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High speed rail would benefit taxpayer, Treasury and economy

High speed rail will boost the UK economy, improve the country’s economic geography and provide a considerable increase in tax receipts, a new study has said.

High speed rail would be cost effective and provide a good return for both the taxpayer and Treasury.The study by research and development group Greengauge 21 and management consultancy KPMG, entitled High Speed Rail in Britain: Consequences for Employment and Economic Growth.

High speed rail will boost annual economic output between £17bn and £29bn by 2040, said the study.

“In the long term the Treasury will be winners too, through substantial additional tax revenues.”

Jim Steer, Greengauge 21

Annual tax receipts could increase by between £6bn and £10bn by 2040 (on 2010 prices), the study found. A national high speed rail network could contribute between 25,000 and 42,000 additional jobs in Britain.

Greengauge 21 director Jim Steer said: “Our new analysis demonstrates that in the long term the Treasury will be winners too, through substantial additional tax revenues.”

The study also demonstrated that a comprehensive national network of high speed services could significantly improve business to business connectivity and change the economic geography of Britain.

Such a network would effectively link the major cities, creating a single national market for service sector and knowledge-based businesses. The greatest economic impacts would be in the north, with the largest gains in Yorkshire and the Humber, Scotland, the North East and North West and the East and West Midlands.

These effects could help to spread prosperity outside the most productive areas of the South East and London, and could contribute to closing the north-south divide, said the study.

New way of thinking

KPMG partner Lewis Atter said the study was an attempt to tackle the scarcity of evidence on the importance of rail to the economy and exchequer revenues. “Using evidence on how rail connectivity and economic performance are linked today, we have asked what high speed rail could do in the future,” he said.

“This is a new way of thinking about the economic returns to transport investment, focused on its impact on the supply side of the economy.”

The findings of the report have been endorsed by HSR\UK, the campaign coalition of 11 major cities which together generate over a quarter of Britain’s wealth.

Birmingham City Council leader Mike Whitby said the study held good news for his city. “The report makes clear that a high-speed line would be a catalyst for economic growth for the whole country, and would generate new jobs in those regions where a skilled workforce exists,” he said. “It would change the pattern of regional economic growth for the better.”

The study was commissioned by Greengauge 21 from KPMG on behalf of the HSR Public Interest Group which brings together public sector agencies and representative bodies to investigate and develop plans for high-speed rail in Britain.

Readers' comments (1)

  • The question I am fored to ask is "Isn't this a 19th century answer to a 21st century problem?"

    The article cites the finding of a group whose interest already lies with the construction of a transport structure. Wouldn't it be more objective to look at the problem in the context of all options. I read recently that the Japanese started constuction of their high-speed rail network in 1964. Do you think that they would have approached that project in the same way if they had had today's electronic communications available to them then. Probably not.

    Thousands of small, medium and large businesses have embraced modern electronic communications (email, web conferencing, modern telephone) successfully, permitting remote working by their employees as well as the successful distribution of their business to regional offices where appropriate. In this country we seem to have a pre-occupation with "bums on seats" employment. Unless someone is at a certain location, the work is apparently not being done. We all know that this is simply not true.

    Of course, electronic communications does not mitigate the need for travelling in some cases, but I would urge anyone reading this to look hard at how they approach work and ask themselves, is much oftheir travellingt really justified?

    Why don't we improve our exiting railway networks to cope with travel when needed, but encourge less travelling where it is unnecessary.

    Of course, electronic communication improvements do not have the same curb appeal as a brand new shiny railway when it comes to electioneering. This was confirmed in the last few days when the government suggested a laughable method for raising funds ti improve broadband connectivity. I say laughable for two reasons. One, because the amount they would raise by this means was totally inadequate for the task in hand. But secondly and of greater concern was the fact that many MPs cited that the economy couldn't afford to spend money on such schemes at the moment. How can such an argument even hold water when there are rumours banding around that the proposed high speed rail scheme will cost in excess of £34bn!!!

    Infrastructure investment goes beyong roads and railways. Communications technologies can and do offer a realistic way of reducing the need for shuffling workforces from pillar to post. Invest in this and you can free the existing transport systems of unneccesary traffic, freeing the capacity for those wishing to travel. Moreover, workforces and businesses can be based regionally, encouraging the growth of local economies in an electronically joined up market!

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