HS2 does not solve North/South divide

Can HS2 cure the North/South divide, or deliver economic benefits?

Government claims for ‘transformational’ benefits are based on belief, not impartial evidence. It’s essential to look at what the facts actually are:

1. The evidence on regeneration (where HS2 acts as a catalyst) points to London, not the regions, winning:

  • DfT say more than 7 out of 10 of the 30,000 jobs created by HS2 around stations will be in London ie not the Midlands or the North. (Old Oak Common, with 20,000 jobs wins most)
  • Most of the jobs claimed will not be genuinely new jobs but ones that have moved from other areas in the region. HS2 Ltd concluded this, after consulting academics
    • DfT say 59% of extra HS2 trips are for leisure; given DfT assume trips to London grow at twice the rate of those from London, so more people and more money will go to London
  • §  HS2 impacts on the service sector, in which London is dominant. So work is more likely to move to London, not away from it.

2. The evidence for wider economic impacts (of HS2 itself) is also small:

  • The productivity benefit from shorter journey times is the key benefit, but it’s already in the business case (and is overstated now that DfT admit that time-on-board is not wasted)
  • The Wider Economic Impacts of better connectivity are relatively small, £4-£6bn (NPV in 2009 prices), and are mainly driven by the use of freed-up capacity, which will need a new further subsidy to realise
  • HS2 Ltd asked Imperial College if faster connectivity had any further direct benefits – they said ‘very little’ (max £8m/a) – but their conclusion was not only left out of the White Paper last year, but not even referred to in the consultation materials.

3. The academics say, if anything, the evidence points to London winning. Key academics have made submissions to Transport Select Committee:

  • Prof Mackie (ITS, Leeds) says ‘For various reasons HS2 is rather unlikely to make much difference to the north south divide.  A spatial analysis would probably show London to be the main benefitting region’.
  • Prof. Tomaney (CURDS) who did a full literature review, says ‘The impacts of high speed rail investment on local and regional developments are ambiguous at best and negative at worst’…’ In countries with dominant capital cities net benefits tend to accrue to these’.
    • §  Prof Overman (LSE) said to the same Committee in October 2010 ‘ Claims about the ‘transformational nature of transport investments for particular areas should be generally discounted in assessing these benefits because they have no convincing evidence base to support them’.