HS2 Letters to the editor – looking at those economic arguments

Letters to the editor

Letters to the editor

In a letter to the Kenilworth Weekly News Railnews’s editorial director Alan Marshall looks at the economic debate surrounding HS2.

In his comments on HS2 forecasts, Peter Shiels (KWN, 22 November) prays in aid the views of economists such as Henry Overman and Richard Wellings. But, of course, there are many other economists who take a much different view, such as Bridget Rosewell of Volterra who reckons that the wider economic impacts of HS1 in London and Kent have already contributed £10 billion to the economy, and that the KPMG forecast of the completed HS2 network adding another £15 billion a year to the economy is under-estimated by at least 25 per cent.

Peter Shiels’ letter was published on the same day I attended an event where the guest speaker was John Major’s former Chancellor of the Exchequer Norman (now Lord) Lamont — who said that during his whole time at the Treasury not a single economic forecast proved correct.

Certainly, there are grave doubts about relying on benefit-cost ratios (BCRs) to decide the rights and wrongs of long-term infrastructure schemes such as HS2 — not least because under present rules any growth is assumed to cease just three years after a project is completed.  Yet HS2 could be in use for a century or more, just like the West Coast Main Line, which HS2 is intended to relieve, that passed its 175th anniversary last September.

Perhaps a more realistic view is that of another Lord, Peter Snape, speaking in the recent debate before the HS2 paving Bill gained Royal Assent last week. He said: “If it were left to the Treasury we would not have built the M25, the Jubilee Line, the Docklands Light Railway and various other schemes that most people would agree are essential.

“I will go further: if everything had been left to the Treasury, when I make my way back to Birmingham this week, I would do so on the 10 o’clock stagecoach from Tyburn. There would be no other way of going from London to Birmingham as no schemes, including the London & Birmingham Railway, would ever have passed the preposterous cost-benefit analysis so beloved of Her Majesty’s Treasury.”

And yet another Lord, Michael Heseltine, Margaret Thatcher’s former Deputy Prime Minister, said some estimates of the costs and benefits of HS2 were “mumbo jumbo” calculated by “men with slide rules.” Many estimates of HS2’s value for money were nonsense, he said, because they left out the possibility of consequential growth.

Instead of listening to the siren calls of economists like Dr Richard Wellings of the right-wing Institute of Economic Affairs — who forecast HS2 could cost £80 billion by including the price of building another Crossrail in London and a new line to Liverpool that is not even planned — perhaps we should note the largely-unreported good news . . . that HS2 Ltd has actually reduced the expected cost of building the first stage from London to Lichfield, where it reconnects with the West Coast Main Line, and the branch line into Birmingham.

At the close of the recent House of Lords debate Transport Minister Baroness Kramer said HS2 Ltd “now estimates that, without any contingency, it could bring in phase 1 at £15.6 billion.”  However, she added, the Transport Secretary had decided to include “a little contingency” — 10 per cent — so the target budget for the first stage, extending over some 150 miles and including more than half the route in tunnels or deep cuttings, is now £17.16 billion.  This could be reduced further after Sir David Higgins takes charge of the project next year and, as Lord Heseltine proposed, there is the opportunity to offset perhaps £5 billion of the cost of stage 1 by negotiating a 30-year concession with a private sector infrastructure manager, as has happened with HS1.

And we should not overlook that the remainder of the cost can be more than offset by revenue from passengers, and by the wider economic benefits to the whole economy.

Instead of nonsensical talk about trying to upgrade the existing 175-year-old railway infrastructure, would it not be better to follow Baroness Kramer’s advice? “Let us protect the Victorian spirit that built our railroads,” she said, “but let us look for an infrastructure that is not Victorian but modern and 21st-century so that we can build the economy of the future.”

It is our children’s and their children’s future we should be concerned about.

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Leaders hail introduction of the HS2 Hybrid Bill as an historic day for rail in the West Midlands

West Midland leaders have hailed the introduction of the HS2 Hybrid Bill in Parliament as an historic day for rail in the West Midlands.

Sir Albert Bore, Leader of Birmingham City Council, said: “Real progress is being made and this is an exciting time for our region. The West Midlands is at the heart of the high speed rail network and the latest economic research reveals we stand to benefit the most.

“We are determined to ensure we deliver the maximum benefits from the line not just for Birmingham itself but for the whole of the city region .”

