27 Aug 2013

High Speed Two is ‘grand folly’ – IoD

The Institute of Directors says the government should scrap its plans for a £50bn high-speed rail link between London, Birmingham and the north of England.

The IoD described the project as “one grand folly” after a poll of its members found that only 27 per cent believe it offers good value for money, while 70 per cent say it will not improve business productivity.

In 2011, a survey of IoD members found 54 per cent rated HS2 as important to their business, but this figure has now fallen to 41 per cent.

HS2 has come under fire in recent days from previous supporters of the government’s plans.

It is time for the government to look at a thousand smaller projects instead of falling for one grand folly. Simon Walker, IoD

Last week, Alistair Darling, who as chancellor first approved stages of the line, said the economic benefits were “highly contentious”, with the risk of “substantially draining the railway of money vital for investment over the next 30 years”.

Mr Darling wrote in the Times that he had learned in government that “big projects… can easily run out of control” and that “political visions can easily become nightmares”.

The government remains committed to HS2, which would see trains running at 250 miles an hour on a new rail line between the capital and the Midlands from 2026. Branches to Manchester and Leeds would follow by 2032.

It is the cost of the project that it causing most concern, with reports that the Treasury is assuming it could rise to £73bn.

What do other business organisations say about HS2?

The Confederation of British Industry (CBI) and the British Chambers of Commerce (BCC) want the scheme to go ahead, but are both concerned about cost.

John Cridland, CBI director-general, said: "In the coming years the UK will need more railway capacity and that is why the CBI supports HS2 in principle, but it must be demonstrably clear that the benefits outweigh the costs - it must deliver value for money."

A BCC spokesman said: "We remain supportive of HS2 as a project to deliver increased capacity to our rail network. However, it is critical that costs are kept under control, and that the scheme remains on time and on budget.

"But this project must be additional to other road and rail spending increases as all are crucial for the future health of the UK economy."

Supporters say time spent on a train is unproductive for business people, who would benefit from shorter journey times.

But the IoD survey found that only 6 per cent of company directors never work on a train, with 48 per cent saying they spend at least half of the journey working.

Value for money

IoD Director General Simon Walker said: “Businesses up and down the country know value for money when they see it, and our research shows that they don’t see it in the government’s case for HS2.

“Some of the specific claims that the government has used to support its economic case for the project have been challenged by our members, who by and large do not feel that their business will benefit.”

“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.

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


HS2 Ltd Chief Executive Alison Munro said: “While we respect the right of the IoD to state its case, we believe that HS2 will provide value for money and will bring about a transformational change to the economic geography of our country through creating thousands of jobs and opportunities for regeneration in and around our core cities.

“While smaller schemes may have higher benefit-cost ratios, by their very nature they only make small improvements to capacity and often just move the bottleneck elsewhere on the network.

“Network Rail have made it clear that they cannot deliver the required capacity by piecemeal upgrades to the existing network.”

A Department for Transport spokeswoman said: “We need to build HS2 to free up valuable space for passengers and freight because, without it, our existing rail network will be full by the mid-2020s at a cost to passengers and businesses up and down country.”