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criticised the scheme, saying: "So far, the Department [of Transport] has made decisions based on fragile numbers, out-of-date data and assumptions which do not reflect real life."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
    0

    Comment number 1118.

    I would like to suggest building it in two halves, the profitable half and the white elephant half, but I cannot decide which to build first, so I won't.

  • rate this
    +1

    Comment number 1117.

    1085. TD_Pete

    "UK population is likely to grow by 7-8million over the next 20 years, mostly centered in the prosperous SE,"

    Then THAT is the problem that needs tackling, not constantly building more and more (and thus making the country less and less pleasant to live in) to cope with an ever-increasing population until we end up unable to.

  • rate this
    0

    Comment number 1116.

    Told you the bedroom tax was criminal.

  • rate this
    0

    Comment number 1115.

    In 30 years the social landscape and the way we live and work will be different - largely due to technological influences. All this proposal does is perpetuate what we do today. We need a different approach - but sadly, as they say; if you always do what you always did, you'll always get what you always got! So, the future's bright - the future's the same.

  • rate this
    0

    Comment number 1114.

    Whilst I believe we can do it on time/budget (we're totally capable with a realistic budget/time scale) - the benefit numbers that show up are clearly nonsense. If we build a high-speed line it should go up the middle of the country and future projects can spur off (but not actually connect to the line).

  • rate this
    +2

    Comment number 1113.

    "Business" itself (however you define that) says there is no case for HS2; many railway experts say there is no case for HS2; huge numbers of the public don't see any advantage in having HS2, so why is the deaf and blind government still trying to press ahead with this waste of money, land, etc?

    The answer? They all studied PPE at Oxford; they know better than everyone else!

  • rate this
    +1

    Comment number 1112.

    Lets face it most of us writing comments here certainly won't see any benefits only the lining of some rich company bosses pockets for basically doing nothing themselves. Our grandchildren though may get employment somewhere along the line (no pun) as long as the rich are getting enough money out of it as lets face it we have a very lopsided world currently.

  • rate this
    +1

    Comment number 1111.

    Half a million lorry journeys saved EVERY day !!!

    I assume the spreadsheet guru's at KPMG simply typed in the potential extra capacity for rail freight into Column A, typed in the number of businesses they think could switch to rail freight in Column B and then use the multiple function - hey presto - 500,000 !!

    Why would so many businesses want to switch to rail - do trains deliver to Tesco's ?

  • rate this
    +2

    Comment number 1110.

    This reminds me of the "Private Finance Initiative"/s where something sounds and is "too good to be true" and ends up a stinker.

    http://www.networkrail.co.uk/investor-relations/uk-government-guarantee/

    Is this right?
    Big banks like HSBC might invest in the infrastructure plan so long as UK taxpayers are guarantors that there will not be a failure.
    The taxpayer/passenger gets stung both ways.

  • rate this
    -1

    Comment number 1109.

    £100million can be found for this? Meanwhile our roads are full of potholes, just one example of the crumbling of our infrastructure. Fix
    the existing problems, if there is so much money available. Qui Bono? Not the general public, that's for sure. It has the feel of corruption about it.

  • rate this
    +2

    Comment number 1108.

    Maybe we can learn something from the Olympics.

    A £2.5 Billion project, cost closer to £12 Billion, and generated perhaps £14 Billion.

    Have can a two week festival of sport generate that much in one year, and an £80 Billion pound investment only £15 Billion?

  • rate this
    +1

    Comment number 1107.

    All this will do is divert money from the other rail links, so all the towns and cities between London and Birmingham will be left with poor trains, poor lines and no investment.

    All this will benefit is a few business man who will be able to get to there HQ's a bi faster whilst us plebs will be on a second rate service.

  • rate this
    +1

    Comment number 1106.

    1) Not one single taxpayer believes the cost projections. It's probably 1/3 the true cost.
    2) Nobody I know thinks it's worth travelling to Birmingham in any event. Even the NEC is a venue I avoid like the plague.
    3) Why would you want to get there 20 minutes faster?
    4) I was born in Sheffield - who on earth wants to go there anymore?
    5) Wigan?

    Will HS2 change things? Did the Olympics?

  • rate this
    0

    Comment number 1105.

    Time to apply for this one way mission to Mars I think, don't think I can take much more from the worlds political leaders. Cameron, Obama, Assad, Jung un, Netanyahu........get me out of here!!

  • rate this
    +1

    Comment number 1104.

    The Government should look to the private sector to deliver the project who will look at real balance sheet not the "funny money" of time savings used in transport appraisal. The assumption that small time savings multiplied over enough trips and enough years is an economic benefit is dubious.

    The profit model was after all what created our railway network in the first place.

  • rate this
    0

    Comment number 1103.

    Dear HS2 Fans
    We have read the HS2 commissioned report about it boosting the economy. We have 6 words for you, "You Get What You Pay For”
    May we also remind you KPMG admit "the methodology used assumes that transport connectivity is the only supply-side constraint to business location. In practice there are other constraints that inhibit the potential location effects"
    Yours sincerely
    HS2 Haters

  • rate this
    +2

    Comment number 1102.

    1076. John Jefkins
    It will pay back its costs - and earn profits over its 150 yr life.
    ---
    Ha! the current railways need millions in taxpayer subsidies on top of sky high prices for passengers, but you think a more expensive version would be a good little earner?

    If the benefits of HS2 were so good there would be no need for the public to fund it at all.

  • rate this
    +1

    Comment number 1101.

    I am neither a Luddite, or a Lefty nor a Nimby BUT I oppose paying for it through taxes. Why would I want to pay for something I will never use - I'll be dead by then. If I recall the utility companies were privatised..... so why are we having this debate ?

  • rate this
    +1

    Comment number 1100.

    If the benefits all accrue from saving 20 minutes on the journey, then why not invest billions in a hyperloop http://www.bbc.co.uk/news/world-us-canada-23677205 and save over an hour instead?

  • rate this
    +2

    Comment number 1099.

    Its about time government of any colour started listening to what the electorate want ?saving 20 minutes off a journey is hardly earth shattering ( or should that be fracking ) this will only be any good to the shareholders who will not have paid a penny for it , the rest of us will not even be able to afford a ticket , what on earth is it all about please someone tell us .

 

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