HS2 Wider Economic Benefits - What about the losses? 3rd December 2015
The October 2013 analysis claims benefits from the Wider Economic Impacts of 4.2bn for Phase 1 and 13.3bn for the full network.
However, no allowance has been made for the hit the economy may take in funding this £50bn to £80bn scheme. To appreciate the scale of that, note that HS2 claim the scheme will generate 100,000 jobs, although many of those may be relocations. Then note that the actuarial cost at the 2011 price base faced by those standing in 2033 will be close to £70 billion, see press release 4. It follows that the cost per job to the taxpayer will be £700,000. How many will that vast subsidy destroy in that part of the economy which makes a profit void of subsidy?
In parallel to that there is the extraordinary KMPG report on the Regional Impacts of HS2, Dated September 2013; principle authors, Lewis Atter and Richard Threlfall. That report claims the scheme will generate benefits worth £15bn annually.
The supposed £15bn can only arise from the generated business plus commuter trips, the supply side, since most of the benefits from existing trips obviously pre-exist. Forecast generated trips amount to 76,900 per weekday[1], equivalent to 24 million per year. Data for Virgin West Coast from the National Rail Passenger Survey suggests 35% may be commuting or on business. Hence, if the £15bn is to be believed, each of these generated business-plus- commuter trips would be worth £1,860 or over £3,700 for a round trip.
To appreciate how absurd that is first note that these are generated trips. Pre-existing ones would be more valuable (perhaps twice as valuable if the same principles are applied as are applied to time values). Secondly, multiply the £1,860 by all national rail’s commuter plus business trips. They number roughly 51% of Network Rail’s 1.6bn passenger rail journeys. The sum provides £1,500 billion, a value which is similar to the nation’s entire GDP!
If only that were true. Building a railway would then equate to undreamed of riches.
Paul Withrington, director of Transport Watch comments:
“Why was any air time at all given to Lewis Atter and Richard Threlfall by either the Transport Committee of the House of Commons or the Economic Affairs Committee of the House of Lords? The claim made by this KPMG report is, at a glance, ludicrous.”
“This scheme, if built, will be a millstone round the nation’s neck for generations, sucking on subsidy for ever, whilst nobody will dare to say that we would do better to dig it up.”
For more details, or to arrange an interview, please contact Paul Withrington on 01604 847438 or [email protected] and open topic 17.
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