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criticised the scheme, saying: "So far, the Department [of Transport] has made decisions based on fragile numbers, out-of-date data and assumptions which do not reflect real life."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 1038.

    @724 - I thought electronic media means we didn't have to travel as much and could still have 'face-to-face' business meetings. So, more confidential work open to scrutiny by fellow passengers, more confidential files left on seats. Who knows who your fellow passengers are, or for which competitor companies they work? Coupled with the phone calls, any amount of trade secrets divulged.

  • rate this

    Comment number 1037.

    Double decker trains are typically about 16 feet high, British tunnels are about 13.5 feet high, so you'd have to raise every tunnel and probably every bridge in the country.
    1026 There is still a need for local passenger services and for some expresses as well as freight but mixing stuff at 125 mph and at 60 mph doesn't work well. Running everything at similar speeds aids more trains.

  • rate this

    Comment number 1036.

    One has the disturbing feeling that the govt has sat down and agreed that they "need a big grand project" rather than "what is best for the country"

  • rate this

    Comment number 1035.

    Just goes to show how our governments past and present have got a hand in our railways. Private or Public. Much needed maintenance budgets are neglected to improve established networks and connections. We already have 2 services from Marylebone to B'ham Snow Hill and moor st.and from Euston to B'ham international/new st. If the benefit is for the North/Midlands - why don't they start there?

  • rate this

    Comment number 1034.

    "..lets make the govt guarantee that all building materials are provided from uk based companies.."
    Not even worth making the same point about jobs for Brits!
    After all, we have to find something for the Romanians to do.

  • rate this

    Comment number 1033.

    Isn't it odd that a report the other day on HYS was explaining how little this HS2 was going to do and was already underestimated in cost by billions. Suppose its a case whoever is paying for the reports gets the info they want and not the public. The 'blind leading the blind' or....those with money leading the blind. either way taxpayers who will be dead by the time its here will still pay for it

  • rate this

    Comment number 1032.

    The Transport Minister says "High Speed Two will make Liverpool stronger. Manchester stronger. Leeds stronger. Britain stronger".
    If that's the case why not make them stronger quicker and make the proposed phase 2 the new phase 1 and start from these places.
    Much easier to start there then expand it outwards to the North, South,East and West than from the bottom up.

  • rate this

    Comment number 1031.

    This massive expenditure will not create any real benefit to the UK as a whole its just another public waste of money.
    There is no joined up thinking by Government other than panic..
    If this was left to those in charge and those who profit they would build on every piece of farm land without a thought for food production for this Nation. The HS2 is a shiny toy, nothing more.

  • rate this

    Comment number 1030.

    The Department of Wild Assertions is at it again.

    If this was commercially viable then businesses would be lining up to fund it given current low interest rates. They are not, so forget it. There are better, quicker and far more lasting ways to improve the economy.

    Improving the current rail network is the best option which will provide a far quicker return for much less money.

  • rate this

    Comment number 1029.

    335: "Are we to live off fresh air in the future?"

    No, Phil - but we do want OUR money spent on projects that will actually produce REAL benefits FOR THE MAJORITY.

    Nice attempt at a Straw Man though - I'll give you that...

  • rate this

    Comment number 1028.

    navigatorjan if the hs2 will free up freight lines the hs2 is for business men to get up north 30 minutes earlier. However we now have skype and conference calls so many businesses are using this instead of send agents around the country. so with computer technology we dont need extra capacity

  • rate this

    Comment number 1027.

    "The high speed rail line between London and Birmingham will boost the economy by an enormous made-up number, it has been confirmed." - Daily Mash

    It is disturbing, is it not, when a satirical/comical news site is more factually accurate than a serious one.

  • rate this

    Comment number 1026.

    Angel Trains Ltd declared a profit of £123.5m in 2011 out of £341.7m revenue. In 2010 the ratio was even higher: £194m total revenue and more than half of that – £112.2m – profit. http://blogs.channel4.com/factcheck/factcheck-are-the-train-operators-the-villains-of-the-piece/11169

    no shortage of big profit in rail. so why they not funding it.

  • rate this

    Comment number 1025.

    Why does everybody think that HS2 will increase capacity between London and Birmingham. It doesn't stop anywhere in between so is only of benefit to people going from one city centre to the other, those poor souls who live in-between will face the same slog as before, and if there is no significant reduction in commuter trains, how is it going to remove 500,000 lorry journeys.

  • rate this

    Comment number 1024.

    100 billion ? Whatever they do invest it anywhere away from London and it will help much more than overcrowed, overrated London sucking it up!

  • rate this

    Comment number 1023.

    It appears to me that KPMG like being paid by the Government to say what the Government want to hear.

  • rate this

    Comment number 1022.

    We could spend this money on improving the housing stock in this country but that of course would undermine the seemingly endless house price spiral that so many have been convinced is a sign of prosperity.

  • rate this

    Comment number 1021.

    HS2 is for CAPACITY rather than speed - but people keep commenting on just one train a day to Brum that saves 20mins. Most trains to Brum have 35mins saved & the station entrance is just next to Moor St.

    HS2 HALVES London journey times to Liverpool, Manchester, Leeds, York or Sheffield - and also HALVES Birmingham to Leeds journeys with TWO HOURS taken off any of those return journeys.

  • rate this

    Comment number 1020.

    Peak hour travel will mean up to 1,100 people boarding trains every 4 to 5 minutes at Euston and Birmingham. Currently it is chaos getting 600 onto a train with 10 minutes boarding time. So are there going to be say 5 platforms for the trains and passenger platform access stopped 10 minutes before departure time? How else can it possibly work? Thats 10 minutes off the journey saving of course.

  • rate this

    Comment number 1019.

    HS2 will not benefit Midlands & NE/NW. It will simply provide a faster link to London, enabling Londoners to sell their homes and buy larger at a fraction of the price further north, then commute back to London. Look at commutable Poole/B'mouth - London house prices, local salaries lower than London. HS2 will price local people in local jobs out of the housing market. I am an ex-Londoner, BTW.


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