The HS2 Hybrid Bill is being introduced into the Commons today (November 25) and will provide the powers to build and maintain the first phase of HS2, as well as securing planning permission for the works.

On Thursday (November 21) Sir Albert, who is also Core Cities’ cabinet member for transport, visited Downing Street with other leaders to press the case for high speed rail and outline the opportunities for the major cities across the UK.

Sir Albert said research concluded HS2 would deliver 51,000 jobs and £4.1bn per year to the West Midlands.

Geoff Inskip, chief executive of regional transport authority Centro, said the introduction of the Bill was an important date and demonstrated the determination of the main political parties and organisations and individuals across the UK to build HS2.

“HS2 will deliver jobs and opportunities and address problems with capacity as demand for rail continues to soar. It will benefit people across our region and throughout the UK.”

Jerry Blackett, CEO of Birmingham Chamber of Commerce said: “Business is right behind high speed rail and excited about the opportunities this massive project brings – so the introduction of the Bill is an exciting development for us.”

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City leaders present HS2 declaration to Prime Minister

This morning, leaders from the UK’s ten largest cities outside of London presented a signed declaration to the Prime Minister calling for the fast delivery of High Speed 2 (HS2) and a commitment to bring about the creation of a full high speed network.

The declaration [1] comes on the day that the ten leaders of the Core Cities (Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield) plus the regional capitals of Edinburgh and Glasgow, are holding a national Summit in London to discuss how greater devolution to the UK’s cities can benefit the UK economy by increasing GDP, jobs and tax revenues.

The UK’s cities believe that a national high-speed rail network has the potential to create “high speed cities” and is the only option to reshape and rebuild the national economy.

The declaration presented to the Prime Minister this morning said:-

• The Government must make the most of the untapped economic potential of the UK’s biggest cities and that without this commitment, national growth will be constrained for years to come.

• The whole of Parliament must unite and press on with the Hybrid Bill for Phase 1 and deliver with all speed plans for Phase 2.

• That the cities want to explore with Government the costs and benefits of expanding a network that extends High Speed 2 to all of the great cities of our country.

• Upgrades to the UK’s rail network are no longer enough. The only solution is a major injection of rail capacity and long-term infrastructure investment to secure the economic future the UK needs.

• That the cities look forward to working with successive Governments to ensure that the maximum economic benefit is extracted from this investment.

The Core Cities Summit today brought together 150 national and international figures to discuss and influence the debate on devolution and the future of our cities. Following the announcement of an unprecedented package of financial powers for Wales earlier this week, the Core Cities has today released a ‘Prospectus for Growth’ [2] outlining their own case for greater devolution to cities in England to drive growth, and also to reform the public sector.

The Prospectus predicts that by 2030 – before HS2 is completed – the Core Cities urban areas could put 1.16 million more jobs and £222 billion into the UK economy. That is like adding the entire economy of Denmark to the UK or almost £14,000 for every person living in a Core City urban area.

The Core Cites two key objectives set out in the prospectus are to outperform the national economy (by 2028) and to become financially independent of Government. At present, in England, cities only directly control about 5% of all the taxes raised from local people and businesses, with 95% going straight to the Government. The prospectus presents a nine point plan for achieving this vision.

The Core Cities fully support further devolution to Wales, but believe given similar powers, they could achieve great results, not just for their cities, but for the entire UK economy.

Sir Richard Leese, Leader of Manchester City Council and Chair of the Core Cities Group, said: “Today, half the planet lives in a city and by 2050 it will be 70%.  Across the world it is cities that drive national economies.  England’s great cities once led the world, and gave it the industrial revolution, but the UK is now one of the most centralised states in the world, where the lack of freedom is holding back our cities from doing more to create growth and jobs.  Our aim is for all the Core Cities to outperform the national economy, and to become financially self-sustaining before the completion of High Speed Two.

“Today we are launching a Prospectus which contains new ideas for driving growth and jobs, and also for reforming the public sector, improving people’s lives, and making the services that underpin the well-being of a city sustainable for the long term.  Through these plans we believe that our great English cities can drive a new economic revolution, putting us at the front of the global race.  But achieving it means cities, their civic and business leaders, need the tools to deliver.”

Cllr Sir Albert Bore, Leader of Birmingham City Council and Core Cities cabinet member for transport, said: “High Speed 2 is an essential step toward a 21st Century high-speed rail network covering the whole of the UK.  We see no credible alternative to achieving our wider economic vision. The UK lags behind the competition in its infrastructure. The existing rail network no longer has the capacity to support modern levels of demand for rail travel and it will be full to the brim within the next decade.

