Infrastructure is a critical element to the development and competitiveness of nations across the globe. Yet there is often a gulf between those who plan their infrastructure on the basis of a strategic vision and those who look only at the narrower confines of economic cost-benefit analysis.

The UK threw up a perfect example recently when the National Audit Office (NAO) produced a report, High Speed 2: A Review of Early Programme Preparation. The study highlighted the fact that the cost-benefit ratio is a less than overwhelming 1:1.4, which was quickly pounced on by those opposed to the high speed rail link.

Yet it quickly became apparent that the published ratio failed to take account of the wider economic and regeneration benefits associated with station developments along the route.

From an economist’s viewpoint, this is understandable, because many of these benefits are difficult to measure with any accuracy. Yet the reality of what often happens when infrastructure investment takes place should offer some reassurance.

Take the experience of High Speed 1, for example. The Channel Tunnel rail link enabled three major development schemes to take place at Ebbsfleet, Stratford and King’s Cross. It was also critical to London’s successful Olympic bid.

Now while it is theoretically possible that all these developments may have taken place anyway – albeit unlikely – they would certainly have taken far longer to realise. Yet today these schemes have had a huge regeneration effect along the corridor, generating tens of thousands of temporary and permanent jobs in the process.

The same is almost certainly going to be true of HS2, where it will see benefits in at least four key areas:

  • an increase in rail revenues, from passengers and freight
  • conventional transport benefits in the form of journey time savings (the basis for the reported NAO conclusions)
  • wider economic benefits, particular in the regions with HS2 stations, which will enable a host of other local productivity gains
  • and a further stimulus for regeneration and growth opportunities along the route, particularly for the core cities.

What we can’t say yet, of course, is the extent to which cities and regions will benefit from the high speed rail route, so we can’t yet account for it. Much of that economic and social development will depend upon how local stakeholders, land owners, regional development and local authorities respond to the opportunities created by the arrival of HS2.

But simply because the benefits are not yet tangible does not mean they will not follow. In fact, experience suggests it is highly likely they will.

In short, the NAO analysis is fine as far as it goes – but it does not go nearly far enough in my view. Real life experience suggests we will gain a great deal more and enable many opportunities for regeneration, boosting jobs, growth and competitiveness along the way.

There is simply no excuse for completely ignoring such benefits.