HS2 could generate £15bn per year for UK economy, report claims

The controversial HS2 rail project could boost the UK economy by £15 billion per year by 2037, a new report has claimed. 

The report from accountants KPMG claims that by freeing capacity on other railway lines and improving connections between cities, the line could boost growth across the Midlands, North-west and North-east of England, increasing GDP and providing an extra £5 billion in tax revenue by 2037.

The government also claims that HS2 will generate around £48 billion in user benefits to businesses when completed.

The report provides the first defence of HS2 after weeks of criticism. On Monday, a group of MPs said that the Department of Transport is “yet to present a convincing strategic case” for the project.

Margaret Hodge MP, the committee’s chair, said, “The pattern so far has been for costs to spiral – from more than £16 billion to £21 billion plus for phase one – and the estimated benefits to dwindle. 

“The Department has been making huge spending decisions on the basis of fragile numbers, out-of-data data and assumptions which do not reflect real life, such as assuming business travellers do not work on trains using modern technology.”

Construction of the first phase of the project is due to begin in 2017, with an indicated completion date of 2026. 

The cost of the controversial development has been repeatedly revised. The government currently believe the project will cost around £50 billion, although in August the Institute of Economic Affairs estimated that the cost could rise to as much as £80 billion. 

In an article published by The Guardian, Simon Jenkins, chairman of the National Trust, called HS2 “crazy.”

“The plan for a new high-speed train has become the Afghan war of British domestic policy. There is no more debate about whether it makes sense. The only question is how long can its apologists hold out, as costs soar and supporters slip away in the night.”

Further reading:

Government accused of ignoring criticism as MPs outline HS2 deficiencies 

HS2 money ‘better spent elsewhere’, says leading business group

Alistair Darling on HS2: ‘there are better ways to spend £50bn’

HS2 could cost double government estimates, warns free market thinkthank 

‘Still unclear’ if HS2 will be economically beneficial