HS2 to boost UK economy 'by £15bn a year' says report


Transport Secretary Patrick McLoughlin: "The main reason we need HS2 is a heart bypass for the clogged arteries of our transport system"

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A new report says the HS2 rail project could boost the UK economy by £15bn a year.

Transport Secretary Patrick McLoughlin presented the findings as he reasserted the case for the new rail line.

The report, from accountants KPMG, says that regions outside London will be the biggest beneficiaries of the new service.

But the economic boost will not be felt until 2037, it says.

In a speech at the Institute of Civil Engineers, Mr McLoughlin argued that rejecting HS2 would amount to a "national loss of nerve".

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KPMG is ignoring one of the fundamental causes of lacklustre growth in many parts of the UK, which is a shortage of skilled labour and of easily and readily developable land”

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HS2 was necessary because the "clogged arteries" of the nation's transport system needed a "heart bypass", he said.

But Mark Littlewood, director general of the Institute of Economic Affairs, told the BBC: "Any private investor would consider this to be a colossal waste of money.

"That is not to say that we don't need to improve capacity. Rail is an extraordinarily expensive way of doing that."

The government was asking UK taxpayers to take "a huge gamble on their extremely dodgy numbers", he added.


Mr McLoughlin argued that the benefits of HS2 were not simply faster journey times and new jobs, but up to 500,000 fewer lorry journeys a day on the country's roads, according to a separate report.

"High Speed Two will make Liverpool stronger. Manchester stronger. Leeds stronger. Britain stronger", he said.

"A £15bn annual boost to the economy. With the North and Midlands gaining at least double the benefit of the south."

Dismissing "scare stories" over the budget, he maintained that it would remain £42.6bn, with a contingency fund of £14.4bn.

But earlier this week, the Public Accounts Committee (PAC) criticised the scheme, saying: "So far, the Department [of Transport] has made decisions based on fragile numbers, out-of-date data and assumptions which do not reflect real life."

The committee also said there was no evidence the line would help the growth of regional cities and would instead draw even more business to London.

KPMG's report was commissioned by HS2 Ltd, which is a non-departmental public body wholly owned by the Department for Transport.

Report author Richard Threlfall, KPMG's head of infrastructure, said: "What I hope this work will do is put some new evidence into the debate, because what we've seen over the last few months is an awful lot of opinions and to be honest not a lot of evidence on the ground as to what effect this will have.

"And what our report shows, beyond any reasonable doubt, is that HS2 will deliver massive benefits to the UK economy."

Map showing the route of phase 1 & 2 of the proposed high-speed service

John Longworth, director general of the British Chambers of Commerce, told the BBC: "Businesses up and down the country are absolutely convinced that this is a really important infrastructure project. It is one of the key infrastructure projects for the UK."


This report tots up the benefits in a new way.

It analyses how better transport links have apparently fuelled business and productivity across various different cities, then applies that to HS2.

Saving time still plays a part, but it's a smaller part.

Instead, there's more importance placed on all those extra seats this scheme provides, not just on the new high speed trains, but on the rest of the rail network too (all those extra commuter services we're being promised).

Critics say the government is just moving the goalposts in a desperate bid to make its project look better.

He argued that simply renovating existing rail lines that were "creaking at the seams" would cause "chaos".

The latest study was commissioned by HS2 Ltd, the company responsible for developing and promoting the project.

It says Birmingham's economy could be boosted between 2.1% and 4.2% a year, while Manchester would benefit between 0.8% and 1.7%.

For Leeds, the boost would be 1.6% and London 0.5%.

Conservative MP Andrew Bridgen: "Enough is enough. This is tremendously bad value for money"

Wednesday's report calculates the benefits of the project in a different way from previous efforts.

Time saved is a less important part of the calculation. Instead, the report includes the benefits of extra seats, which means passengers will be able to work while travelling.

It also takes into account the reduction in congestion elsewhere on the network.

"The point about High Speed Two is that you won't have to travel on it to gain from the better transport system and economic growth it will support," he said.

The high-speed line would run between London and Birmingham from 2026 before being extended to Manchester and Leeds from 2033.


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  • rate this

    Comment number 118.

    This will be another shambles of a project, much the same as the Edinburgh tram system, delayed, way over budget, needless and with no benefit to the people at all.

