KPMG to face grilling by MPs over HS2 benefit calculations

Consultants KPMG are to be quizzed by MPs for a second time over a report that claims the HS2 rail line could bring an economic boost of £15bn a year.

A key component of the report was “essentially made-up”, said leading transport economists last week.

The Commons transport select committee has summoned KPMG, along with transport secretary Patrick McLoughlin, to answer questions about the rail project, having learned “significant new information”.

The Department for Transport’s strategic case for HS2 had included figures from KPMG that estimated the economic gain the project would enable in areas outside London.

The report said: “The results of the analysis suggest that HS2 could increase economic output by £15bn per year. Even with more cautious assumptions the annual benefit could be £8bn.”

But Henry Overman, professor of economic geography at LSE and a former adviser to HS2 Ltd, said the figure was arrived at using a procedure that was “essentially made-up”.

According to the Guardian, committee chair Louise Ellman MP, who has been a strong public supporter of the £42.6bn scheme, said: “HS2 is a hugely significant and controversial investment. We are following up the questions we raised in our earlier report, in the light of significant new information.”

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Readers' comments (1)

  • This project continues to be chivvied along by the government using spurious figures arrived at by essentially fiddling the figures in favour. The reduction in cost benefit ratio from £2.50 to £2.30 per pound invested is complete rubbish as this includes figures guessed at, before any actual planning, around knock-on benefits from further developments which are hoped might arise because of the construction of non HS2 infrastructure. These are figures that are NEVER normally included in cost benefit ratios for infrastructure spending decisions and the DFTs own guidance said they should't be included. The real CBR of this project was 'next to no gain' before these fake figures were massaged in and then downgraded by 20p in the pound. I think the country has a right to know what the ACTUAL CBR would be using the standard model so that it can be compared against alternative projects fairly - my guess is that it wouldn't even break-even which in usual circumstances means it would need to be re-thought. The whole thing stinks of vested interests and scant regard for the county's still exponentially increasing debt pile. They're spinning one very big expensive yarn on this and I think its an outrage. People want services they're actually going to use on a daily basis, at good value for money for the taxpayer, and this quite simply is nothing like that.

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