardly be underestimeated.
23 - Set up a British space base on Thule & use it to launch spacecraft allowing Britain to reach "Mars by 2015, Saturn by 2020" or earlier. This was originally costed at $1 billion in the 1960s & current costs, amortised over a decade, are easily affordable. The economic benefits of controlling the universe are considerable, if difficult to fully quantify immediately.
OK I think you can be a relentless supporter of growth without endorsing #22 even though it would give us all the Dan Dare stuff we were promised. And it would work
I hope David Cameron is genuinely determined to push "relentlessly" for growth, rather than it just being a politician's promise. Perhaps he isn't sure himself. However I am convinced that a number of other members of the government are & he has now put down his clear & undeniable marker that this is what he intends to do. Any time the government are faced with a decision to falter they must be reminded of this promise. I believe everything I have suggested both now & 2 years ago when I first proposed most of them, are feasible. Indeed none of them are particularly expensive compared to even modest GNP growth (1% GNP growth generates £3 trillion over 2 decades). If even half of them were pushed hard enough we would become easily the most successful sizable economy in the world & this government would go down as being as successful as any in history.