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".

Start Quote

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”

End Quote

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criticised the scheme, saying: "So far, the Department [of Transport] has made decisions based on fragile numbers, out-of-date data and assumptions which do not reflect real life."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
    +4

    Comment number 718.

    Why does the British tax payer have to pay for this? Thatcher (the witch that you so kindly donated 10m toward her funeral) privatized just about everything except your Kitchen sink! Hence your nightmare utility bill costs. So the British Government should make the Rail companies pay for it! Oh I just saw a flying Pig laughing out Rip off Britain, unless one goes to Eton!

  • rate this
    0

    Comment number 717.

    @698Daemy
    As originally configured HS2 will not carry freight. It would be too limited for that anyway, w/high speed timetable & linking only 2 cities in 1st stage & a handful more after 2nd stage completion.

    As I understand it, rail industry wants freight capacity on a new central Britain line so that it has time for maintenance on existing routes in order to increase their passenger capacity

  • rate this
    +1

    Comment number 716.

    I managed to find the Stop HS2 website, can anyone direct me to its associate Stop CrossRail ?

  • rate this
    +3

    Comment number 715.

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

    I struggle to believe this given the source... First hand experience of him in his role as MP! He oversaw relocation of medical center from a prime central location, close to care homes and good links, to the outskirts of town, on green belt land with only two buses a day... Genius!

  • rate this
    +51

    Comment number 714.

    I believe HS2 will shave 20mins off a London-Birmingham trip but the train won't terminate at New St Station in Birmingham. If you want to travel north from Brum before (or if) the line is extended you'll have to walk across town to get to New St. Which, by the time you reach the Platform in New St for you connection will probably take around...20 minutes! What a waste of money for no benefit.

  • rate this
    0

    Comment number 713.

    Widen the existing WCML trackbed and you have to demolish houses and offices, widen the tunnels and bridges and cause untold chaos until it is finished. Double-decker trains would cause the same amount of chaos. Increase the length of the trains and you slow the network down. The easiest solution is to BUILD A NEW LINE.

  • rate this
    0

    Comment number 712.

    "Half a million fewer lorry journeys a day" this is simply not true,and if it was it means half a million drivers out of work which will then cost us in social security payments.The department of transport love to cause trouble and waste money,look at the motorway network and the problems they have been causing for the past 18 months just so they can install speed cameras and variable speed limits

  • rate this
    +2

    Comment number 711.

    Total waste of money a vanity project by this goverment to give huge amounts of tax payers money to their friends in th construction industry to build this white elephant.

  • rate this
    +3

    Comment number 710.

    687. continentview

    "Thanks God that the victoriens where not that anal retentive otherwise the UK would still use canals..."

    Thank god that they cared about making things that last and have character, and didn't have the technology to trash the country as has happened since. All we've needed to do since then is improve working conditions but we've ruined the country too.

  • rate this
    0

    Comment number 709.

    The problem is with the HS2 predictions is that no-one making them will be backing up their claims with their own personal finances. Not Cameron, Osbourne or the 'faceless ones' at KPMG would be willing to invest their own assets in HS2 on the promise of a return when their predictions are realised in full. What baseline & measures would they use after all? A good question to answer now I think!

  • rate this
    +1

    Comment number 708.

    As in all privatisations the only useful services will be classed as ' Premium ' and you'll be charged 6 times the reasonable price because someone in a red or blue cloak with a little hat will smile at you for 3 seconds.

  • rate this
    +3

    Comment number 707.

    The new report focuses on the benefits of extra seats. So reduce the number of unused seats in first class. Problem solved.

  • rate this
    -3

    Comment number 706.

    WHY would anyone with any sense want to get to Birmingham 'faster'? OR is it to get out of there faster?

  • rate this
    +1

    Comment number 705.

    if its a free market the govt should not be building anything. all it will be will be a direct subsidy to private shareholders who put their money in tax havens. british people are still lions led by donkeys. the uk taxpayer is being farmed by private companies with the connivance of the govt.

  • rate this
    +3

    Comment number 704.

    692. 90005Nelson
    Why not invest in double-Decker trains and double the railway capacity for everyone.!!!"

    Because you would have to rebuild all the bridges over the railway and re-align all their approach roads, and you would have to re-dig all the tunnels.

    A non-starter.

  • rate this
    +2

    Comment number 703.

    692. 90005Nelson

    simple, valid question, simple answer. Whats called the 'loading gauge' of the majority of UK railway will not allow higher double deck trains. Its an idea that has been tried & dusted off more than once, but it would mean every single bridge and tunnel on a route would need to be rebuilt, raised or enlarged by several feet, and it would cost more than HS2 !!

  • rate this
    +2

    Comment number 702.

    Be interested to see the names of directors/board members of the companies on this HS2 gravy train, another conservative piggy bank retirement fund....

  • rate this
    -5

    Comment number 701.

    HS2 will be good for the UK. All aboard!!!

  • rate this
    0

    Comment number 700.

    Invest the £50bn on social housing, property for 1st time buyers, fibre-optic broadband, & manufacturing. Putting your eggs all into one basket is ridiculous. We are £1.2tn in debt.

    This £50bn is borrowed money.

    We have the ability to borrow money at low rates to invest in infrastructure that facilitates a competitive economy & helps reduce state costs: i.e., social housing over private.

  • rate this
    +1

    Comment number 699.

    I read this HYS and it just reminds me of how many sheep are still out there.
    Tell me how H2S will benefit all of us that pay tax but will never use it. A bit like Fracking, how will that help the public when its allready been said it wont make gas cheaper. Please wake up!

 

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  60.  
    Welcome to Thursday Chris Johnston Business reporter

    Good morning from me and Matthew West. Another busy day of business news coming up - we'll be here to guide you through it all. Get in touch with your comments at bizlivepage@bbc.co.uk or on Twitter at @bbcbusiness.

     

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