New TPA Research: High Speed Rail is a huge spending risk

February 04, 2011 8:34 AM

We today expose the flaws in the business case for High Speed Rail, the Government's most expensive new project, in a research note by a respected rail expert. Proposals for the first leg of the new high speed line to the West Midlands (HS2) will cost £17 billion. The Government looks set to steam ahead with this plan despite this being a potential multi-billion pound white elephant when we can least afford it.

Click here to read the full report


The key findings of this research are:

  • The line between London and Birmingham will cost £17 billion, and is expected to reduce journey times by around 30 minutes. This means it will cost well over £500 million per minute saved.
  • Rebalancing regional economies is now cited as a major justification for HSR, however the evidence for those benefits are weak.HS2 will never produce a financial return. The value of the net operating profit once it has been built only covers 42 per cent of the capital costs over a 60 year project life.
  • The project will not cut greenhouse gas emissions.  According to HS2 Ltd own proposal it will be carbon neutral.Forecasts for growth in demand for HS2 are certainly overstated. The business case and benefits rely on an unrealistic forecasted 267 per cent rise in demand, to make the sums work.
  • The calculated economic benefit used to support the case for HS2 is based on flawed assumptions such as average passenger income of £70,000 and zero passenger productivity during a journey.Nearly half (47 per cent) of long distance rail trips are made by high earners. HS2 is a railway for the rich, but paid for by everyone.



Matthew Sinclair, Director of the TaxPayers' Alliance, said:

It is incredible that while the Government are imposing higher taxes on ordinary families, and making necessary cuts in spending on services like education, they are planning on throwing billions at a new train line that will only benefit a well-off few. Passengers on the new high speed line are never expected to pay enough to cover the project's costs in fares, and it will depend on massive subsidy at the expense of millions who never use the line. This just can't be a priority with the massive scale of the fiscal crisis and huge pressure on family budgets. Politicians should focus on making commuter journeys more convenient and affordable, not a flashy new train set that will be a huge white elephant

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