“Upgrades will not do, and will instead cause years of delays and economic damage not just for cities, but for the UK as a whole. Understanding the benefits this will bring is of course essential, but we believe the case has been made for this investment, which is roughly the same annual sum as that spent on Crossrail in London, and will connect all the UK’s cities as a single economic powerhouse.”

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HS2 is the best solution despite claims of alternatives, argues Alan Marshall

The latest post is a piece from rail journalist Alan Marshall examining the claims from opponents that upgrading existing infrastructure is better than building HS2

HENRY Overman, professor of economic geography at the London School of Economics — who declares that he used to be an adviser to HS2 Ltd but is now a sceptic — has claimed HS2 is poor value for money compared with other transport plans, and may well be poor value for money compared with alternatives that ‘address exactly the same set of problems.’ Click here to read. 

There are others, too, who have looked at the alternatives, put forward by W S Atkins in conjunction with Network Rail to the HS2 Strategic Business Plan, and taken a similar view — even though the alternatives are reckoned to require at least 14 years of major disruption at weekends affecting all three of the existing north-south main lines: the East Coast, Midland and West Coast routes.

But it has to be asked if such an alternative option is worth pursuing? — bearing in mind that the additional capacity to be provided would be much less than that offered by HS2, and after completion no further significant capacity could be provided without then building new infrastructure at great additional cost. Indeed, to boost capacity at the southern end of the East Coast Main Line, Network Rail proposes that a new 60km (40-mile) new two-track alignment would have to be built anyway between Alexandra Palace in North London and Biggleswade in Bedfordshire as part of the alternative to HS2.

In effect, if growth continues after the alternatives are completed, HS2 would merely have been postponed — in much the same way that Automatic Train Protection (ATP) was abandoned in 1995 for fear that its cost would undermine the then government’s desire to privatise Railtrack PLC. But now ATP is having to be adopted as part of costly train control and signaling schemes to squeeze more capacity out of the existing network.

And if anyone is in doubt about the need for more capacity, it should be noted that when Network Rail’s expenditure was agreed for the period 2009-14, the Office of Rail Regulation estimated passenger growth would be 6% a year — whereas it has actually turned out to be 9% a year, half as much again higher than forecast despite the economic recession, so the expected capacity crunch could occur sooner rather than later.  By comparison, HS2 Ltd has based all its plans on assumed growth of only 2% a year.

There are also further questions regarding the possible strategic alternatives to HS2, including the very serious one of whether there would be sufficient buses and coaches — and, above all, qualified drivers — available to provide all the replacement services necessary at weekends for 14 years? And by how much would train operators’ revenues be depressed by the loss of passengers deterred from traveling because of the disruption, longer journey times and dislike to replacement bus services? 

During West Coast Route Modernisation between 2002 and 2008 (and, please remember, it was a modernisation scheme, which is still not yet complete, and not an upgrade as originally intended) Network Rail had to pay £650 million in compensation to train operators.  The enhancements now suggested as an alternative to HS2 would involve three main lines, not just one, and extend over a longer period of time, so at current prices compensation could easily add around £2 billion to the bill.

And then — above all — the question has to be asked: is it really sensible to consider as alternatives to building the new line schemes that attempt to upgrade infrastructure that mostly pre-dates the 20th Century and not unusually is 150 years-or-more old?  After all, the core section of the West Coast Main Line between London, Birmingham, Liverpool and Manchester, is already 175 years old.

This question, I believe, is particularly valid currently as concern grows about the impact of extreme weather conditions — and some of the resulting difficulties were recently explained to the House of Commons Transport Select Committee by Network Rail’s chief executive Sir David Higgins, who is soon to take over as chairman of HS2 Ltd.

Four of the five wettest years in the last 100 years have occurred since 2000 and the summer of 2012 was the wettest on record, he told the MPs.  Since his evidence was given in October there have been further warnings from the Environment Agency of flood risks this coming winter (2013-14) due to the ground being severely waterlogged already because of the autumn’s heavy rainfall.

‘120,000 slopes, 80,000 structures’

“It is not correct to say that this railway is designed for extreme weather,” David Higgins told the Select Committee. “Last summer [2012] we had 50 major landslides in western, particularly south-west, England in one day.”

