Unrecognised tax gains and benefits for the Treasury

Like (I suspect) many others, I am staggered by the ever-increasing estimates of the cost of HS2.

They challenge my basic supportive instincts, as a lifelong fan of the railways, that the cost will be justified and that the huge investment in one massive project will pay national dividends.

I would be more confident if I understood better whether the final oft-quoted scary estimates take account of the financial benefits that the Treasury will gain from HS2.

Take wages, for instance, as the likely highest project expense. For sake of argument, if 25,000 people are employed on the project, that presumably means that 25,000 jobs are created with the result that 25,000 people somewhere in the employment food-chain will not require unemployment benefit.

Those 25,000 on the project will suffer PAYE and National Insurance deductions (combined at close to 25% of gross wages) via their employers, which goes to the Treasury.

In addition, their personal spending will result in increased VAT and more tax on the profits of retailers, also reaching the Treasury.

Add, too, the Corporation Tax yield on the profits of companies engaged on the project. These factors will apply every year in the decades that HS2 will take to complete.

The tax yield to the Treasury from these various sources will be massive, easily running into billions, as will be the benefit of the substantially reduced cost of unemployment benefits.

My question is: are these issues factored into the HS2 balance sheet? If not, then the public is being fed the worst-case financial position, instead of the more palatable ‘net’ cost.

I am sure there are other issues that could also be converted into national financial benefits to add to the credit side of that balance sheet - such as the value of transferrable skills gained in HS2, or national self-reliance to undertake projects here and abroad - but they are beyond the ‘simple’ financial question I have posed here.

And what I have asked does not apply just to HS2, of course, but to every government-sponsored project.

I will be delighted to learn that a ‘net’ figure rather than the alarming ‘gross’ figure, is available deep down in some government file which could reassure some HS2 doubters.