Government get dodgy accountants to make up figures to justify HS2

The KPMG report

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.”

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30 comments to “Government get dodgy accountants to make up figures to justify HS2”
  1. I now see hs2 as got there sums wrong according to the Sunday times .on land purchase .They now are having go back to farmers and house holders to tell them they need more homes and land along the route .They are to quick to call ukip clowns us nimbys ,they are just a joke and certainly not fit for purpose .They should sack the lot of them and call a halt to hs2 and stop wasting our taxes on this project .and now they are saying they are going to put a stop on free plastic bags to save our environment and wildlife .but what do they say about the biggest polluter hs2 nothing .all they want is to make a name for them selves by saying they built hs2 they have no concern for the people in the north in fact they have no concern for any people full stop

  2. I have come to the conclusion that the that our leaders of today are fighting for hs2 because it is the only thing they have to hang there hat on for there term in govenment as the general election nears .i can not see any of them being top of there game after the election

  3. Its amazing what explanations the government uses to justify its actions. Today they announced that the Royal Mail had to be privatised so that it will be able to access investment capital which apparently it can’t do at the moment. Yet the government does not seem to have any worries about finding the money to spend on HS2 even though they are confused over what the purpose of HS2 really is.

  4. 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.
    Would someone provide an internet link for this report, please? Particularly HS2 costing jobs in the East Midlands.

  5. FT article today ” Government adviser shoots down case for HS2 “.

    Prof Dan Graham who has advised the govt on both HS2 and Crossrail said “these numbers really need to be scrutinised , otherwise they could turn out to be fanciful ” and the figures “seem to be on the optimistic side”. To say the least. See earlier post re Robert Peston

    • Don’t be missled by all these claims of economic benefits into thinking that HS2 itself would make a profit. The spectacular benefits claimed by KPMG would be in the wider economy, so you would need to invest in companies in areas around the new stations.

      This is why it is easier for HS2 Ltd to justify building the railway on this basis, as the actual effects are harder to work out afterwards and any improvement to the economy could be claimed by HS2. If they based their claims on the numbers of people using HS2 then it would be very easy to check to see how their forecasts matched with reality.

      Once Phase 1 opened it would be possible to check forecast patronage against actual figures before deciding to go on with Phase 2. By basing the need for HS2 on the wider economic effects they will claim that there is a delay in the impact being felt and will argue that Phase2 would have to be built to give businesses confidence to invest.

      • What you say is obviously true, Paul, yet could not it also apply to all kinds of infrastructure that we now take for granted as part and parcel of a civilised life.

        Services such as an almost universal electrical supply, started as it was on a local and piecemeal basis, nationalised and then privatised, but still giving a standard power supply throughout the country- the almost universal supply of clean drinking water- a widespread network of domestic gas, the road network of paved roads developed in the last century, telephone networks and radio and television…all of these developed by an historic combination of private, local authority and state enterprises provide the services we require .

        Some may be immediatly and obviously profitable; others are funded indirectly- but basically they are all services which we can use or not,as we chooseand which are available to all, regardless of personal circumstances. Their value is that they enable people to have choices about their work and lives.

        We could dig our own wells, burn or bury our own sewage and refuse, travel only in summer, along rutted muddy tracks,hire our own tutors, cook over scavenged wood fires, go to bed at sundown and hope to cure our own ailments – and bury our own dead when that fails- but most of us don’t choose that way.

        Our taxes are part of the cost-as are the holes on the road when services are renewed, the bypass driven through our view, the new school at the end of our garden, valleys flooded to provide drinking water for cities and lines of pylons striding across the countryside- and windfarms- and waste tips and refuse incinerators – perhaps even oil wells and ‘fracking’.

        • Today the govt introduce a plastic bag tax ‘for the environment’ (apparently although that has been diluted since announced this am……enviro-charities may not benefit etc typical of the spin).
          Yet this is a govt that is cynically through HS2 unleashing massive environmental damage.

