Business case for HS2 doesn’t stack up


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HS2 has a very weak business case

Ahead of the government announcing more details on the HS2 project, Dr Richard Wellings, Head of Transport at the Institute of Economic Affairs, said:

“The extension of High Speed 2 to the North of England is very bad news for taxpayers and the wider economy. The project’s £34 billion-plus bill – over £1,000 per household – will destroy jobs and force businesses to close across the UK, including in the North. Many areas along the route may also be affected by planning blight.

“The government is deluded if it thinks HS2 will regenerate the North. The region’s long-term economic problems will not be solved by faster rail links to London. Towns such as Doncaster already enjoy fast links, but remain among the poorest places in the country. Indeed, HS2 will be used as an excuse to waste billions more on flawed regeneration schemes in northern cities, at further expense to taxpayers.

“High Speed 2 is being driven forward by politics, not economics. It is a loss-making scheme with a very weak business case based on a series of flawed assumptions. If the government wishes to boost the economy through infrastructure investment, it should allow private investment in profitable projects such as Heathrow expansion and road schemes with very high rates of return.”

Notes to editors:

To arrange an interview with an IEA spokesperson, please contact Stephanie Lis, Director of Communications: 020 7799 8909, [email protected]

In July 2011, the IEA published High Speed 2: the next government project disaster? The research revealed why the scheme is economically flawed and showed that taxpayers will bear a high proportion of the financial risks.

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.