The KPMG report
KPMG, the firm which could not find a £1.5bn hole in the accounts of the Cooperative Bank, have been paid by Government to produce a report which concludes that HS2 will be worth £15bn every year to the UK economy. The majority of the benefits which they claim HS2 will derive to the economy are still based on the idea that no-one works on trains, and that HS2 will result in reduced transport costs which in turn make businesses more productive, due to increased connectivity to labour markets. In total, £12bn of the benefits shown in the report still completely rely on the concept that no-one ever works on trains, and therefore a cash value can be put on any time saved by quicker journeys.
All KPMG have done to come up with that £12bn is say that everyone on a train only earns £35k per year, instead on £70k. KPMG previously produced a report saying that HS2 would cost jobs in Wales, the South West and even though there is due to be a station there, the East Midlands. On Monday, Transport Secretary Patrick McLoughlin refused to even say that ticket prices would be the same as current transport modes, let alone cheaper. HS1 in Kent is a premium service, compared to other railways.
Stop HS2 Campaign Manager, Joe Rukin decided to go all out with the rail metaphors:
“It seems the big ‘relaunch’ of HS2 consists of rehashing the discredited argument that no-one works on trains. Charles Dickens was proving that wrong 150 years ago, and unlike todays commuters he didn’t have a laptop. Now we are meant to all fall into line because KPMG, the same dodgy accountants who couldn’t find the £1.5bn hole in the Cooperative Bank accounts, have been paid by Government to say HS2 is a great thing. It is telling that the start of their report is full of disclaimers which more or less say that no-one should rely on anything they say.”
“Everyone knows that these are bullshit figures, and to be honest it is really sad that the Government is still all aboard this express train to disaster. It’s time for the Government to pull the emergency stop. With 55% of the public opposed to HS2 they have hit the buffers, they are not convincing anyone. The more they flog this dead horse, they more stupid they loo. All of the arguments for HS2 have been destroyed, they have reached the end of the line, HS2 must terminate here.”
Penny Gaines, Chair of Stop HS2 said:
“The Government has not been able to make the case for HS2 because it is the wrong project for our nation. This is a last ditch attempt with the Prime Minister and Deputy Prime Minister getting personally involved. With the costs going up, and the benefits falling, the Government have been trying to pull in all sorts of spurious rationales for this white elephant. Stop HS2 has seen many of these arguments before, and we’ve proved them wrong already.”
“The Government is currently trying to argue that HS2 is needed because there is not enough capacity on the railways at the moment. Even ignoring the fact that the real shortfall is in commuter traffic, HS2 would do nothing for the typical traveller until it opens 2026, but they will suffer a decade of chaos and disruption at Euston station and numerous places on and off the route. It’s time to put this vanity project out of its misery and cancel it as soon as possible”
Richard Houghton, spokesman for HS2 Action Alliance said:
“It is always depressing when you hear Ministers make statements that they know to be untrue. A quick study of the DfT’s own figures show that Euston is second least crowded London station for long distance travellers – beaten only by HS1. The vastly cheaper alternatives more than meet the Government’s own projected growth for the next 30 years – and these take no account that passenger journeys actually dropped in Q1 of this year.”
“Much has been made of the potential disruptions of upgrades to the WCML but of course the major upgrades have been done and the required developments to release capacity would be tiny in comparison. Indeed the disruption in converting a First Class carriage to a standard one, or from train lengthening is nothing compared to rebuilding Euston and having several platforms out of use for eight years that HS2 requires. But this pragmatic unsexy approach doesn’t fit with the need for a political legacy that is so clear in the Government’s increasingly strident defence of this white elephant.
“Betting £50 billion on a single train line being the solution to the economic woes of the country outside of London really is irresponsible – and doesn’t cover up for the lack of a coherent economic strategy for the regions. It’s time to accept the facts: HS2 is an unnecessary waste of money.”
Extend MML as HS2 KMPG suggest part of Phase 2 may assist Birmingham, Derby, Nottingham, Sheffield and Leeds to reduce the rail journey times but not at 200mph+. The MML northern end could be upgraded to cut through the hilly areas. No need to build Phase 1 or both Phase 2 links. Such a MML upgrade could have a short section to Manchester. The Pennine and Peak District have been a barrier to railways. Tunnel machines can create the accesses to better link these cities and towns. The problem is that part of HS2 does not meet the political finance raising agenda for the Coalition. However the Coalition could do the right thing and the right thing to do is to only provide this Phase 2 essential interlinking faster and higher capacity section. The £15B is not a plausible gain but mainly savings. Savings are very difficult to realise as most companies well know. KMPG has not concluded the result of its methodology that there are sections of the current HS2 that are not needed but what is needed as better train operating depots where lengthing and shortening of trains for and after peaks can be more readily created and that some sections require an additional track or junction or cord. HS2 should focus on what is required for this location with grandees and other MPs who want to a railway for their locations.
Everyone who as sent in there response to the govenments answer to hs2 are excellent .They might as well call it day and cancel this crazy project .perhaps the govenment would like to put there accountants in front of Mrs Hodge to tell her where this 15billion is going to come from and which areas will lose out after all people have only got money to spend at one store either by the new railway or where they shop now .Unless the govenment is planing on giving us a extra 15billion to spend each year ?
If connectivity generates such a significant economic benefit why do we subsidise the railways?
