A new report which claims HS2 could pump £15billion into the UK economy has been labelled a ‘desperate attempt to shore up a failing project’ by the line’s opponents.
The KPMG report, commissioned by government-owned HS2 Ltd at a cost of £200,000, also gives a breakdown of the economic benefits for each HS2 city region.
It claims, for example, that HS2 will give the Birmingham city region economy a yearly boost equivalent to 2.1-4.2% of the city region’s GDP. For Manchester city region the figure is 0.8%-1.7%, for Leeds city region, 1.6% and for Greater London 0.5%.
Martin Tett, chairman of the 51m Alliance of local authorities opposed to HS2 said it was a desperate attempt by the government to justify the line.
He said: “This is a report commissioned by HS2 Ltd, to justify HS2 Ltd.
“This is hardly the impartial, independent review of the economic value of HS2 that is desperately needed”.
He said the report’s methodology relies on ‘heroic assumptions’.
“This has the feeling of a desperate attempt to shore up a failing project that has been independently reviewed by experts groups such as the Public Accounts Committee, the National Audit Office and the Institute for Economic Affairs .
“All have found HS2 a seriously flawed project and a poor use of public money.
“The real test is how does the use of over £50 billion of hard pressed taxpayer’s money on HS2 compare to the alternatives available of upgrading our existing rail, road and international airport infrastructure.
“We could also be investing billions in really high value business projects in our core cities and around the entire country generating jobs and growth now? On every count HS2 is found wanting”.
Richard Threlfall, KPMG’s head for infrastructure, building and construction said: “There have been repeated calls for a business case for the HS2 scheme focused on jobs, productivity and growth.
“KPMG’s analysis forms a key part of that business case, setting out the economic impact across the country of the HS2 scheme.
“It shows beyond reasonable doubt that HS2 brings net benefits to the country of many times the scheme’s cost.
“It shows the UK will be £15 billion a year better off with HS2, recovering the cost of the scheme within just a few years.
“Our analysis 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.”
Drawing on analysis of how connectivity influences productivity and competitiveness today, the KPMG analysis looks at the potential benefits of HS2 in a different way to those captured in more traditional appraisals.
Lewis Atter, KPMG lead on infrastructure strategy, added: “Our report looks beyond time savings of HS2 to the impact on the real economy in terms of GDP and therefore also tax generated for the Exchequer.
“Adding £15 billion a year to the UK economy is like creating an economy the size of Cambridgeshire or Oxfordshire, without reducing the size of anywhere else. Given the proportion of GDP that flows to the Exchequer, this means more than £5 billion a year in extra tax receipts, more than enough to cover the long term costs of the project to the taxpayer.
“The work also shows that once the focus is what HS2 can do for the economy, the debate about the ‘lap-top’ effect on the value of time saved on rail turns out to be a red herring.
“Yes it’s true that because it is possible to use a train a little bit like a mobile office, saving time on a journey isn’t as important as it once was, but it also means that the value of rail connections between places to the economy has gone up and will rise over time.
“HS2 is not just about speed it is also about new capacity and the ability to provide those ‘mobile office’ benefits to more businesses, between more places and at higher levels of frequency.”
A HS2 Ltd spokesman said: “This KPMG report makes a hugely significant contribution to the progress of HS2. Increased rail capacity, with faster and more reliable connectivity, will contribute to the economy right across the UK.
“The North and Midlands are set to gain at least double the benefit for the south.
“There is now clear evidence of the economic boost HS2 represents in terms of jobs, productivity and growth. HS2 is the right project at the right time.”