IEA responds to new government analysis of HS2

HS2 represents extremely poor value for money

Responding to the new KPMG analysis of HS2 commissioned by the Department for Transport, Dr Richard Wellings, Head of Transport at the Institute of Economic Affairs, said:


"The new research shows how desperate the government is to find new justifications for High Speed 2. This loss-making project fails the commercial test, while standard cost-benefit analysis shows it to be extremely poor value for money. The government has therefore employed consultants to boost the economic case for the scheme.



"Unsurprisingly the analysis is one-sided and unconvincing. It fails to take proper account of the substantial wider economic losses resulting from the enormous tax bill for HS2 and ongoing rail subsidies. Moreover, its conclusions are based on highly questionable assumptions about the relationship between improved transport links and economic activity.



"Just because cities such as London enjoy a combination of good rail connectivity and high output does not mean better links will produce comparable results elsewhere. Economic success is built on a wide range of place-specific factors which interact in complex ways.  Real world examples such as Doncaster – one of the poorest towns in the UK - show that fast rail links are no guarantee of economic success.



"It is also indefensible for the government to adopt a new methodology to assess HS2 but not apply it to other projects. Given the weakness of HS2’s business case, it is almost certain that alternative transport schemes would deliver much greater connectivity gains and deliver far better value for money for the taxpayer."
 


To arrange an interview with an IEA spokesperson, please contact Stephanie Lis, Communications Officer on 020 7799 8900 or 07766 221 268.

Notes to editors

To arrange an interview with an IEA spokesperson, please contact Stephanie Lis, Communications Officer on 020 7799 8900 or 07766 221 268.


In August 2013, the IEA published The High-Speed Gravy Train: Special Interests, Transport Policy and Government Spending. The research showed that HS2 could end up costing taxpayers £80bn, double the current estimate.



The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
 


The IEA is a registered educational charity and independent of all political parties.

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