A new government-commissioned report predicting a £15bn per year economic uplift as a result of building HS2 is the latest twist in a national debate that is becoming increasingly polarised.
KPMG’s study, commissioned by the Department of Transport, predicted that extra tax receipts amounting to £5bn a year would mean that the £43bn scheme pays for itself within nine years.
It gave a breakdown of the economic benefits for each HS2 city area and it found the scheme will give the Birmingham city region economy a yearly boost equivalent to 2.1-4.2% of its gross domestic product.
Once the full Y-shaped line is built, Manchester will see a 0.8-1.7% increase, Leeds will see a 1.6% improvement. However, the full economic boost would not be felt until 2037.
But KPMG’s study followed hard on the heels of a report from the Public Accounts Committee that questioned many of the government’s fundamental assumptions on HS2.
View of the line as it crosses Bridgewater Canal near Broomedge in Cheshire
The MPs on the committee argued that there was a lack of evidence to suggest HS2 would aid regional economies. Instead, it warned, the effect could be to concentrate economic activity into London.
And when CM invited CIOB members to add their views to the debate via LinkedIn, there was no more consensus among the membership than the population at large.
David Denton ICIOB subscribed to the “let’s build it” argument – adding that he’d like to see HS2 built as soon as possible. He wrote: “My view is simple – in principle HS2 is good, however, the time scale is too long, I would guess about half the current workforce will have retired by the time it’s finished. I would have also thought that getting freight onto trains should be a bigger part of the business case as it is very hard to know how business will be done in 30 years’ time. Who would have thought 30 years ago we would be able to make video calls from a small handset such as an iPhone?”
Sean Morgan, senior buyer at O’Hare & McGovern, also thought that freight was missing from the argument, and for him this was a deal breaker. “It seems to me that the amount of freight taken by lorries is increasing at an alarming rate. Surely trains would be cheaper but better? The fast train that is being proposed only goes to move people faster, although the argument seems to be that more people will be moved from place to place. But there is no mention, as far as I have read, of moving freight. Therefore I don’t endorse this proposal.”
But Richard Spedding, senior planning manager at Mace, suggested that freight hadn’t been overlooked. “The capacity freed up on the existing network will enable much more freight to be carried, and that is part of the business case. The platforms have just been extended to take 11 car sets, and the first class carriages do get used on certain services (morning and evening rush hours) so the business cases allow for the fact that they are on the system running empty during the day – but they will become fuller and fuller in the next 15 years.”
But then he addressed other factors missing from the debate so far. “One of the issues that hasn’t been factored in to the calculations is the lack of fossil fuels which will force us, in the sort of timescales we are talking about, to reduce the amount we use because (at least) of cost. Admittedly the acceleration of computer technology hasn’t either, and the ability to be with people at the other end of the country while at home or in some local office, may, and I stress may, limit the projected increase in passenger numbers. However, the rapid increase in population, both immigration and home-grown could offset that.”
In fact, Spedding concludes by saying that all the predictions are just predictions, so you might as well go by gut instinct. “I would rather have my taxes spent on a possible white elephant which gives us a tangible reward of some railway tracks, and which gives the country some strategic benefit, than one which just dissolves into thin air like a health service computer system that doesn’t work.”
Artist’s impression of Manchester Piccadilly station
David Carter sought to put HS2 in the context of previous infrastructure projects and the similar debates they raised. “Major infrastructure projects like HS2 do cause a tremendous amount of feeling both for and against. This one already seems to be on the way to far exceeding what happened with the Channel Tunnel rail link.”
But he also put the blame for the current uncertainty at the door of the government. “This is another example of the government not getting the correct message out from the beginning. The public did not accept this massive cost was justified by saving a few minutes time on a journey. One would ask why they didn’t think this very important description through properly to avoid what has now happened.
“Over the last two days we have had a report released by the government stating what massive benefits the country will have when this line is completed. Here again another clanger is that this report is not produced by anybody independent…”
Carter noted transport secretary Patrick McLoughlin’s switch to presenting HS2 as a “by-pass for the UK’s clogged arteries”. “What he is now saying is that this is all about congestion and he could have a point here. There have been comments… from people that know that to increase the capacity of the existing rail tracks and services is impossible. However, no money has been spent on researching this and maybe introducing track by-passes etc in certain places and so on. Double-decker trains had been ruled out because of the low bridges and tunnels, but if you’ve got £43bn to spend some of that would go a long way to changing it.”
Chris McKenzie-Grieve was also critical of the switch in the PR messaging, and called for more independent research. “Given the ‘cock up’ in terms of PR on why this is needed then we, the funders, would like some confidence that someone has really got the best assumptions and forecasts. Government track record on major projects is not particularly sparkling so you can forgive the public scepticism.”
