High Speed Two and the Cost-Benefit Blues

High Speed Two continues to dominate the news agenda, but now that MPs have voted to releasing the funding for the scheme, it’s time to move on from obsessing over the minutia of ‘cost-benefit analyses’, and think far more carefully about how we extract the maximum economic benefit for the cities the new line will connect.

Ever since HS2 was proposed in 2008 – originally by the last Labour Government – the debate surrounding its merits has been characterised by claim and counter claim, study and counter study, as to the true nature of the economic benefits and environmental damage it could produce or inflict.

This week the Government downgraded the ‘expected benefit-to-cost ratio’ – industry jargon for the likely return on investment – from £2.50 to £2.30 for every pound spent. This revelation is highly unlikely to have swayed the opinion of most policymakers, commentators or members of the public, who by now will have made up their minds whether HS2 is a vital investment for the future of the UK economy, or a waste of money better spent on other things.

Those in favour of the investment argue that HS2 will provide a long-term solution to capacity shortages on the West Coast Mainline, and could help rebalance the economy over the long term. Sceptics and opponents counter that it will cost too much, and that as a standalone project which is not part of a coherent strategy for the future development of UK infrastructure, HS2 will do little to reshape the future of the economy.

So should the Government be investing in HS2? The truth is, despite the sums spent on ever more complex studies, it is impossible to answer this question purely on economic grounds. International experience from France, Japan, Spain and elsewhere shows that the development of high-speed rail networks are, in most cases, driven by political aspirations and commitments rather than economic considerations.

Of course those charged with the responsibility of deciding whether to proceed with HS2 must weigh the evidence that has been produced, and do everything that they can to keep costs under control throughout. But decisions of this magnitude will ultimately come down to a series of political as well as economic judgements regarding the best way to support the British economy today and in the future.

Now that the vote has been passed, it is vital that far greater attention is given to helping those cities that the new line connects extract maximum economic benefit from it. That means providing maximum access to the line for residents and businesses by fully integrating the new infrastructure with existing local transport networks, and ensuring that stations are within easy reach of dense city centres.

Likewise, tickets must be affordable for commuters if the anticipated ridership numbers are to be achieved, and the pressure is to be relieved from existing West Coast Services.

And most critically of all, HS2 must not be delivered at the expense of other, more incremental local transport improvements, which are vital not only to the success of HS2, but also to the wider UK transport network.

HS2 does have the potential to have a major economic and social impact on the places that it connects, but only if those cities are equipped to make the most of it. The attention should now shift to making sure that they can.

Ben Harrison is Director of Partnerships at Centre for Cities