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criticised the scheme, saying: "So far, the Department [of Transport] has made decisions based on fragile numbers, out-of-date data and assumptions which do not reflect real life."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 1058.

    1023. Steve Watts
    It appears to me that KPMG like being paid by the Government to say what the Government want to hear.
    and they are Dutch.

  • rate this

    Comment number 1057.

    1019 Boudicca 12 - Very well said! We could also do with some upgrading of the NE infrastructure and rolling stock in the so that Uni students, and those of us travelling to/from London or to regional airports and other destinations for holidays/work, and having to change trains at Darlington can at least have space to put luggage on the connecting trains to regional towns from there.

  • rate this

    Comment number 1056.

    @1049 put a clause in kpmg proposal that if the cost of the hs2 ends up 60% more they loose 60% of there fees.

    Are you kidding? 60%? If I made a quote for a contract, and it comes in over 10% above budget, I have to cover it!
    This HS2 is going to be a licence to rip the public off, whilst generating huge dividends for private investors.

  • rate this

    Comment number 1055.

    Comment number 11 is an Editors' Pick
    7 Hours ago

    I live in Devon. How am I and my business going to benefit from HS2?"

    Depends... Does your business make train tracks?

    Having no idea what your firm does it's hard to say but if you sell nationwide then it should (if the boost actually appears) benefit... if it's local maybe more passing trade if people decide to holiday more?

  • rate this

    Comment number 1054.

    The argument about freight is rubbish. Its not that there is not enough room, its that its too expensive and cheaper to move by road.
    The bunny hugger argument goes down the toilet.Unfortunately.

  • rate this

    Comment number 1053.

    The latest study was commissioned by HS2 Ltd, the company responsible for developing and promoting the project. (I assume they are a disinterested party giving honest assessment?) The Public Accounts committee earlier this week said it wasn't going to be worth it. I was always taught that 2+2=4....seems not if the experts can't agree on the same sums. I only wish I could get an experts paycheck!

  • rate this

    Comment number 1052.


  • rate this

    Comment number 1051.

    "..1,100 people boarding trains every 4 to 5 minutes at Euston and Birmingham. Currently ..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?

  • rate this

    Comment number 1050.

    Here in Mid-Norfolk, our nearest mainline station is Norwich, a terribly slow line in desperate need of upgrade. How is HS2 going to help us?

    I'm all for public transport, but it needs to be good, reliable and low cost - none of that applies here. It is quicker and cheaper to drive to north London than take the train.

  • rate this

    Comment number 1049.

    jules Ltes put a clause in kpmg proposal that if the cost of the hs2 ends up 60% more they loose 60% of there fees

  • rate this

    Comment number 1048.

    If the government can afford this much for rail and infrastructure is so important, then how come the new bridge at Runcorn is going to be tolled?

    With tolls on the tunnels and tolls on the new bridge, investment will simply avoid this already deprived area.

    Yet again its all about London!

  • rate this

    Comment number 1047.

    I'm really not against HS2 in principle, but the £32bn (oops sorry, now £42.6bn) price tag is completely unjustifiable. How on Earth can it cost such a crazy amount?
    Okay it was 2 decades ago, but even the massively over-buget Channel Tunnel was a tenth the price of HS2. And considering how quickly the price went up by £10bn, there's no chance it'll stay at £42.6bn. Where's the money going?

  • rate this

    Comment number 1046.

    Theres a much cheaper/better way to boost UK economy by upto £12 billion next year, & EVERY year, INSTANT, no countryside ripped up, no-one kicked out of homes & no cost to taxpayers & no added costs to rail fares & instead the £12 billion equates to a serious amount for investment to create the BETTER paid jobs we as a country need to SURVIVE.

    Just stop UK foreign aid

  • rate this

    Comment number 1045.

    @1009 nagivatorjan: The problem is that the government isn't even talking about a next phase to Scotland as an aspiration. Philip Hammond was Transport Secretary when HS2 was first announced and he explicitly said there would be no extension into Scotland.

    But even if there was - when? Realistically we'd be looking at several decades of increased economic disadvantage compared to England.

  • rate this

    Comment number 1044.

    The truth is that this report by KPMG was commissioned by the department for transport, and these expensively taxpayer funded reports are rarely given to companies that are unsympathetic to the aspirations of the people who give them their obscenely lucrative work.

  • rate this

    Comment number 1043.

  • rate this

    Comment number 1042.

    It would be cheaper and quicker to have kept the RAF Nimrod aircraft and flown people to London. The cost over run and basic lack of value will be shocking. Exactly how big is Britain...its not like your crossing vast distances shaving off hours. Its bloodly London to Brum, not San Francisco to New York. Someone ,somwhere is getting something for pushing this daft project. Vanity.

  • rate this

    Comment number 1041.

    High fares paid by British commuters are subsidising rail travel across Europe – and even China – by millions of pounds.... foreign train firms shared in a net subsidy of £2.7billion paid to train companies last year.http://metro.co.uk/2013/04/02/soaring-rail-profits-are-used-to-cut-fares-abroad-3567491/

    and the govt claims this a is a free market. its a jedi mind trick. end all subsidy.

  • rate this

    Comment number 1040.

    I've just got off the Manchester to London 12:35 service. Travelled First Class Off-peak (about £120 return) so that I could work. There were three people in the carriage the entire way. Try working in economy - most seats don't have enough room to open a laptop. I have been off peak with economy packed as sardines and First half empty. Sort out how the train layout rather than waste £40b+.

  • rate this

    Comment number 1039.

    What fee are KPMG receiving for this and will there prediction be anyway near the final accurate cost?


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