The Economics of High Speed 2 - Economic Affairs Committee Contents

Our main conclusions and recommendations

National transport plan

1.  An investment decision on the scale of HS2 should have been made with reference to a co-ordinated transport plan for passenger and freight traffic across all modes of transport. Such a plan could have given full consideration to how all areas of Great Britain and all transport users would be affected by the project.

The cost of HS2

2.  HS2 is an expensive project. The construction of the railway and purchase of rolling stock is estimated to cost up to £50 billion at 2011 prices, including contingency. The net cost to the taxpayer is expected to be £31.5 billion at 2011 prices over 60 years. If complementary projects to connect HS2 to existing transport networks are taken into account, the final cost would be even higher.

3.  If a new railway is required, the costs could be reduced, for example by constructing it to run at a slower speed—say at the same speed as the French TGV—and by reducing the cost of construction closer to French levels.

Who will pay for HS2?

4.  Business travellers are forecast to derive the most benefit from the project (70 per cent of the net transport benefits). Passengers could be charged higher fares for travelling on HS2 to recoup more of the costs and reduce the burden on the taxpayer, especially since many taxpayers would derive no benefit from the project.

Demand and capacity

5.  The Government's principal justification for building HS2 is to provide capacity to meet long-term rail demand. Inadequate information on rail usage and demand modelling makes it difficult to determine whether this is correct. Overcrowding appears to be caused by commuter traffic, not long-distance traffic, and is exacerbated by inflexible pricing.

Lack of consideration of alternative rail investment

6.  It is impossible to agree with the Government that HS2 is the only solution to increase capacity on the rail network. Additional capacity could be provided by incremental improvements to the existing network, a new conventional railway line, or a new high-speed line (of which HS2 is only one option). These options have not been assessed equally, with only HS2 receiving serious consideration by the Government.

Effect on the UK economy

7.  We do not believe that the Government has shown that HS2 is the best way of stimulating growth in the country. While investment outside London is long overdue, evidence and experience from other countries has suggested that London would be the biggest beneficiary of a project such as HS2.

8.  Nor has the Government considered the opportunity cost of spending £50 billion at 2011 prices on this single railway. How much could be achieved if that money were invested differently?


9.  The evidence we have heard suggests that investment in regional transport links between cities outside London could be more likely to generate significant growth in the north than HS2. The Government should consider whether improving trans-Pennine links, or building the northern legs of HS2 first, are higher priorities than the southern leg of HS2.

Lack of evidence

10.  The cost-benefit analysis for HS2 relies on evidence that is out-of-date and unconvincing. The Government needs to provide fresh, compelling evidence that HS2 will deliver the benefits it claims.


11.  We welcome the objectives the Government has set. We fully support investment in UK rail infrastructure. But the Government has not made a convincing case for why this particular project should go ahead. The analysis presented to justify the project is seriously deficient.

12.  The slow progress of the High Speed Rail (London-West Midlands) Bill through Parliament provides an opportunity for the new Government following the 2015 General Election to review the conclusions of this report and the questions that arise from it.

13.  In the final chapter of our report we list the questions that the new Government should consider. The Government must answer these questions before the High Speed Rail Bill completes its passage through Parliament.

Figure 1: Map of HS2 and improvements it will bring in journey times on selected trips

Source: Map: ©HS2 Ltd; Journey time savings: Strategic Case, Figure 11 (see this Figure for full listing of journey time savings)

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