HS2 opponents criticise business model as flawed
OPPONENTS of the proposed HS2 rail link between Birmingham and London have slammed the business case for the £17bn project claiming it is a white elephant which will never pay for itself.
The TaxPayers’ Alliance said the rail link would not deliver the journey savings claimed; would fail to generate economic growth in the Midlands; and never produce a financial return on investment.
Its findings are based on a new study by rail industry consultant Chris Stokes, a former deputy director of the Network SouthEast rail operation.
Having studied the business case for the rail link, Mr Stokes has completed a study of his own into the project and come up with a number of observations.
His findings are:
• The line is expected to reduce journey times between Birmingham and London by around 30 minutes.
• Evidence for a rebalancing of the region’s economy is weak.
• HS2 will never produce a financial return. He claims the value of the net operating profit once it has been built only covers 42% of the capital costs over a 60 year project life.
• The project will not cut greenhouse gas emissions.
• Forecasts for growth in demand for HS2 are overstated. He claims the business case and benefits rely on an “unrealistic” forecasted 267% rise in demand.
• The calculated economic benefit used to support the case for HS2 is based on “flawed” assumptions such as average passenger income of £70,000 and zero passenger productivity during a journey.
• Nearly half (47%) of long distance rail trips are made by high earners.
Matthew Sinclair, director of the TaxPayers’ Alliance, said: “It is incredible that while the Government are imposing higher taxes on ordinary families, and making necessary cuts in spending on services like education, they are planning on throwing billions at a new train line that will only benefit a well-off few.
“Passengers on the new line are never expected to pay enough to cover the project’s costs in fares, and it will depend on massive subsidy at the expense of millions who never use the line.
“This just can’t be a priority with the massive scale of the fiscal crisis and huge pressure on family budgets. Politicians should focus on making commuter journeys more convenient and affordable, not a flashy new train set that will be a huge white elephant.”
Chris Stokes, rail expert and author of the new TaxPayers’ Alliance research, said: “The business case for HS2 hasn’t been made and relies on a number of assumptions that are optimistic, in some cases to an incredible degree.”
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