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.

'Stronger'

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criticised the scheme, saying: "So far, the Department [of Transport] has made decisions based on fragile numbers, out-of-date data and assumptions which do not reflect real life."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
'Creaking'

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."

Analysis

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
    +6

    Comment number 138.

    An entirely unscientific survey, but I've just asked 22 colleagues here in London three questions.

    1, Have you been to Birmingham? 4 of the 22 had

    2, Do you want to go to Birmingham? 0 of the 22 replied yes

    3, Is spending £80B+ on getting there 20 minutes faster worth it? A resounding no.

    Wherever you are, try it in your building & lets see if there's ANY support for it.

  • rate this
    +7

    Comment number 137.

    For a start, I've worked with KPMG. imo they'll say anything because they get lots of highly paid consultancy work from large UK projects.

    Even if they're right and there is £15b benefits, not until 2037? Half of us will be dead by then!
    We need investment in smaller projects that will bring benefits now not in time for my grandkids!

  • rate this
    +2

    Comment number 136.

    Another day dream by Dave and Dim George.
    It will bring the same benefits as the privatisation of the Railways and the Power Industries. Increased costs for the consumers. The Posh Boys do like to play.

  • rate this
    +4

    Comment number 135.

    Get all the lying pro-HS2 MPs in a room and ask them to explain the business case.

    Ask them why they didnt factor in that most business people on trains spend most of their time productively using laptops/tablets/mobiles.

    The lying has to stop.

    The lobbyists have to be kicked out along with their sidekick MPs.

    There is NO business case for this and everyone knows it.

    Spend the money elsewhere

  • rate this
    +2

    Comment number 134.

    If the problem is capacity then:

    1. Reduce number of people
    2. Increase capacity of existing trains.

    Option 1 is causing issues in every area of our lives. Option 2 is as simple as spending a bit of money increasing the height of railway bridges and tunnels and buying new double decker trains.

  • rate this
    +7

    Comment number 133.

    Another example of big project that will do very little for most people.

  • rate this
    +45

    Comment number 132.

    25 years before the benefits are felt?. Wow, that's convenient for all concerned. Writing a report with no responsibility or accountability should it be inaccurate.
    I suggest KPMG are made to wait 25 years before getting their fee for creating this "report" in case it's all a load of bull.

  • rate this
    -1

    Comment number 131.

    HS2 will benefit many areas of the UK.
    It will also increase internal Tourism & Business across the UK.

    Or should we improve only the South?
    For many years the Media & Labour have complained that not enough other areas of the UK have benefitted by our infrastructure - so why are they STILL griping?

    Just Political bias - as ever...

  • rate this
    +3

    Comment number 130.

    If HS2 is such a good thing let the train companies and other companies who think its a good idea put up the money for the building of the line and stop this government spending money on vanity projects that only going to swallow tax payers money and not come in on budget. If these companies see that there is a profit in it they will build it but if there is not profit in it they will not build it

  • rate this
    +4

    Comment number 129.

    "HS2 to boost UK economy 'by £15bn a year"
    Faster trains will bring in all that extra money is as likely as increasing the speed limit on the motorways bringing an extra £30bn to the economy
    It is all utter rubbish.
    If its that good let private industry pay for it not the taxpayer, they will not because the scheme is a big WHITE ELEPHANT only to serve the Dave's mates.

  • rate this
    -8

    Comment number 128.

    121 This is the kind of stupidity the MPs are up against.

    200 year old technology - yes it's still around because IT WORKS.

    Get lorries off the road? How else are you going to get stuff to shops and into peoples houses?

    Improve the quality of life... too generic, any ideas on what you actually mean?

    Silly silly silly communist!

  • rate this
    0

    Comment number 127.

    It's hard to fully appreciate the link between economic growth and high-speed rail.

    The relationship between 'futuristic business' and economic growth is easier to understand.

  • rate this
    +6

    Comment number 126.

    ..and with one bound he was free.

    What a lot of nonsense. How desperate does a government have to be to pretend that they have ignored £15bn a year of benefits, only for a KPMG staffer to suddenly stumble upon it.

    HS2 is an ill-conceived solution to an ill-defined problem.

    Go away, Messrs McLoughlin, Cameron and Osborne and think again. Better still, just go away.

  • rate this
    +1

    Comment number 125.

    I have worked at a rail company for a number and I can confirm the state of privatized railway has made a complete mess of British Rail. Profit is always turned into bonuses rather than properly re-investing, pricing is inconsistent across all companies. ATOS the company behind the Rail IT infrastructure refuse to develop new systems and control the future of British Rail.Each TOC has to pay them.

  • rate this
    +5

    Comment number 124.

    Remember the 2012 olympics delivery company that was wound up and paid everyone involved a nice big redundancy package?

    This is what will happen with HS2, lots of chums of the government will get jobs and in 2030 will get a nice comfortable retirement thanks to a BBC style pay off.

  • rate this
    +1

    Comment number 123.

    If we really must have a HS2 line why not just build it along the old Great Central Railway, that way it would move up the centre of the country if you must you could have it via of towards Manchester but the original line would take it to Sheffield and you could continue it on to Leeds via Huddersfield.

  • rate this
    +3

    Comment number 122.

    85. Mr Wonderful
    "Oh, totally credible, then, despite the lack of any explanation as to how the £15 billion benefit will be generated."

    I really can't be bothered to wade through the entire 95 page report on KPMG's site but I suspect that is where you will find your explanation, credible or not. Get back to me if you make any sense of it or are convinced by the arguments.

  • rate this
    +1

    Comment number 121.

    Why invest so much money in 200 year old technology. There must be better ways to boost the economy, improve the internet, get lorries off the roads, improve the quality of life.

    If a project can not pay for it's self in 2 years then it should not be considered in these tough economic times, it will only icrease our debt level.

  • rate this
    0

    Comment number 120.

    Only 15 Billion, Is that all? Don;t bother then!

  • rate this
    +1

    Comment number 119.

    Now speed isn't the point, why not build a much cheaper ordinary line. Given they have done a complete about face on the use of journey time the slower it goes the more work people can get done. Increasing national productivity.

    Of course now there is no case for a speed line, so none for HS2, capacity would better be added on existing lines, dealing with choke points, providing passing track.

 

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