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High Speed Rail: Focus on the UK

August 04, 2011
Author: Eve-Marie Morgo

With the UK announcing that its economy grew by just 0.2%, the Euro faltering, and America battling an increasingly worrying debt crisis, the last quarter saw the debate surrounding the future of high speed rail re-ignited worldwide. It is increasingly being questioned whether high speed rail is worth it as costs are expected to run into tens of billions. In the UK, a recent report by the Institute of Economic Affairs labeled the plan to build a high speed link (HS2) between London and Birmingham and eventually to Manchester and Leeds ‘economically flawed’, claiming that it will require a £1,000 contribution per income taxpayer.

Whilst initial costs are high it is crucial, especially in financially straitened times, to consider the overall potential of high speed rail as an economic asset and an aid to growth and regeneration.

In the UK, according to PWC the government could recoup up to £7 billion as a return on a £13.9 billion investment. This figure of course does not of course take into account the wider economic benefits.

In the longer term, high speed rail provides an opportunity to ease the economic gulf between the North and South, and in America between rural and urban areas. Research by the UK’s leading cities found that HS2 could create 38,900 jobs in Liverpool alone over the next 20 years, whilst reduced journey times between Birmingham and London will support the growth of Birmingham’s existing financial and business sector.

Looking to the past, investment in infrastructure, especially in rail, has a legacy of stimulating economic activity. Between 1820 and 1850 some six thousand miles of railway were opened in Britain. The result was a greatly rebalanced economy – no longer reliant on two or three industries - and a significant rise in employment. At the peak of railway construction, between 1848 and 1850, £2 million (equivalent to approx. £117 million today) was invested and over 200,000 people were employed. The number of men working in mining, metallurgy, machine and vehicle building rose by almost 40% over the period. Britain’s economic landscape was never the same again.

More recently, South East Kent has reaped the benefits of the construction of HS1. The line has cut journey times between Ashford and London St Pancras to just 39 minutes. Since the line opened, the number of rail passenger statistics europe has increased by 120%, demand for industrial space in the area has risen by 50% and house prices in areas served by HS1 have risen.

Perhaps most tellingly, it is the developing economies such as Brazil and China who are implementing the most ambitious high speed rail projects. Brazil’s rapid investment in infrastructure and industry has led the unemployment rate to fall to the lowest ever in May 2011 (according to Brazil’s national statistics agency). These countries no longer see high speed rail as a luxury but as an imperative to their continued economic success.

In light of this history, perhaps the question we should be asking shouldn’t be ‘can we afford to invest in HS2’ but can we afford not to? 


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