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HS2 and economic output

with 4 comments

In a report commissioned by the Department for Transport in 2013, KPMG estimated that HS2 would create £15 billion annually in increased economic output, with phase one accounting for 40 per cent of that benefit (£6 billion per annum).

However, a ‘new mathematical model of human interactions’ predicts that HS2 phase one would create only £3.6 billion annually in increased economic output; less than one per cent of the current output of Birmingham and London.

[HS2 and Crossrail: Scientists predict the economic effect of major rail projects, Simon Levey, Imperial College, 31 July 2015]

[…] Dr [Aaron] Sim carried out the study with Professor Michael Stumpf, also from the Department of Life Sciences, Professor Mauricio Barahona, from the Department of Mathematics, and Professor Sophia Yaliraki, from the Department of Chemistry at Imperial.

They say the findings should be used to help politicians and civic planers to put in place the most efficient, widely beneficial and fairest infrastructure.



Written by beleben

July 31, 2015 at 11:20 am

Posted in HS2

4 Responses

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  1. The wider benefits can only come from generated business plus commuter trips since all the rest pre-exist.

    The answer to my FoI request, numbered by HS2 as FoI 13-873, provides generated trips of 76,886 per day or 2.3 million per year. If half are on business or commuting we have 1.15 million per year. Hence, if the Wider Benefits are £15bn per year the value per one way generated business plus commuter trip is £13,000, providing £26,000 for a round trip.

    That is over and above what would be been gained from travelling elsewhere or working from the office. So yes the analysis by KPMG is ludicrous. The following illustrates the scale of the folly.

    Network rail carries circa 1,600 million passenger journeys per year. Of these 61% or circa 1bn are business or commuters. (Leisure is the consumption side).

    Multiplying KMPG’s £13,000 per trip by the 1 billion pre-existing business plus commuter rail trips provides £13 trillion per year, or nearly ten times the nation’s GDP of £1.5 trillion – and that’s before considering all the other business and commuter trips in the nation.

    Why on earth these HS2 trips, generated only because a journey time has been shortened by perhaps half an hour each way, should be assigned such incredible values with a straight face is beyond comprehension. That the Government takes the KPMG analysis seriously indicates why the nation is bust.

    Wider benefits at £6bn would still provide a ludicrously high benefit per trip.


    August 1, 2015 at 9:10 pm

    • One could also argue that HS2 would be an enabler of ‘less productive journeys’, because if the generated business trips were as valuable as pre-existing ones, they would be already taking place.


      August 2, 2015 at 9:43 am

  2. From your article, the report still attributes vast economic benefits to HS2. But from a quick glance, the report itself seems to rely on the same false assumption as KPMG: that connectivity is the prime driver of economic output. For a real world refutation of this assumption: the small (backwater) town of Long Eaton, adjacent to the proposed HS2 station at Toton. Long Eaton is only a couple of minutes from the M1 and East Midlands Airport and an hourly service to EuroStar St Pancras that takes only 90 minutes (75 minutes with an electrified MML).

    The report attributes little economic benefit to CrossRail, since London is already well connected.

    It’s worth mentioning that no-one at the Nottingham-Derby LEP, Nottingham-Derby County Councils, City Councils or Borough Councils has been able to produce a single shred of evidence or argument to support any claims of economic boost from HS2. Nottinghamshire County Council paid £35K to Volterra for a glowing testimonial which failed completely. Now Broxtowe Borough Council are making another attempt with another consultancy. Councillors & council officers are referencing the report, yet when the public request a copy, they’re told that not even a draft copy exists.


    August 3, 2015 at 6:52 am

    • Mike, of course connectivity alone does not explain all of productivity. Nevertheless one can the divide output by business and commuter journeys and compare that unit cost with the same for these generated HS2 trips. The comparison shows the KPMG’s 15bn per year is ludicrous.

      Beleben is right to say these generated trips are less valuable that the pre-existing ones. Conventionally generated trips are assigning half the value. Applying that to my sum at first above would double the nonsense.


      August 3, 2015 at 11:00 am

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