Sept. 11 (Bloomberg) -- U.K. Transport Secretary Patrick McLoughlin defended government plans to build a high-speed rail line between London and northern England amid growing opposition to the near 50 billion-pound ($79 billion) project.
The High Speed 2 route is crucial to economic development, McLoughlin said in a speech in London today. His comments came as the British Chambers of Commerce declared its support for the plan, known as HS2, and a KPMG LLP report estimated the benefits at 15 billion pounds a year.
HS2 will act as a “heart bypass for the clogged arteries of our transport system,” he said. “It will lift the long-distance burden from our overcrowded main lines so they can concentrate on what they are best at: more local trains, more freight trains.”
Opposition to HS2 has grown, with rank-and-file lawmakers in Prime Minister David Cameron’s Conservative Party joining former Chancellor of the Exchequer Alistair Darling from the opposition Labour Party in withdrawing their support. A report by the House of Commons Public Accounts Committee said Sept. 9 that the government had failed to make a convincing case for the line, which would run initially from London to Birmingham, with a second phase connecting it to Manchester and Leeds.
Ministers have voiced their support for HS2 in the past week. Chancellor of the Exchequer George Osborne told lawmakers yesterday that the line would change the “economic geography” of Britain. Deputy Prime Minister Nick Clegg said on Sept. 9 it’s “the most compelling answer” to a shortfall in rail capacity. Cameron said in a Twitter posting today that McLoughlin’s speech marked the start of a government “fightback” on HS2, which he said will deliver “huge benefits.”
McLoughlin restated that the budget for HS2 remains 42.6 billion pounds, rejecting reports putting the likely cost at as much as 80 billion pounds as “scare stories.” The government will “bear down” on a 14.4 billion-pound contingency cost with input from Oxford University’s Said Business School, he said.
In his address, McLoughlin cited a KPMG report commissioned by HS2 Ltd. that finds the benefit to the U.K. economy by 2037 would be spread countrywide, supporting the coalition government’s case that it would help rebalance an economy weighted toward London and the south. HS2 Ltd. is a state-owned company responsible for developing the network.
“These productivity benefits accrue to all regions, with the strong gains in the Midlands and the North,” the report said. “Though Greater London does well, it is not at the expense of everywhere else. In fact, areas outside Greater London and the Phase Two city regions account for around half of the total forecast increase in G.B. economic output.”
John Longworth, director general of the British Chambers of Commerce, and the leaders of 26 of its regional groupings wrote to Cameron to give their backing to the line.
“Future business success depends on infrastructure networks that meet demand -- rail is no exception,” according to the letter published today. “The U.K. rail network must have the capacity to meet rocketing business demand for long-distance services, for commuter rail services, and for the transport of freight.”
Main lines connecting the north and south of England will be full in 15 years, according to the letter. It compared the importance of HS2 to the building of the Channel Tunnel, the London subway’s Jubilee Line and the M25 orbital motorway around the capital, which were all vigorously opposed.
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