Outside the marginals

a commentary on the politics that followed the UK 2010 & 2015 elections

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?

Related Posts

HS2: Labour surprise

HS2 Northern Section – TBA

HS2: This service is running late or cancelled

HS2: Fiscal Irresponsibility? Political Avoidance

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One thought on “HS2: throwing away the benefits?

  1. Pingback: HS2: This service is running late or cancelled | Outside the marginals

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