Business case for HS2 starts to crack

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The government's latest business case for the High Speed 2 (HS2) rail link has lowered the amount of benefit it predicts relative to the spiralling cost of the project.

Despite recent criticism from MPs and the Institute of Directors, the beleaguered project has relied on cross-party support and an economic impact assessment from KPMG to justify the bumper price tag.

In recent years the political debate has moved on from ‘not in my back yard’ concerns to a 'battle of the financial models' and the strategic case for high speed rail in the UK.

However according to the new DfT report, the expected benefit cost ratio (BRC) has dropped from £2.50 to £2.30 in economic benefits for every pound spent. This is mainly due to a £10bn increase in the cost of the £42.6bn project which was revealed earlier this year.

After it was widely ridiculed the government...

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Comments
memyself-eye's picture

Not high speed then....

memyself-eye | | Permalink

Now more capacity. Rubbish! there is an existing unused train line from London through Rugby which can be reinstated (for freight) for a fraction of the cost of this monstrosity. Labour will veto it in favour of social housing projects and lose the next election non the less and maybe, just maybe common sense will prevail and London's third runway will be built..... All this from a midlander too.

.

ireallyshouldkn... | | Permalink

When they are struggling to make a case for this even with the inbuilt biases that are inherent when someone commissions a report into something that want to go ahead, written by er, Atkins who stand to benefit from the 'correct' outcome you know it stinks.

Why the obsession with North/South.  East/West is hugely under-invested, invariably you end up going into/out of London which is a huge waste of North/South capacity. 

From a capacity point of view it would help to actually run full length trains and run overnight with cheap fares for the 4am trip to reduce demand in the daytime for long distance trips. Be full of students and other people with low incomes who will put up with travelling 'out of hours' to get cheap tickets.

HS2 - North/south - Better than upgrading existing?

markabacus | | Permalink

They say the it's better to do HS2 instead of 14yrs upgrading the whole network but I can't see sure how HS2 is going to help the East coast whilst the upgrades would. Clearly I'm missing something here!

Current estimated cost is £42bn, if it comes in under double that I'll be pleasantly surprised. Designed and costed by the proverbial experts.

 

Faster Motorways

Knight Rider | | Permalink

High speed motorways would be more popular and cheaper.

Can't we just banish railways to the 19th century?

Not really a business case

vstrad | | Permalink

It's a bit unfortunate that this document is called a business case. A genuine "business case" for HS2 would be prepared by a company planning to build the line and would compare the revenues anticipated from users with the costs of building and operation. This is, of course, how the railways were originally funded. The Government's document is an appraisal of the overall economic benefits (or losses) that would accrue from the project. There are far too many imponderables for it to be more than an educated guess. We can be sure, however, that some of the benefits (and dis-benefits) will come from factors that were not considered - they always do. So the question "Is HS2 worth the money?" is not really helpful. A better question is "Could we spend the money more beneficially on anything else?" Even this is not really of much help as we can only spend it once and will therefore never know. So, like most large infrastructure projects, it is really an article of faith. Previous examples have indeed delivered large economic benefits, in fact it's hard to think of one that hasn't. The cost may seem large but, spread over 20-odd years, it's actually about 0.25% of annual Government spending. Even if no economic benefit accrues in the end, almost all the money will be spent in the UK, with UK firms and UK workers, who will then pass much of it on into the wider economy, via either B2B or consumer spending. Much of it will return to the Treasury in tax. So, provided it is well-managed and costs are well controlled (and London 2012 gives some confidence we can do this) it really just comes down to are you in favour of large infrastructure projects or not?

Large infrastructure projects

andrew.hyde | | Permalink

One word.

Olympics.

Specifically on railways, three words.

France; Germany; Spain.