He went on: “We have over 120,000 slopes. We have 80,000 tunnels, bridges and structures across the network.

“Half of those 80,000 are over 100 years old,” said David Higgins, a highly qualified civil engineer who has frequently drawn attention to the age and 19th Century origins of much of the railway system.

“We found last summer that railway embankments failed that had been classified as stable and reasonably good just because of the level of water that had built up in rivers or the amount of rain we had. I don’t believe you can ever provide for that or design it out.

“Unfortunately, many of our railway lines have been built on, beside or even in watercourses. Therefore, because they have been around for 100 years or so, they are very exposed to that sort of weather.

“We will do a lot more monitoring. We can progressively improve flood defences and monitoring, but it is much more a case of pre-empting what happens when a bad event happens so that we keep the railways safe.”

David Higgins explained: “The really big improvement we have had – and it has taken two years of negotiation with the Office of Rail Regulation, in which I have been heavily involved – is to say that railway embankments and railway structures are all different.”

And he said: “Of course, they are old and Victorian,” adding: “Many of them were never even designed.”

So it really does have to be asked if it is right or sensible to consider attempting major enhancements and upgrades of ageing railway infrastructure at a time when Network Rail is having increasing difficulty in keeping it in good repair? — and when, increasingly, we hear warnings of extreme weather becoming more likely.

The best solution — surely? — must be to provide urgently-needed additional capacity, plus some to spare for future growth, by constructing HS2 to the best-possible 21st Century engineering standards rather than patching and mending what the 19th Century railway pioneers bequeathed to us.

No one ever suggested widening Telford’s A5 route as an alternative to building the M1/M6, or enhancing the A40/A41 roads instead of constructing the M40.  

In London, the foresight of Joseph Bazalgette gave the city a drainage system that has largely managed to cope since Victorian times until today. But no one has suggested enhancing the original tunnels and now new sewers and drains are being built beneath London.

Having endured substantial reductions in railway trunk route capacity over the past 50 years, why is it now that some people seem to think it is better value, and we can cope in the future, by squeezing more capacity out of what is left, rather than adding to it by building anew and replacing some of what has been lost in the past half century?

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HS2 Ltd at Skills Show in Birmingham

HS2 Ltd is attending the Skills Show at the NEC from tomorrow (November 14-16).

For full details click here.

For the first time, HS2 Ltd will be attending The Skills Show, giving schoolchildren and young people an excellent opportunity to discover the variety of jobs HS2 will generate and the different careers paths available- including apprenticeships and graduate training schemes.

Engineering, environmental science, archaeology, land and property management, stakeholder engagement and finance might not be the first career choice for many of today’s young people.  However, graduates, school leavers and schoolchildren throughout Britain should prepare to have their minds changed when they visit the HS2 stand!

During the three day event, representatives from HS2 Ltd will be available to give young people an insight into working on the UK’s largest and most exciting transport infrastructure project and give a first-hand account of their career paths.  HS2 Ltd will also be running a series of interactive activities on its stand to encourage and inspire young people to learn more about HS2.

The Skills Show is aimed at young people aged between 8-18 years and young adults aged between 19-24 and is free to attend.

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West Midlands set to reap major benefits from HS2, new Government report shows

The HS2 high speed rail line will deliver more than £2 of benefits for every £1 spent while offering massive economic benefits for the West Midlands, a new Government report revealed today (Oct 29).

Commenting on the Department for Transport’s ‘Strategic Case for HS2’, Geoff Inskip, chief executive of transport authority Centro, said it not only showed high speed rail to be good value for money but also its ability to provide badly needed capacity for Britain’s creaking rail network.

The strategic case shows a revised benefit to cost ratio for HS2 of 2.3. It highlights how alternative ‘patch and mend’ options to the existing network would cost billions and inflict years of disruption on passengers yet only deliver a fraction of the capacity of HS2.

Mr Inskip said: “Today’s report shows how important it is to press on and build HS2 to deliver jobs and investment and to address soaring demand for rail travel in the West Midlands.

“We have a tremendous opportunity to take advantage of our location at the heart of the network, delivering fast direct services from the West Midlands to the UK’s major cities and Europe, as well as increasing local, regional and freight services.”

