Economic benefits of HS2 falling
Published 28/10/2013 | 09:26
The Government is continuing to enthusiastically back HS2 even though an official report has shown the estimated economic benefit of the £50 billion project is falling.
A detailed 150-page report today from the scheme's promoters HS2 Ltd showed that the benefit-cost ratio (BCR) for the full two-phase project is now estimated at 2.3 compared with a figure of 2.5 given in August 2012.
This means that for every £1 spent, the wider economic benefit of the entire scheme will produce a benefit of £2.30 compared with £2.50 estimated last year.
Opponents of the scheme immediately seized on the lower figure as further proof, to them, that the project was a waste of money and should be scrapped.
Shadow Chancellor Ed Balls said it was vital that costs "stacked up" but Transport Secretary Patrick McLoughlin stuck to his guns by saying the scheme would bring massive benefits to northern England and was great for commuters.
Mr McLoughlin and the HS2 Ltd team also latched on to another report today - from Network Rail and engineering company Atkins - which said there would be 14 years of weekend engineering work if HS2 did not go ahead.
But emphasising the mistrust that exists between the pro and anti-HS2 camps, the scheme's opponents spoke of "random figures being pulled out of the air", the Government resorting to "voodoo economics" and areas such as Camden in north London being "blighted for a decade" by HS2.
The new BCR came in a report entitled The Strategic Case For HS2.
The HS2 Ltd company said the new BCR was based, partly, on a recalculation of the number of business travellers using the 225mph, 400 metre-long trains and the amount of work they do on trains.
The strategic case document said the line was vital to make more equal the North-South divide. By completion of the full scheme around 2032/33 with the building of a Y-shaped route north of Birmingham to north east and north west England, there would be a trebling of the number of train seats an hour into Euston station in London.
Also, at present there are 13 trains an hour on the West Coast main line. Building HS2 would increase the number on the West Coast corridor to 30 an hour.
Carrying 1,100 passengers, the trains would run at the rate of 14 an hour for the first phase of the project and this would increase to 18 when the full line is completed.
HS2 Ltd director-general David Prout said the strategic case was based on HS2 travellers paying the same rate of fares as "normal" travellers.
Pressed on whether there would, in fact, be a premium fare for those using the new line, Mr Prout said it would be his firm intention to advise ministers to have the same fare structure for HS2 as for existing long-distance travellers.
HS2 would produce London-Birmingham journey times of just 49 minutes, with London-Manchester coming down to one hour eight minutes and London-Leeds down to one hour 22 minutes.
Mr McLoughlin said: "We need a radical solution and HS2 is it. A patch-and-mend job will not do - the only option is a new north-south railway.
"HS2 brings massive benefits to the North, is great for commuters and the alternatives just don't stack up.
"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."
The Government said the revised BCR for HS2 was "similar to Crossrail and higher than the BCR ratio for some other major projects when approved, such as Thameslink and the Jubilee Line extension".
It added that the BCR for HS2 will increase to 4.5 (£4.50 of benefits for every £1 spent) if rail demand continued to rise until 2049.
Mr Balls said: "We have supported HS2 and there is a case for new investment in a new North-South rail link. But when you have got a project of this scale - £50 billion potentially - you have got to know that it is really value for money.
"In the last couple of years the Government has been all over the place and the costs have got out of control. So my message to David Cameron and George Osborne is 'Get a grip - you shouldn't be cheerleaders, you should be taking a hard-headed look at costs and benefits'."
Stressing that Labour had supported HS2 "in the past", he said the costs had to "stack up".
He went on: "There isn't a blank cheque for this project and if David Cameron and the Transport Secretary want to be cheerleaders for a big infrastructure project, fine."
Hilary Wharf, director of, HS2 Action Alliance said it was " disgraceful that the Government is resorting to voodoo economics, while Stop HS2 campaign manager Joe Rukin said: "As we expected, the Government have pulled some random figures out of the air in a desperate attempt to con the public.
"As if by magic, they expect us to believe that, after three years, the economic case for HS2 has risen like a phoenix from the flames. They surely must realise that everyone is going to see through this cynical attempt at spin."
The Institution of Mechanical Engineers said: "This business case offers welcome clarification of the benefits of rolling out HS2" while rail industry organisation the Rail Delivery Group, said it was vital to " plan for a network which can move more people and freight across the country safely, reliably and efficiently"
The Institute of Directors (IoD), said it could "not support the inefficient use of taxpayers' money, particularly if it comes at the expense of other much needed infrastructure improvements or wider investment projects".
The CBI said a modern rail line to tackle the capacity crunch on the West Coast line was needed but the Taxpayers' Alliance said today's report was "another attempt by the Government to make the numbers behind HS2 stack up".
Sarah Hayward, leader of Camden Council in north London, said HS2 would " deliver a decade of blight to Camden".