“If this is a capacity problem, the new business case, then why are there so many first class carriages on trains from Birmingham/Manchester? A simple test for the capacity would be to convert these trains to standard class throughout. Then let’s test the capacity issue and have some real evidence that capacity is the issue or likely to be the issue. Another point is how much would it cost to extend the key platforms and have more carriages? Have any other options been considered and what was their business case?”
But Mace’s Spedding again made the point no business case or passenger numbers projection will ever be totally reliable. “Perhaps the most important thing to realise is that the timescales for capital projects are so long that it is not feasible to wait until the projections have been verified before starting to build. Therefore we end up with some white elephants. However not to do anything will mean that things grind to a halt, and 20/20 hindsight will have all sorts of people asking why something hasn’t been done before now!”
Where do you stand on the HS2 debate? Please post your comments below.
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The whole idea is crazy, using Victorian technology in a digital age is anachronistic. It will destroy irreplaceable heritage buildings and landscapes at an inordinate and unpredictable cost over a uncertain building timespan for no gain. We already have a rail network serving all these towns which has fallen into disrepair, commuter services that treat people like cattle on trains that are often 30 years old and rarely run on time, due as much as anything to under-investment and profits from privatisation being chanelled into the wrong pockets. Whatever money we have to spend on railways would be better spent putting right the all too obvious faults in the existing rail network and on high speed broadband. I say stop HS2 in it’s tracks.
I simply do not believe that the economic benefit cannot be achieved by upgrading the existing network and removing the bottle-necks. Therefore the business case is fundamentally flawed and the project is a waste of limited resources. I am 100% in favour of upgrading this country’s infrastructure and doing what can be done to spread the wealth more equally around the country. But to trash a vast swathe of this country is not the solution. We need to develop the infrastructure so that travel is less necessary and that means fibre everywhere and efficient transport networks for when travel is necessary which should be equipped to enable people to connect and therefore work if they want to while traveling. This approach will result in no less work for our industry.
HS2 – another waste of public money, an excessive expense to save half an hour of travel for the rich (not MPs as they never seem to be in Parliament). This money could be better spent on road repair and the NHS to name but a couple of deserving projects add to that all the money that is being wasted in so called aid abroad and this once great country (now just run of the mill) might be able to survive. Unfortunately successive governments do not know what the people want or seem to care so long as they make their little mark on society whilst in power.
In addition to this the HS2 together with large housing projects will be destroying farm land that will be needed in the future to feed our grandchildren as I can see food wars happening in their lifetime.
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Its all about the politics, this government needs a major infrastructure project so they can convince the electorate that they are doing something for the economy. As for the £43 bn, no major Government-backed infrastructure project has ever come in within the target budget. Any major scheme that is pushed through without detailed consultation and detailed consideration of all risk and contingencies will spiral in costs. We can guarantee that it will be nearer £70 bn. So is £70 bn worth the 35 minute saving in time? Will the real benefits ever be seen? And what consideration to the lives of those property/land/buisnesses are harmed by this construction. Does the £43bn include all risk for compensation claims and alike? With the fast changing environment that we work in, developments with social media, conference calls, super fast broadband and all future IT technology yet to be seen, the business day will change. Surely this will impact on a vast majority of working practices and long commutes to meetings will reduce, and thus capacity needs will change. Wifi on trains? will we notice the 35 minute reduction in time if work is not halted on the travel as were busy answering e-mails and reviwing reports etc. I would rather £46-70 bn went on healthcare and education where we would really see the long term benefits. But that is just not high enough on the government’s agenda.
In principle I am against and agree with the previous comment as well as many others. The main supporters seem to be interested parties who will benefit from years of ‘planning and feasibility fees’ with no guarantee of final adoption. Delivery would be well beyond the working life of most of those involved presently!
The possible benefits are on an ever receding horizon and costs accelerating and unquantifiable presently.
The money should be spent on improving the overstretched and poorly maintained system presently suffering from decades of underinvestment. Plans could be implemented immediately with corresponding early benefits.
HS2 would not be realised for years and would probably be out of date before delivery!.
I am not against the principle of progress or better communications but HS2 will just encourage more businesses to the South East and more commuting from the provinces causing more congestion in the capital.
Money will be sucked out of all regions to pay for HS2 while only a privileged few will benefit from HS2 on a regular basis.
The argument seems to be HS2 will be built at whatever the cost. The cost is not truly quantifiable as it does not take into account the horrendous disruption that such a major infrastructure project will incur on families and businesses along the route.
During the construction period many areas will grind to a halt causing immeasurable costs to businesses and communities in the path of HS2.
Properties will be blighted, green belt will be destroyed and irreplaceable habitats will be devastated.
