New research released today by the Institute of Economic Affairs, High Speed 2: the next government project disaster? , shows that the High Speed 2 (HS2) project is economically flawed. It reveals why the scheme is not commercially viable and asserts that taxpayers will bear a high proportion of the financial risks.
The research finds that policymakers in favour of HS2 are making their case on the basis of bogus assumptions:
- Huge government subsidies on the existing rail network mean that prices and demand levels are severely distorted.
- Estimates made by the government of demand growth are very optimistic. The long timescale involved also adds to the uncertainty.
ØThe DfT’s Command Paper said demand for HS2 would be 267% higher by 2033. However, in the more recent Economic Case, it was said that this demand level would be reached by 2043 i.e. 10 years later.
- The effect of competition from other rail lines has been ignored when projecting future HS2 ticket prices and passenger numbers. Lower prices would m