With critics, including the TaxPayers' Alliance in an earlier research note, revealing serious weaknesses in the business case for the new high speed rail line (HS2), the Government are increasingly relying on the argument it will create jobs. New TaxPayers' Alliance research suggests that justification does not stand up to scrutiny. HS2 will create relatively few jobs for the scale of the massive £17 billion investment planned and, as that money cannot be spent twice, is likely to mean fewer jobs overall.
The key findings of the research are:
- The existing net capital stock in the UK economy was around £103,000 per workforce job in 2009, the most recent year for which data is available.
- At a cost of £17 billion, the London to Birmingham portion of HS2 will cost well over £400,000 for each of the 40,000 jobs the Government claim it will create. The real cost per job, after taking out temporary workers and economic activity relocated rather than created, could be even higher.
- An investment of £17 billion could be expected to create over 170,000 jobs - more than the working population of Coventry - if it achieved the same cost per job as in the wider economy. That is the opportunity cost of choosing to invest in HS2.
- HS2 will cost four jobs for every one created.
The research suggests that HS2 cannot be justified as a means of increasing employment.
Matthew Sinclair, Director of the TaxPayers' Alliance, said:
“The Government’s grandiose claims that a new high speed line is a good way of boosting employment don’t stand up to scrutiny. Any seventeen billion pound investment will obviously create some work, it would take quite a few people just to bury that much cash, but we can’t spend the money twice and choosing to go ahead with this expensive vanity project means neglecting other opportunities. If ministers want to help create the conditions for strong growth in employment, they shouldn’t waste taxpayers’ money on an expensive white elephant. Instead they should go with more affordable options to get the rail capacity we need and avoid imposing a huge and unnecessary burden on families and businesses across the country, just to benefit a fortunate minority of passengers who already enjoy a fast and frequent service.”