HS2: throwing away the benefits?
From Updated Economic Case for HS2 (published on http://www.hs2.org.uk)
Table 1 – HS2 Y Network quantified costs and benefits (£ billions) of HS2 (2011 present value prices) and resulting BCR 1 Transport User Benefits Business £34.3bn Transport User Benefits Other £16.7bn Transport User Benefits Total £51.0bn 2 Other Quantifiable Benefits £1.0bn 3 Loss to Government of Indirect Taxes ‐£3.8bn 4 Net Transport Benefits (PVB) £48.2bn 5 Wider Economic Impacts (WEIs) £15.4bn 6 Net Benefits including WEIs £63.6bn 7 Capital Costs £36.4bn 8 Operating Costs £22.3bn 9 Total Costs (7+8) £58.7bn 10 Revenues £32.9bn 11 Net Costs to Government (PVC) = (9) – (10) £25.7bn 12 BCR without WEIs (ratio) = (4)/(11) 1.9 13 BCR with WEIs (ratio) = (6)/(11) 2.5 Please note – table totals may not be an exact sum of components due to rounding
These figures are all a bit opaque (what is the Internal Rate of Return or what are the annual benefits?), but seem to say that conservatively you can expect to get back £1.90 for every £1.00 spent on the extension of HS2 from Birmingham to Manchester and Leeds (the Y Network). If genuine, why the delay in not starting this project until HS2 London to Birmingham is finished? If we did both at once we would get the benefits from the Y Network not in 2033 as currently planned, but as soon as London to Birmingham was finished in 2026. Bringing in such a valuable project 7 years early (potentially 7 years more of benefits) has to be worth doing. So why aren’t we doing so:
- Physically there are not enough resources to do both phases at once – unlikely.
- Doing both at once will stretch the public finances too much – but at these returns we can afford to have the cost of government debt go up a tiny amount – or offer the project for public subscription?
- “They” want to keep the Northerners in their place
- “They” don’t really plan to build phase 2 and expect a future government to quietly cancel it once Birmingham is part of the Greater South East.
- The figures are not genuine?