  • rate this

    Comment number 117.

    Right well stop messing about and build it then. Thanks...

  • rate this

    Comment number 116.

    What is it with these spoilt children? Young Dave getting in a strop because we we won't play war in Syria and young Gideon getting mardy because he can't show off his train set to the big boys.

    They should be sent to bed until they learn to stop playing with other people's money. Corporal punishment might be the answer - but they'd probably enjoy it.

  • rate this

    Comment number 115.

    And I'm now putting my hand into the hat of numbers..to pick the winner ....and the winning number is .........£15bn per year!!!

  • rate this

    Comment number 114.

    What kind dream world is McLoughlin & these incompetent tories living in 15bn a year & not till 2037, 24 years time you got to be joking,this government haven't got most things right year to year let alone 23 years time

  • rate this

    Comment number 113.

    No ordinary people trust Dave and George - we've seen their attacks on the most vulnerable, austerity for the many and the cosseting of the few, the carve up of precious national assets - so anything with their prints on is treated with suspicion. This is just another way to give taxpayers' money to the rich in the form of subsidy, which will then result in profit and dividends for the rich again.

  • rate this

    Comment number 112.

    I'm pretty sure a speculative report doesn't count as evidence. Sorry KPMG.

  • rate this

    Comment number 111.

    Why not create new rail lines linking ports & the industrial centres just for the transport of goods & materials & get most of the lorries off the existing roads. That would really make an impact on all our lives.

  • rate this

    Comment number 110.

    The report would have more credibility if it had been authored independently. The assumptions that Northern cities may benefit financially in the longer term is feasible although this would of course be offset from reductions elsewhere, particularly in London. I look forward to reading the report in detail.

  • rate this

    Comment number 109.

    Anyone can make a report say what it wants

    So why are there so many people opposed to this, Money being spent on something no one wants? The North South divide, as why everything has to lead to LONDON?????? Knowing what we all know now, a budget set which will double or triple? A case of the project put in place with out completion penalties or costs running over,normal government projects DO

  • rate this

    Comment number 108.

    Meanwhile we have a captain of politics lecturing folk who use food banks, who can't manage their finances. Hello Mr Gove, this H2 whatever its called will cripple dear old'e UK financially, this will be govt managing to poorly control its own finances! Unless of course your one of the ministers to gain something else with this project?

  • rate this

    Comment number 107.

    In the words of Karl Pilkington: Bull ****

  • rate this

    Comment number 106.

    Because railways are no longer nationalised, maybe the private train operating companies should pay for their new toy, not the UK taxpayer.

  • rate this

    Comment number 105.

    No mention of how these imaginary £billions will be generated, just figures.

    The talking head from KPMG says that our 'grandchildren will expect us to invest in the rail infrastructure'. Whilst I don't wholly disagree with that, I'm sure those same grandchildren won't want a debt mountain handed to them to pay off either.

    Pay down the debt Dave, or doesn't that suit your City mates?

  • rate this

    Comment number 104.

    Similar projects to this have been implemented in other major European countries, including France and nowhere have they produced the benefits to the regions that their governments had claimed.

    Yes, we do need better and - let's say it loud - more affordable train travel. So let's focus on improving and expanding what we have - not a white elephant ride to London!

  • rate this

    Comment number 103.

    Milliband, state that you'll cancel this project and you're a dead cert at the next election. It would actually make you seem like an alternative to "Dave" rather than a clone.

  • rate this

    Comment number 102.

    There is a band of loud mouths hitting the media and the lobby and criticising this project.

    Their objection? They don't like money being diverted away from London to 'the regions'. They can't admit that so they just bray like donkeys to drown out the benefits of providing the country with a real transport network.

  • rate this

    Comment number 101.

    Who is going to benefit (hugely): HS2 Ltd. Who's going to pay? You, me, my children & my grandchildren.

  • rate this

    Comment number 100.

    How can any person on this earth predict what will happen in 2037, those people in charge of this country are on another planet. What the populace of this land want is an infrastructure that will work and give them what they have been paying for for years gone by. The monies for this project should be spent on updating the existing system to bring that into the 21st century. Join the real world.

  • rate this

    Comment number 99.




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