Communities will forced to suffer the presence of HS2 in their area without the ability to use it as stations will be few and far between reserved for the cities and not the majority of the population. Although the journey time from Manchester to London may be reduced the journey from many out lying or country areas to Manchester (or other cities on the route) will be increased due to lack of investment and overcrowding on local railway networks and road systems full to capacity.
The Government should take a more practical approach, working with what we have and improving our mainly outdated rail system providing a high-speed system as an integrated part of the established routes that are already in place.
HS2 is a now a white elephant – out of date and out of time – it should of been built years along time ago to help resolve the problems we are now facing due to previously under-subscribed rail and road links.
In conclusion HS2 will cause more problems than it resolves and the money spent on it would be better spent in other areas.
As a British expat living in the UAE, I find it amazing how protracted the process of implementing a new infrastructure project is. Over here, things get done for the greater good of the country. Clearly there is a lot more space, but I think the UK Gov. needs to think more strategically in order to stay competitive. That may mean diminishing the rights of NIMBY’s somewhat, but the detriment of a few will be the benefit of many.
“I simply do not believe that the economic benefit cannot be achieved by upgrading the existing network and removing the bottle-necks”
Well this has been studied in the Atkins report. It was found that upgrading existing lines would cause far more disruption to both passengers and those living alongside the tracks, ie more loss of businesses and homes. It was also found that this approach had far fewer benefits.
“HS2 – another waste of public money, an excessive expense to save half an hour of travel for the rich
In reality HS2 is about providing new capacity on new high speed lines thereby releasing capacity for more passengers and freight on existing lines. In reality HS2 saves 35 mins to Birmingham and one hour to Manchester and Leeds. The huge capacity increase is not for the “rich only”.
“The whole idea is crazy, using Victorian technology in a digital age is anachronistic.”
Given the thousands of kms of high speed rail built and being planned worldwide since 2000 and given that Victorian trains did not run at 200+mph, HSR is very much 21st century technology. we need HS2 and fast broadband, not one or the other.
I agree with the majority of comments in this post, though not all. HS2 should not proceed. Show me a consultant’s study for a major infrastructure project that ever accurately predicted the economic benefits arising… Certainly the timescale is far too long, and hence the predicted business benefits have to be seriously undermined by the fluidity of business practices; this is likely to become more pronounced as globalisation proceeds and international competition intensifies. The birth rate and population growth have variously been given as reasons why HS2 is needed, however a further look at this issue reveals that all is not what it seems. Among indigenous British the birth rate is declining, rather it is the immigrant population that is currently driving population growth. By implication many immigrants have dual nationality and therefore at least two countries they could choose to live and work in. Given the growth and international investment focus in the developing world, those already here may decide that their countries of origin are better suited to their requirements in the future. Moreover, and far more likely is that potential immigrants will choose to go somewhere else.
Serious thought should be given to spending this money in other ways, which would have far more tangible benefits including; addressing the issue of the UK’s unbalanced economy e.g. investing in our manufacturing capacity; serious investment in research and development funding for the sciences; education (not more lightweight degree courses to enable higher education quotas to be met); healthcare, and nationalise the railways (the East Coast Mainline has been run at a profit in public hands), this would ensure that all revenues get reinvested in the rail network, and of course upgrade the existing network and rolling stock.
Finally, it is unhelpful and questionable that KPMG seem to be pushing this from more than one angle (CBI/KPMG infrastructure report); this should be stopped. The public must be guaranteed a level of transparency and the impartiality traditionally associated with consultancy, commensurate with such a large public investment.
To address the issue of comparison with the UAE.
It (the UAE) is a creditor country, and we are a debtor country, and there is no process of public debate and consultation for large infrastructure investment. This is largely because the money spent on public infrastructure projects is not raised from public income taxes. Also, the UAE is mostly desert, and has a much lower population density, so the environmental and social impacts and considerations between both countries are completely different.
I find it difficult to see why any haulage company would immediately revert to transporting their customer’s goods by rail, should the scheme go ahead. The goods would require transferring from road to rail and in reverse at the end terminal, so where is the time or cost saving? There would certainly not be a rail head at every major terminus, thus, that so called economy associated with reducing travel time for freight is immediately lost.
Can anyone really justify such an expense, merely to save 30 minutes of travel time?
Undoubtedly, should this go ahead, many individuals and organisations would benefit financially, but very much to the detriment of an even greater number of people/bodies/organisations, in both the short and medium term.
Better to spend less money on a properly planned and managed upgrade of the existing rail network.
This must be the biggest waste of public money ever thought of. It must surely make more sense to upgrade existing rollingstock, upgrade existing network and improve stations (lengthen platforms for longer trains, etc), and all at a fraction of the cost. Besides, the overall gain in journey times isn’t so wonderful and the proposals to date don’t even serve the whole country. Stop this now before any more money is wasted.