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HS2 should be scrapped, say business leaders

An organisation representing the UK’s business leaders has branded High Speed 2 (HS2) ‘a grand folly’

The Institute of Directors (IoD) has joined the increasing number of objectors to the proposed high speed rail link and has called on the government to abandon the scheme, according to the AJ’s sister publication Construction News.

Last week former chancellor Alistair Darling warned that HS2 had become too expensive and could drain the railways of investment

Now a poll of the IoD’s members found 70 per cent thought the scheme would have no impact on the productivity of their business and only 27 per cent believed it is good value for money.

Support for the scheme among the institute’s members has fallen over the last two years. In August 2011, 54 per cent said it was important to their business whereas the figure now stands at 41 per cent.

The institute’s members preferred investment in other forms of transport to HS2. 80 per cent thought investment in existing intercity rail services was important, 73 per cent said the same of commuter rail networks and 68 per cent of tube, metro and tram services whereas 41 per cent thought investment in new high speed rail was important.

The IoD said that a ‘central part’ of the government’s case for HS2 was that time spent on a train is unproductive but 48 per cent of IoD members said they worked for at least half of their journey time.

Simon Walker, director general of the Institute of Directors, said: ‘The IoD cannot support the government’s current economic case for HS2 when so many of our members are doubtful of the benefits.

‘We agree with the need for key infrastructure spending, but the business case for HS2 simply is not there. The money would be far better spent elsewhere and in a way that will benefit much more of the country. Investment in the West and East Coast main lines combined with a variety of other infrastructure projects would be a far more sensible option.

‘It is time for the government to look at a thousand smaller projects instead of falling for one grand folly.’

The IoD surveyed 1,323 members online between 1st and 11th August. 

But consultancy KPMG, which is an adviser to HS2, defended the case for HS2. Richard Threlfall, KPMG’s head of infrastructure, building and construction, said: “Work undertaken by KPMG in 2010 showed that a high speed rail network in the UK could boost annual economic output in 2040 by between £17bn and £29bn, recovering the currently anticipated £42.6bn cost within just a couple of years.

‘And last year 64 per cent of respondents to the CBI-KPMG Infrastructure survey said HS2 would have a positive impact on business. Failing to invest now into big infrastructure projects like HS2 will only speed up the process of putting the UK on a downward spiral to a second tier economy.”

Jon Hart, infrastructure partner at law firm Pinsent Masons, said: ‘It is a reminder – if any were needed – that if the project is to go ahead the price tag associated with HS2 is likely to be the largest item of capital investment undertaken in this country for the foreseeable future. 

‘It is also worth applying a degree of rigour in what the numbers are intended to include and exclude – civil works, rolling stock procurement, transport interchanges, other enabling works, land-owner compensation – and, above all, clarity as to what the project is intended to achieve and how the economic value for this is determined.”

Transport Minister, Norman Baker said: ‘This is not an economic analysis by the IoD, it is a survey of less than four per cent of their members who have responded to some of the misleading reports of late. The IoD is simply not aware of the facts. It says we should be investing more in the existing rail network – we are spending £37 billion on this in the next five-year period, undertaking the biggest investment since Victorian times.

‘The fact is that over the last 15 years the number of long-distance rail journeys in this country has doubled to 125 million a year.

‘HS2 will provide the essential capacity we need in a way that will provide hundreds of thousands of jobs and billions of pounds of economic benefits.”

Readers' comments (3)

  • At last major representatives of both the business and private communities are realizing what an act of idiocy HS2 is. There are so many other infrastructure projects that are desperately needed to sustain growth; water, sewage, power, housing, etc etc. Of course they won't attract the same amount of publicity, but do we want another tunnel experience?
    Albatrosses and necks come to mind.

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  • HS2, surely the most absurd infrastructure project to be pursued by any UK government. We will all pay heavily for it yet the vast majority of us will never use it, so who is it for? Tourists, unlikely, business people attending meetings in London, but surely video conferencing will come of age soon, commuters, possibly? But as the economy is increasingly focussed in the south-east where the jobs are and mega-cities are the future, then why not properly plan and build more housing and community infrastructure in the south-east around London?

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  • The route appears to avoid Coventry and the NEC, which are currently the only stops on the main London/Birmingham line route. This must surely have a negative effect on the economy of these two major destinations.

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