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criticised the scheme, saying: "So far, the Department [of Transport] has made decisions based on fragile numbers, out-of-date data and assumptions which do not reflect real life."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
    -2

    Comment number 738.

    HS2 a project just for londoners, when will the politicians learn there are 63.2 million people in england and only 8.2 are in london. Why not invest in some projects that will help the rest of the populous for a change?

    Why not hold a referendum and see how many people really agree with wasting this money on HS2!

  • rate this
    0

    Comment number 737.

    ah the gov say it will benifit britain... which as per usual means london.
    They do realise that we voted them to run the UK not a city in one of its countries, Right?

  • rate this
    +4

    Comment number 736.

    I still cannot understand why so much emphasis is put on reducing journey times - its a complete fallacy: what the travelling public actually want / need is a train with seats that runs on time at reasonable cost.

    If people want to get from Edinburgh to London quickly they'll fly ! modern telecoms means we can video-conference and in many cases a journey simply isnt needed any more.

  • rate this
    +3

    Comment number 735.

    Love the opening lines from KPMG
    We accept no responsibility for the consequences of this document being relied upon by any other party, or being used for any other purpose, or containing any error or omission which is due to an
    error or omission in data supplied to us by other parties.

  • rate this
    +1

    Comment number 734.

    Why are we wasting so much money on trains when over 90% of journeys are by road? The roads in the UK are a disgrace.

  • rate this
    +1

    Comment number 733.

    @730 Drewbonce: Investment? I don't see any investment in my part of the country. None at all.

  • rate this
    0

    Comment number 732.

    HS2 is for the richest of society who will drive up property prices by being able to commute to London to quicker and easier by having their fares subsidised by the poorest in society who won't be able to afford HS2.

  • rate this
    +1

    Comment number 731.

    At last some more professional research than the flawed claptrap seen previously, but I still continue to be amazed at the eye-watering amounts these projects cost - incompetent tendering by civil servants again? In any case the argument shouldn't be does HS2 justify itself it should be will we get more benefit spending the money a different way?

  • rate this
    -1

    Comment number 730.

    What's wrong with you moaners. Without investment in our infrastructure we'll be nothing in a few years. Increasingly people want to travel for business and personal reasons.
    No doubt a few Victorians complained "why build these horrible trains when we have an excellant stage coach service".
    Thank God no one listened to them otherwise we would now be a country on a par with Belgium.

  • rate this
    +1

    Comment number 729.

    A significant part of the cost of HS2 is likely to be the design choices they made to achieve the speed the Ministers wanted, which essentially meant the line couldn't follow any existing transport corridors. If they'd allowed a slightly lower line speed, it could have followed existing corridors so been less costly and less destructive. They may even have had some spare change for other HS lines.

  • rate this
    0

    Comment number 728.

    Instead of using the money on something we don't need, why don't we use it on something we do (three nuclear power stations are roughly the same price.)

  • rate this
    0

    Comment number 727.

    WASTE OF MONEY NO THANKS........

  • rate this
    0

    Comment number 726.

    Utter guff.

    All this will create is more national debt.

  • rate this
    -3

    Comment number 725.

    One of the problems with Concorde, if you recall, was that it was TOO SLOW...

  • rate this
    -1

    Comment number 724.

    Finally, the 'benefits' of working on-train have been added to the project (Dept of Transport finally entering the 21st century) resulting in a more realistic business case. The idea that we could put HS2 travellers on motorways, on already-crowded railway lines or on aeroplanes seems bizarre and, might I add, ridiculous.

  • rate this
    +1

    Comment number 723.

    Simply moving the goalposts (now economic growth instead of time savings) does not make this hugely expensive vanity project any more attractive. Assumptions are still flaky. Perhaps a real test would be to insist on private sector investment (50%?) based on a share of future revenues - I doubt there would be many takers.

  • rate this
    +5

    Comment number 722.

    The whole concept of HS2 is fundamentally flawed - a large scale political legacy exercise. The proposed budget will be nowhere near the real spend as costs will spiral out of control due to private sector contractors milking the public cash cow. Much better to use that investment on the wider network and rolling stock so there is a public benefit - not just for south east expense account types.

  • rate this
    +1

    Comment number 721.

    I have had a brief read through of the report – commissioned by HS2 Ltd – and it really is nonsense. The figures are guesses based on what they imagine might happen many moons from now. While the £15bn economic boost is mentioned, this is still many years after some 40-80bn spent on building the thing. That money could go 50/50 on upgrading the current rail and road network rather than HS2.

  • rate this
    +2

    Comment number 720.

    I don't understand why these people are allowed to make such statements without producing the documentation to prove it. I want to see some slides showing the calculations that got you to those numbers. otherwise all I can hear is "blah blah...help me get richer..blah blah... help me get richer...."

  • rate this
    -1

    Comment number 719.

    Twaddle!

 

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