Today’s publication of the strategic case for HS2 highlights:

  •  A Birmingham city centre station integrated with both Moor Street and New Street  stations.
  •  A Birmingham Interchange station next to the airport/NEC connecting towns across the West Midlands to other destinations.
  •  Birmingham to Paris in three and a half hours.
  •  Faster services to Scotland/North-West England, Yorkshire and the North East
  •  More capacity for commuter services on the Coventry – Birmingham route.
  •  More capacity for Coventry – London passengers
  •  More Nuneaton – London fast services
  •  Capacity to introduce Kenilworth services

The Government’s strategic case comes just days after West Midlands transport chiefs approved a £2 billion package of local rail, tram and rapid transit schemes designed to get the most out of HS2.

Centro research has concluded that the Local Connectivity Package would double the economic benefits of HS2 for the West Midlands securing, 51,000 jobs and a £4.1bn a year boost to the local economy.

The package, which was ratified by the region’s new Integrated Transport Authority Shadow Board last week, includes extensions to the Midland Metro tram system in Birmingham and the Black Country, new and upgraded rail stations, opening up rail freight lines to passenger services and the electrification of other key rail routes.

In approving the package, spokesman for the Shadow Board and leader of Wolverhampton City Council, Cllr Roger Lawrence, said; “With the right local transport connections we can double the benefits of HS2, benefitting people right across the West Midlands.

“We have already secured more than £320 million towards the package and that’s a great start. We will now continue to work closely with the region’s Local Enterprise Partnerships and Network Rail amongst others to deliver the rest of the package.”

Phase One of HS2, connecting London with Birmingham, is scheduled for completion by 2026 and will tackle demand and congestion on the southern section of the West Coast Main Line – the busiest railway in Europe.

Phase Two will see the new line split into a Y shaped network north of Birmingham linking the West Midlands with Manchester in the North West and Leeds in the North East. That is scheduled for completion in 2033.

HS2 will cut journey times between Birmingham and Manchester from around 90 minutes to 41 minutes and a typical journey from Birmingham to Leeds of around two hours will be halved to 57 minutes.

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£2bn transport package to reap maximum economic benefits from HS2

A £2bn package of rail, tram and rapid transit schemes to ensure the West Midlands secures the maximum economic benefits possible from HS2 was formally agreed today (October 23).

The Local Connectivity Package, which was ratified by the region’s new Integrated Transport Authority Shadow Board, will enable the West Midlands to more than double the potential benefits of HS2 by best connecting and feeding into the high speed rail line.

The package includes extensions to the Midland Metro tram system in Birmingham and the Black Country, new and upgraded rail stations, opening up rail freight lines to passenger services and the electrification of other key rail routes.

Cllr Roger Lawrence, spokesman for the ITA Shadow Board which is made up of the leaders of the seven West Midland councils, said: “HS2 offers a once in a lifetime opportunity for our region and we intend to grab it with both hands.

“With the right local transport connections we can secure more than 51,000 new jobs and boost the West Midlands economy by more than £4.1bn a year, benefitting people right across our region.

“We have already secured more than £320 million towards this package so we can press on and build several of the schemes over the next five years or so.

“That’s a great start and we will now continue to work closely with the region’s Local Enterprise Partnerships and Network Rail amongst others to deliver the rest of the package.”

Cllr Lawrence said the £320m already secured would be used to:

  • Extend the Midland Metro tram from St George’s in Wolverhampton to the city’s rail station and from Birmingham New Street to Centenary Square
  • Electrify the Walsall to Rugeley and the Coventry to Leamington Spa rail  lines
  • Build a  new rail station and provide services at Kenilworth
  • Expand park and ride sites at local rail stations
  • Introduce a tram-style bus rapid transit system called SPRINT along the Hagley Road
  • Upgrade the area between New Street and Moor Street Stations to create a “One Station” environment
  • Improve cycle links

The schemes are earmarked to be built between 2015 and 2019.

Other schemes in the Local Connectivity Package include capacity improvements on the Snow Hill lines, the introduction of rail passenger services on the Camp Hill line in south Birmingham, Metro tram extensions from Wednesbury to Brierley Hill and through Birmingham’s Eastside district to the city’s HS2 station and a rapid transit link between the HS2 station at the airport/NEC and Coventry.

Potential funding sources for the schemes include Network Rail’s control period 6, the Single Local Growth Fund, Enterprise Zone, private sector developers, local and national government and HS2 Ltd.

The schemes would be delivered over a 10-15 year period, the equivalent of a £167m a year investment in the West Midlands.

The Connectivity Package document is available to download at: http://www.centro.org.uk/rail/HighSpeed2.aspx

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