          My issue is not with infrastructure per se ,but the very specific damage and very poor planning of HS2 to AONB, SSI and virgin countryside when with proper planning, brownfield and motorway could have been used for most of the route. HS2 also fails to connect with other key transport.
          My question is why this route when Arup advised against it?, The House as a whole appear to have revoked all environmental concerns and plan to destroy the fragile ecosystems that remain. Either they know something they do not wish to reveal/share or they are complacent and duplicitous as a cohort.

          Rather than argue with me I wish that you addressed the points in the article as I said I raised it not as my voice but as a matter of interest.
          For me it is not either or. ‘HS2’ as planned is very poor and it needs fundamental rethink or revision. It is simply wrong in conception and route. It is designed for ultra high speed when it is apparently a response to capacity!

          If you want a personal answer and you are corresponding ‘blind’ with no knowledge of whom your are in ‘discussion’ with which means that your comments reveal their prejudice and subtle attempts at denigration esp all that historical analogy which actually has no real anology with the present day. The classical world was full of ancient forest…and limited in concrete structures.
          You are dealing with an old soul, and someone with Roman history and written annals back to AD 600.
          We have been on both sides of the ‘divide’ indicated in the article and yes the matter goes as far back as you suggest and likely further. Political power, greed and cronyism/favouratism just about covers it.
          Toll Roads/stagecoaches then Railways and Shipping are part of my family history. My grandfather wrote papers on railway capacity/movement in the 1920s.

          Sadly your argument to my mind lacks basic competence and you have conflated issues deliberately. HS2 is in no way comparable to the exemplars you illustrate. The rarity of historic landscape has not been factored in. HS2 ltd refused to value the loss of the AONB and all that it supports economically.
          The Govt set up a AONB with a board to protect it and through indolence will destroy it when there are alternatives that have not been adequately considered and they steadfastly refuse to consider.
          There is much secrecy about HS2 and little transparency. Indeed demands for transparency have been legally contested/appealed.
          HS2 is a grossly flawed, poorly thought through and expensively mismanaged project that survives on its ability to pay for PR and political indolence.
          The reckless political enthusiasm reminds me of 1920s-1930s schemes……..at the time the World applauded, history holds another perspective
          All I can say is that in my lifetime there has been a disconcerting change in British democracy and a frank lack of political competence

          • Thankyou for your response, Paul.

            The point I was trying to make was that projects such as HS2 may not be immediatly nor directly ‘profitable’ in themselves and that they may be seen to be of ‘value’ in other ways in addition to any profit earned in the immediate aftermath of their construction.

            I imagine you would agree that the roman road network fostered trade and the spread of ideas and skills, although it was built to tie together an empire of diverse peoples, promote swift communication between Rome and the extremities of that empire and ,above all, to facilitate the rapid and safe dispatch of troops to counter any threat to the Roman Peace.

            Perhaps there is a parallel in the development of roads and the enormous Indian railway network, under the Raj.,tying together the disperate states and regions of the consolidated Empire

            Even Dover harbour, our principal short sea ferry port ,was extended from the original small dock, now a marina, I believe, not for trade so much as to provide a sheltered anchorage for the Channel Fleet of the late Victorian Royal Navy. The same was true at Portland, only recently finding a new civilian role after the Navy departed.

            In all these, while the origens lay in political and strategic demands of their respective empires, and built regardless of cost, the fact that they still existed, years or centuries after their conception, created benefits and profitable opportunities beyond their original purpose and unrelated to their cost.

            By way of contrast, Britain’s victorian railway network- and associated ports- was built by private companies, often duplicating routes and overseen by government opposed to monopolies but distancing themselves from control or strategic direction,unlike many Euopean continental railways. Unforeseen at the time of their building, their contribution in two World Wars was vital- and against an enemy Power other than that anticipated in the early 19th century.

            Specifically to HS2, a problem with so many who contribute comments on this site,seems to be that, despite the “STOP HS2” label, not all speak with one voice.