When will the report using the same principles be produced on nationwide 100 Mbps broadband?
Will be asking the nao to audit this latest work of fiction?
Worth a read
“…….The professed benefits of state infrastructure projects are a thin pretext for the usual big money favoritism and collusion that drive public policy on the national level. The story of big infrastructure ventures is that of corporate welfare, insolvency and waste palmed off as a catalyst for interconnectedness and economic growth. Business and government benefit, transferring billions in stolen lucre to connected contractors, while the taxpayer is left with the bill for a finished product that history demonstrates often does more harm than good……..
HS2 is the result not of careful economic forethought, but of political machinations; it represents the best interests of a small group of politicians and business, but not those of Britain at large. Here’s to hoping the misgivings of Chairwoman Hodge prevail.”
exerts from
High Speed 2 benefits special interests at the expense of the wider economy
David S. D’Amato
11 September 2013
Institute of economic affairs IEA
http://www.iea.org.uk/blog/high-speed-2-benefits-special-interests-at-the-expense-of-the-wider-economy
How far back would you say this went, Paul?
Has it always been endemic…to the building of the M1, Heathrow and Gatwick, the National Grid from the 1930s, the Kingston Bypass or the Southend Road – or perhaps Henry VIII’s dockyards, King Edward’s Welsh garrison towns or Roman Watling Street, Anderida and Dover pharos?
Mr Webber, nice to hear you opine again. This reportage is not my voice so I cannot argue on their behalf, I simply found it interesting. Your choice of historical analogues is as intriguing as I believe it is knowingly nuanced.
I note you avoid the 1950s centralised city planning. Concorde, IT schemes, ground nuts and more analagous politically motivated comparators.
There is a huge flaw in the logic about building a ultra high speed route through an AONB and multiple SS1’S when the current political issue/rationale is ‘capacity’ and speed has been officially acknowledeged as a flawed agenda….. it has obvious socio- political machinations and is so flawed as to poison future infrastucture projects on the basis of lack of honesty and trust. Such is vanity.
The HS2 brief has been poltiically reconstructed but not the route and land-grab. Indolence or intent what is your opinion? Given the change of ‘rationale’ should the route not be revised?
How far back? ..mythical …….the tower of babel perhaps?
I think you well know about such issues (yours is a knowing, perchance cynical comment), such matters have dogged democracy; it has been with us for a long time (since man could exploit his peers) but since the threat of social revolution in the first part of the 20th century there was a well rehearsed pretence that the old order had changed and ordinary people and their wellboing were of significance and counted.
Perhaps the truth is just uncomfortable: politically we have returned to the old order of autocracy and democratic argument (as opposed to political manipulation of the media) is dead in the water..
John Longworth from the British Chambers of Commerce was on BBC Breakfast this morning, having to deal with some surprisingly feisty questioning from Bill Turnbull and Susannah Reid. He scarcely referred to the KPMG report. It was almost as if he was scared to hang his hat on it , knowing it will be blown out of the water in short order.
He had 2 main arguments :
He claimed that businesses were behind HS2. When asked about the Institute of Directors survey he dismissed this and said that he had been told by his members that investing in infrastructure was important. Spot that ? Trying by slight of hand to make it look like investing £ 50 billion into HS2 and investing in infrastructure are one and the same thing.
He also claimed that we needed a new line and it “might as well be High Speed”.
Well , no John !
Whether we need a new line is highly contentious but regardless of that the 225 mph bit is also in considerable dispute.
250 mph ( because that’s the design spec ) trains have to go on straight lines thus removing the possibility of travelling along an existing transport corridor. The emphasis on journey times prevents there being more stops which limit connectivity and capacity. To cap it off the FT reported last week that 225 mph trains use 90 % more energy than 125 mph ones.
The existing HS2 proposals came from the unelected Adonis who, after consulting with SNCF( surprise, surprise ), decided to specify that the trains must travel at 225 mph. Joe Rukin is exactly right, we came up with the solution before asking the question ” what is the best way of spending money to meet the transport needs of all of our people “.
The polls ( and more significantly their movement this year ) show that people have seen through this. The KPMG report won’t change anything because people fundamentally do not trust the politicians involved. Cameron, Osborne and McLoughlin might stagger on for now but they have lost the argument.
As with most government spending, this stinks of brown envelopes and backhanders.
I’m gonna suggest a common sense approach to stimulating the economy with £50 billion…. replenish the social housing sold off by Thatcher. Here is the maths – an estate in Charlton, South East London was due to be knocked down and rebuilt at a cost of £100 million for 1024 homes. Lets round the number of homes down to 1000 and disregard the demolition costs, this gives us new homes at £100,000 each. So £50 billion would create 500,000 affordable homes.
Private rented accommodation costs around twice what social housing does. The annual housing benefit bill is just over £20 billion per annum so a big chunk would be sliced off that. And for those working, they would have a significant amount of money to spend in the economy. And let’s not forget the amount of jobs that would be created to build the houses!
As for the need to increase the rail network – trains are virtually empty outside of rush hour so why not encourage the ignorant bosses to stop forcing people to work Victorian 9-5 hours? We have light bulbs in offices these days, we don’t ALL need to go to work at the same time!!
Common sense, or am I missing something?
So with all these wonderful financial benefits there will be no problem with full mitigation and compensation
Ive worked in the British Transport public sector and I can 100% confirm…….you can buy accountants to say anything