Government lowers estimated HS2 benefits

29 Oct 13
A revised government analysis of the proposed High Speed 2 rail line has slightly downgraded the economic benefits of the route, but has also concluded Britain cannot meet its future transport needs without the link.

By Richard Johnstone | 29 October 2013

A revised government analysis of the proposed High Speed 2 rail line has slightly downgraded the economic benefits of the route, but has also concluded Britain cannot meet its future transport needs without the link.

A revised government analysis of the proposed High Speed 2 rail line has slightly downgraded the economic benefits of the route, but has also concluded Britain cannot meet its future transport needs without the link.

In the analysis published today, the Department for Transport said the planned line, which will run from London to Birmingham in a first stage and then on to Leeds and Manchester, would produce £2.30 of benefit for every £1 spent. The project has a total budget of £42.6bn.

This is slightly lower than the ratio of £2.50 for every £1 when the analysis was conducted in August 2012.

Support for HS2 has waned ever since the government announced at the June Spending Review that the cost had increased to £42.6bn, almost £10bn more than previously thought. Senior figures, including former chancellor Alistair Darling, have come out against the project, and the Labour Party has said it wants more clarity about the benefits.

However, Transport Secretary Patrick McLoughlin said capacity constraints on the existing rail network required ‘a radical solution and HS2 is it’. A second report, also published today, stated that alternatives to HS2, such as upgrading the West Coast mainline railway, would result in up to 14 years of weekend closures on existing lines and deliver less additional capacity.

McLoughlin said this showed that ‘a patch and mend job will not do – the only option is a new north-south railway’.

Overall, the new line would deliver an annual boost of £15bn to the economy as a result of productivity benefits to business from faster journeys and reduced crowding, he added. There will also be efficiency benefits from reducing travelling times between firms, which will boost those in the north of England more than the south.

The benefit-to-cost ratio has been calculated on the assumption that demand for rail travel will stop growing in 2036. If passenger numbers increase until 2049, the benefits would increase to £4.50 for every £1 spent.

‘HS2 brings massive benefits to the north, is great for commuters and the alternatives just don’t stack up,’ McLoughlin said.

‘Now is the time to be bold and deliver a world-class railway which Britain deserves and can truly be proud of. Future generations will not forgive us if we fail to take this opportunity.’

However, the Stop HS2 campaign group said the revised business case showed the government was ‘increasingly desperate’ to get backing for the project.

Campaign manager Joe Rukin added: ‘Every case they have put up for HS2 so far has been torn apart, and this one will be no different. It is really quite sad that government think throwing everything at an expensive public relations exercise will all of a sudden create support for HS2.’

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