By Mike Geddes, September 17, 2013
Honorary Professor Mike Geddes attacks the ‘desperation’ of a government that relies on ‘trashed evidence’ to prop up the collapsing case for HS2.
Debate about the regional impact of HS2 has been revived by the release by government of KPMG’s report, HS2: Regional Economic Impacts.
KPMG claim that HS2 could generate £15bn in productivity gains for the
GB economy in 2037 when the full network opens (to Leeds and Manchester
as well as London to Birmingham), with a further positive effect in
following years. Moreover city regions like the West Midlands will
experience an improvement in their competitive position relative to
London and the rest of the UK.
As might be expected, this has been seized on gleefully by key
figures in Birmingham. Jerry Blackett of the Birmingham Chamber of
Commerce Group is quoted as saying that ‘the KPMG report is a ringing
endorsement of everything those of us who support HS2 have been
saying’. Mr Blackett is, as usual, engaged in ‘boosterism’ – bigging
up positive news in order to create a bubble of optimism around the city
economy. But of course we all know what happens to the economy when
bubbles burst. So should we join with the Birmingham boosters in
welcoming the KPMG report?
Well in the first place, we should note that this is not the first
time consultancy reports have been produced with eye-catching headlines
about the regional economic benefits of HS2. Not so long ago, Volterra
and Arup undertook a study on the basis of which the Core Cities Group
(which includes Birmingham) claimed that HS2 could underpin £44bn of GVA
(gross value added) and 1m additional jobs in our major urban areas.
The only problem was that the Volterra/Core Cities figures turned out to
be no more than a hypothetical and highly unlikely ‘best case’ economic
scenario for the period up to 2020 – well before HS2 could be operating
and so in no way a result of it!
KPMG also have previous form on this. Earlier work for Greengauge
21, the pro-HS2 lobby group, suggested that high high speed rail would
help to bridge the north-south divide, creating more jobs and higher
wages in the North and Midlands, especially in the core cities, than in
London and the south, which might actually see relative losses.
It is notable however that the government and HS2 Ltd have not
directly associated themselves with such claims until now, leaving that
to regional boosters. There are excellent reasons for this. Studies
such as that by KPMG for Greengauge were criticised by impeccably
independent experts. The Institute for Transport Studies at Leeds
University thought they exaggerated the role of transport investments in
driving employment and questioned whether London would lose out.
Indeed the great majority of experts take the view that the most dynamic
centre (in this case undoubtedly London) is likely to be the principal
beneficiary of new transport investments like HS2.
A study by Imperial College commissioned by HS2 Ltd said that the
order of magnitude of national economic ‘agglomeration’ benefits from
high speed rail is likely to be very small. A cross-national review of
the evidence by Professor John Tomaney of Newcastle University found
that “the impacts of high speed rail investments on local and regional
development are ambiguous at best and negative at worst”, while
Professor Roger Vickerman, commenting on the much-hyped parallel case to
HS2 of the supposed economic benefits of HS1 in Kent, says ‘they are
not visible to the naked eye’.
So does the new KPMG report turn this around? Absolutely not.
Experts are already trashing their methodology and conclusions. One of
the biggest names in the field, Professor Henry Overman of the LSE, in a
commentary titled ‘HS2 Regional Economic Impact: Garbage in……?’, says
the report does things which are ‘technically wrong’ but are crucial for
their findings. Key parts of their method ‘does not have a firm
statistical foundation’, ‘is essentially unfounded’ and ‘produces
estimates of effects that are meaningless’. This may well explain why
KPMG are so curiously coy about their own work, saying in the preface
that ‘all users are advised to undertake their own analysis ….before
making any decision ….based upon information in this report’. Hardly a
glowing endorsement of their own product!
So what can we conclude? First, that the government is getting
desperate in making the case for HS2 if it needs to rely on ‘evidence’
like this. Secondly, that HS2 may well produce a bit of new
regeneration around the (very few) stations, but will do little or
nothing for anywhere outside these locations and will be absurdly
expensive in employment creation terms.
Brummies have always had a reputation for straight talking and common
sense. Hopefully they will see through the smoke and mirrors which the
government and some local voices are forced to rely on to prop up the
collapsing case for HS2.