            Some demand a total STOP to any plan to build a new line, any line -while others concede that some new track capacity is required.
            Some accept that Network Rail just may be right when they state that, with ever busier traffic on certain key parts of the network – and bearing in mind the chaos and disruption the last time they tried to”upgrade’ on a live mixed traffic route- not to mention the triple cost and time overrun- large scale reconstruction of the WCML is not a realistic option.
            Others don’t- suggesting “just add on more coaches” regardless of the fact that (1)most modern trains come in fixed formations ,(2) You cannot lengthen platforms at somewhere like New Street, Birmingham, without rebuilding the ‘throat where all the tracks converge and then run through tunnels beneath the city centre-in both directions and (3) extra coaches – servicable ‘spare’ stock -hardly exist and anyway are in great demand and tightly regulated by the government.
            Double deck trains- on existing lines (!) – even double track underground tube trains were suggested the other day…or as an alternative the very inflexible MAGLEV, which clearly couldn’t connect or integrate with classic routes…or even a tube inside which a car is propelled at many hundred mph – like that in which Dan Dare was transported to Mekonta in the 1950s Eagle.
            Overhead, suspended railways- like the experimental French vehicle as featured in ‘Farenheit 451″, now I believe, dismantled , or what about the suspended Wuppertal line in Germany, with the trains suspended from great iron frames; a surviving curiosity but not repeated, elsewhere , and scarcely adding to the view of the “virgin countryside”..?

            One problem facing those opposed to HS2, at least in its present form is that if ‘improvements’
            are added-usually at added cost- then the case against the scheme is lessened.TThey ask for mitigation- but do they really want it?

            Our M.P. for South Northants was challenged recently by her neighbouring MP., the Member for Northampton (town) South, to urge that a station should be built near Brackley.(as at our twin town,Montebaur, on the Cologne-Frankfurt HS line)
            She declined, because,she said, it would diminish the case against the whole scheme.

            But if the government are determined to press on regardless, would not the time and money devoted to a fruitless campaign be better spent in trying to modify, revise and maybe scale back the extreme features of the plan, rather than repeating plaintive cries that “nobody wants” it, or that no money is being spent on the existing railways or that it is only going to benefit a “few rich cats “or that all those in support must be utterly corrupt and self seeking.
            We don’t win arguments merely by insult, even if it makes us feel better.

            Finally, with regard to the ANOB, surely the time to shout was when both the M. 40 and the A.41 wre driven through, both of them entirely on the surface and both considerably wider than the proposed Hs route, much of which will be out of sight ,underground. Why the double standard? Why the cry that HS2 “Will destroy the Chilterns” when clearly it won’t? Why the repeated claim that the A 413 isn’t an existing transport corridor, despite it’s being shown as such (green)in any recent road atlas, part of it being a wide dual carriageway and partnering as it does, the former G.C.trunk line to the Midlands, now the busy Chiltern commuter railway line to London Marylebone?

            • The economic benefit is from the City development not the HS rail per se.

              Improving existing rail and maybe developing a new rail capacity line’/freight line with city development would produce just as much ‘growth’ if not more especially if the connectivity was better.
              Indeed the choice of cities and populations to have this benefit is quite partial and politically motivated.
              Other areas of the country and indeed other nations of the union have been overlooked and yet could benefit as much.

              Compensation for loss and inconvenience is frankly pathetic and a land grab of greedy Victorian qualities and ruthlessness.

              Stop HS2 is an umbrella group as are many pro HS2 groups and certainly their lobbyists.

              I expect the stop HS2 is quite specific and relates to this current proposed scheme. Alternatives I am sure there are many as you state……….at least the anti HS2 crowd seem creative and practical as opposed to adhering to a very poor scheme despite its manifest errors and poor ecological foundation, poor business plan etc

              The motorways listed were damaging and I am sure there was concern.
              Historically you should be aware they were built before the AONB and its Board were created so this is yet another specious retrospective argument.
              You seem to disregard any notion of conservancy and the need to preserve the rest of the AoNB which is mainly agricultural and woodland.. HS2 will compound the damage massively. It should be tunnelled throughout the AONB if it has to happen at all.
              The ventilation shafts should be subject to architectural prizes and reflect Chiltern Vernacular.

