Huge benefit to the regional economy from HS2 – KPMG report
HIGH-speed rail project HS2 will benefit the Birmingham city region by up to £3.1bn a year, a new report has concluded.
Accountancy and advisory firm KPMG prepared the report on behalf of HS2 Ltd, the company managing the project.
Its findings will comfort to supporters of the scheme – which will link Birmingham and London via 225mph trains by 2026 – after weeks of criticism of HS2 and questioning of the scheme’s validity.
The cost of the project has also been criticised. The Government puts the cost of HS2 at £50bn – including new rolling stock – but critics suggest it could be much more than that.
But if the scheme is worth £15bn a year to the UK economy, as KPMG suggests, it will have paid for itself within four years of being operational even if the project cost rises to £60bn.
The report prepares the ground for a counter-offensive against the scheme’s critics which will be taken up today by transport secretary Patrick McLoughlin who will warn that existing rail networks are running out of capacity.
The KPMG report also debunks claims that the line will drain jobs and investment away from the regions to the capital.
The report says the investment will deliver an annual £15bn boost to the UK economy, with up to £7.8bn of that outside Greater London.
It concludes HS2 will give the Birmingham city region economy a yearly boost equivalent to 2.1%-4.2% of the city region’s GDP, compared to Greater London’s 0.5%.
According to the study business connectivity – driven by increased capacity and reduced journey times – will be improved by 21.1% in the West Midlands.
Earlier this week the House of Commons’ Public Accounts Committee said the Department for Transport was failing to present a “convincing strategic case” for the project.
Criticism from the committee followed soon after business group the Institute of Directors (IoD) called HS2 a “grand folly”. Senior Labour politicians Alistair Darling and Peter Mandelson have also come out against the project as has right-leaning think tank the Institute of Economic Affairs.
But 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 £15bn 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.”
Geoff Inskip, chief executive of regional transport authority Centro, welcomed the research from KPMG saying the West Midlands is set to take advantage of its place at the heart of the high speed network.
He said: “This is tremendous news for the West Midlands and highlights the benefits of high speed rail and the additional capacity this will bring to our region.
“We’ll be better connected than ever before – benefitting from fast, direct links with major UK and European cities and boosted by capacity released on our existing lines to run more freight and local services.”
Centro recently unveiled its own research which concluded HS2 will deliver more than 50,000 jobs to the West Midlands as benefits are increased by improvements to the regional network.
Inskip said figures showed that the benefits of connecting Birmingham with London were more than doubled when the West Midlands was also linked with the East Midlands, North West and Yorkshire via high speed rail.
