The Business Case Against HS2

The Government’s own figures show that HS2 will provide absurdly low economic returns for the public money spent. Adjusting for the flawed assumptions used by the Government, it is clear that the costs of HS2 will far exceed the benefits. By contrast, there are much better value-for-money alternatives that meet all our capacity needs.

    There is no business case for HS2

    Since the first business case was published, the Government’s returns for phase 1 have fallen from £2.40 for every £1 of public money spent to just £1.40. The comparable figure for the entire network has fallen from £4 to £1.90 of benefit for every £1 of public subsidy.

    55% of the predicted benefits of HS2 rely on the clearly incorrect assumption that people do not work while on trains, and impossible-to-measure ‘reliability benefits’.

    Official figures confirm the net revenues expected from HS2 now cover just 29% of the capital costs, down from the over 40% originally claimed in February 2011.


    The real figures are far worse

    Key assumptions on demand, pricing, financing costs and other savings have been manipulated to exaggerate the case for HS2.

    The Government has ignored the impact of recently-announced improvements to the rail network, such as the electrification of the Midland Mainline, that will further reduce HS2’s benefits.

    HS2’s business case is dependent on £7bn of cuts from existing rail services, but little detail has been provided on which services will be cut to realise this figure.


    Alternatives offer much better value

    The Department for Transport’s own figures show that Rail Package 2 – a series of proposed improvements to the existing rail network – offers over twice the value-for-money of HS2.

    A more ambitious program of works known as the Optimised Alternative would provide the capacity needed to serve the passenger flows HS2 addresses, at under 10% of the build cost, and in January 2012 was assessed at three times the value-for-money of HS2.

    The benefits of the alternatives are more robust, not relying on the exaggerated value of journey time savings, on untried technologies or involving the disruption HS2 will bring to our existing rail network.