              Given there is now a a scar and a corridor with ambient noise ?MI and M40 should form the corridor. M1 via Milton Keynes which wants a high speed connection. Tunnelling was an issue in this proposal. These I think were the Arup preferred. Now HS2 ltd are tunnelling even more because of disruption to other services and yet there is no sense of return to the drawing board
              The reasons for the ‘preferred’ route (against Arups advice) were never published but I am reliably formed there was some murky demographics and politics deployed. Bit like the ‘kink’ up north.

              In opposition this route was considered seriously flawed (bow group etc).
              The plans were hurriedly drawn up for political reasons.
              There is poor connectivity with airports, HS1, city centres etc, etc. Any gain in speed will be offset by local commute.

              Seems mad to spend so much to create such a flawed system and one which will endure for so many years

              Unlike concorde although this was flown with known potentially severe design flaws which eventually grounded it.

              HS1 took many years and many major revisions for good reason.
              It was not perfect and skirted the AONB save some N Kent Marshland.
              I also have experience of that when i lived in Kent.

              It seems that this week there is to be a rival scheme unveiled with much more connectivity.

  6. Accountants can only work on figuars provided to them by there clients the govenment .and they have not there sums right yet so how they can say this changes anything I don’t know .hs2 should now be scraped .So people along the route can get there life back and the money can go to paying off our massive debt

  7. On a lighter note …. The latest MSN survey actions whether money should be spent on HS2 or a manned mission to Mars ( which incidentally costs less than 10 % of HS2 ).

    The vote stand at 32 % for HS2 and 68 % for Mars.

    Since a separate survey a few days ago was 20 % for HS2 and 80 % against HS2 I am wondering whether 12 % of people have been convinced by KPMG and the rhetoric of McLaughlin or whether 12 % of people think that a manned trip to Mars is a silly idea.

  8. I haven’t had the chance to read through the KPMG report yet. I will probably have that pleasure over the weekend. So I won’t comment yet on whether the holes in the KPMG logic are as blatent as the ones in the original Core Cities report ( confusing lines of causality between employment density and the number of transport links ) or the Volterra report on HS1 ( mixing up gross economic benefits with net economic benefits ).

    So in the meantime I will work with the assessment of Robert Peston the respected economist and commentator who would seem to be sceptical about the report.

    Mr Peston ( who stresses that the report was commissioned by HS2 Ltd ) buys the idea that increased connectivity ( with customers, suppliers and employees ) can add something to productivity. However he suggests that the numbers stated are massively overstated :

    1 ) He highlights that the report assumes that transport connectivity is the only constraint on growth. Ie there is no shortage of labour, no shortage of appropriate development land and buildings, no shortage of finance, no constraints of any other kind. He describes this assumption as “jaw dropping”.

    2 ) The increased connectivity described by KPMG mainly comes from getting existing pathways cleared. The “High Speed” bit is largely irrelevant. This little fact could end up proving an “own goal” for supporters of HS2. The Institute of Directors has already said that any new methodology should be applied not just to HS2 but any / all alternatives.

    I’m sure that we can rely on StopHS2 to HS2AA to commission their own detailed analysis of the KPMG work.

    None of this really gives any clearer view about what the net impact on employment will be. My own view is that gains in certain areas will be largely offset by losses elsewhere. Moving the deckchairs around in other words.

    …. meanwhile in the real world the council in Wolverhampton ( a town whose London service will be adversely impacted by HS2 ) has announced that up to 1,000 jobs are likely to go to save “just” £ 89 million, money that has previously been taken by central government. A picture repeated time and again across the country.

  9. The decision to ditch something like 50 years of transport planning practice and come up with an entirely new way of justifying HS2 just shows how much this project is a solution desperately looking for problem to deal with. First they design a system based upon the principle of high speed trains saving travel time, then they suddenly decide its being built for an entirely dfferent reason, yet the design stays exactly the same.

    Obviously if speed is no longer the fundamental driving force then the track can be more curved, there can be more stations etc.. In fact it would be a whole different design.

    This is Blair’s dodgy dossier all over again – make a decision and then churn out the evidence to support the decision regardless.

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