Research by KMPG provides evidence of economic payback

The Department for Transport and HS2 Ltd have responded to growing criticism that the case for the planned high speed network is weak and unproven by publishing new research into its regional economic impacts.

The research for HS2 Ltd by KPMG was cited in a speech by transport secretary Patrick McLoughlin as providing new evidence of the economic payback from the £50bn project. The study suggests that HS2 could benefit the economy by up to £15bn per year, and that the greatest impact would be on regional economies rather than London.

It shows the impact of HS2 on the Birmingham city region economy will be the equivalent of an annual increase of 2.1-4.2% of regional GDP. For Manchester city region the figure is 0.8%-1.7%, for Leeds city region, 1.6% and for Greater London 0.5%.

As a result, KPMG concludes that the scheme would cover its costs through national benefits within a few years, and that the £5bn additional tax receipts generated would enable the construction cost funded by the public sector to be covered in the medium term. Overall, KPMG estimated that the scheme will deliver benefits equivalent to creating an economy the size of Cambridgeshire without negative impacts on any region.

“The report shows beyond reasonable doubt that HS2 brings net benefits to the country of many times the scheme’s cost,” Richard Threlfall, KPMG’s head for infrastructure, building and construction said. “It also shows that HS2 will significantly help counter the corrosive effects on our country of the widening north-south divide. There has been a long-running debate about ‘who wins’ from HS2, the north or the south? The answer is both.”

The research was published two days after a report from MPs on the Public Accounts Committee which concluded that the DfT had not made a convincing strategic case for HS2. The committee also warned that the DfT’s plans for passing the Hybrid Bill for High Speed 2 in March 2015 could be unrealistically rapid.

 

THIS ARTICLE APPEARS IN PASSENGER TRANSPORT.

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