The government’s benefit-cost ratio (BCR) for HS2 does not reflect the full impact the rail megaproject will have on the UK, chief executive Mark Thurston has said.
Thurston (pictured) told a meeting of the House of Commons Transport Committee that they should consider ‘wider strategic issues’ when assessing the benefits the rail line will bring to the UK.
A benefit-cost ratio is the comparison between the cost of a project and the estimated return in economic benefits per £ invested. The government has awarded HS2 an RAC of 1.2, meaning that for every £1 spent, it will generate £1.20 in return.
Anything greater than 1 suggests that a project will bring positive net worth to the country.
Thurston claimed that HS2’s BCR was higher than other major infrastructure projects such as the Jubilee Line Extension in London, which had a BCR of between 0.95 and 1 when considered. This figure suggests that the project had to make losses.
“If you look at the Jubilee line extension, the BCR was very low,” Thurston said. “But it changed this part of London. You can never imagine we would have hosted the Olympics or the expansion of places like Stratford and beyond, without extending the Jubilee Line to Canary Wharf and Stratford.
He said the completion of HS2 would “profoundly change” the connectivity of northern cities, significantly increase rail capacity and help reduce the carbon footprint of the whole country by switching from road to rail.
“We need to look at the larger strategic issues to find out why this is so compelling.”
Thurston also confirmed that HS2 had issued all Mandatory Purchase Orders (CPOs) for the first phase of the project. Last year the Department for Transport (DfT) ruled out any plans to extend the deadline for HS2’s land purchase powers.
Earlier this month, HS2 began its search for contractors for up to £500million of work at Euston station. The new HS2 station rose to £2.6bn from £1.5bn when the contracts were signed with the main contractors – a joint venture between Mace and Dragados, in 2019.
The DfT has been contacted for comment.