The Alice in Wonderland world of HS2 economic growth claims

Claims about the impact of HS2 on economic growth get more weird and wonderful by the day.

In the Telegraph today, ‘leading economist’ Bridget Rosewell says
“If we take the KPMG £15bn, my guess is that we can add at least 25pc to that on how market access creates new growth that we haven’t thought about.”

This is a remarkable double. First, she endorses the KPMG claims which have been so thoroughly trashed (see http://blogs.lse.ac.uk/politicsandpolicy/archives/36335). Then she ‘guesses’ there could be 25% more. So the methodology for calculating HS2’s economic impact appears to be according to a formula of 100% error + 25% guess.

And if this wasn’t enough to be getting on with, in the same Telegraph article we find the Secretary of State for Transport standing on his head:
“Mr McLaughlin said the true benefits of HS2, which could cost as much as £50bn to build, could not be calculated properly by financial models. “We’re not building this [to be used] for five years or 10 years, this railway will be being used in 100 years,” he said. “Sometimes you can’t get that on a benefit cost ratio analysis. When you look at the benefit/cost ratio for the Jubilee line in London it didn’t stack up but if it hadn’t been built nor would Canary Wharf have been built.”

In fact, the construction of Canary Wharf began in 1988 and the Jubilee Line extension was authorised in 1990. So it was the London Docklands development that led to the Jubilee line extension, not the other way around.

In other words, the Secretary of State said “if I have to stand on my head to justify HS2, I will do so”.

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About Mike Geddes

Professor Mike Geddes has research interests in public policy and management, including local democracy, local economic development and public services. He has undertaken research for the EU, the UK government and many local authorities, and has led and participated in several large scale policy evaluations for government. He has contributed regularly to the OECD LEED programme on local governance and the work of the OECD Trento Centre, and is a member of the Commonwealth Local Government Forum Research Advisory Group.
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