HS2 Rail Link 'Will Boost Economy By £15bn'

The HS2 high-speed rail project will boost the UK economy by £15bn and will be completed within its £42.6bn budget, the Government is to claim.

New research shows the proposed link between London and cities in the Midlands and northern England will drive growth in the regions.

The announcement by Transport Secretary Patrick McLoughlin comes in the week the Commons spending watchdog issued a scathing report on the scheme.

It said the apparent benefits were dwindling as the costs spiralled.

Ministers' case for the massive project was based on "fragile numbers, out-of-date data and assumptions which do not reflect real life" with no evidence that it would aid regional economies rather than sucking even more activity into London, said the Public Accounts Committee report.

But Mr McLoughlin will point to a new analysis by KPMG, commissioned by HS2 Ltd, which shows that the boost to Birmingham's economy will be equivalent to 2.1% to 4.2% of the city region's GDP, there will be a 0.8% to 1.7% benefit to Manchester, 1.6% for Leeds and 0.5% for Greater London.

The proposed HS2 lines

"It addresses that vital question: will HS2 create jobs and growth in the North and Midlands, where they are needed most? The answer is absolutely clear. Yes," he will say.

The Exchequer could benefit from £5bn a year in extra tax receipts as a result of the boost to the economy, KPMG said.

The Transport Secretary's speech forms part of a campaign announced by David Cameron to make the case for HS2 in the face of what he called an "unholy alliance" of sceptics.

Recent critics have included Labour's Alistair Darling who first approved it as chancellor, and the Institute of Directors which dismissed it as "a grand folly".

It is also fiercely opposed by some Tory MPs - many representing communities which will be disrupted by construction work and train noise along the route.

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