Further supplementary written evidence
from Malcolm Griffiths (Bluespace Thinking Ltd) (TE 07c)
Reading the 30 November transcript of evidence from
John Jarvis and Jo Rukin, it seems the committee were left with
the view they were given conflicting evidence about the distribution
of benefits associated with HS2. (I attach the relevant transcript).
I think Mr Jarvis evidence comes from Steer Davies
Gleave report, North-South Connections, August 2007 and refers
to agglomeration benefits.
Table 2.1
ANNUAL PRODUCTIVITY GAIN FROM INCREASED AGGLOMERATION
| Productivity gain (£m)
| % of GDP |
| Government Office Region | West
| East | Network
| Network |
| East Midlands | 0.0 | 24.5
| 26.4 | 0.04 |
| East of England | 0.0 | 4.2
| 7.7 | 0.01 |
| London | 31.1 | 51.1
| 82.3 | 0.04 |
| North East | 0.0 | 13.4
| 19.9 | 0.06 |
| North West | 27.4 | 0.0
| 44.1 | 0.05 |
| Scotland | 0.0 | 13.7
| 27.4 | 0.03 |
| South East | 5.4 | 0.0
| 16.5 | 0.01 |
| South West | 0.0 | 0.0
| 0.0 | 0.00 |
| Wales | 0.0 | 0.0
| 0.0 | 0.00 |
| West Midlands | 17.8 | 0.0
| 21.2 | 0.03 |
| Yorkshire & Humber | 0.0
| 24.2 | 28.6 | 0.04
|
| UK | 81.6 | 131.3
| 274.1 | 0.03 |
2.22 Not unexpectedly, London receives the largest absolute gains
for the full network option, £82 million. The North West
benefits by £44 million, whilst Yorkshire and Humberside
and the North East get about £30 million and £20 million,
respectively.
2.26 These results represent the likely impact of a two-line high
speed rail service including the trans-Pennine link. The one line
options offer substantially less agglomeration benefits and they
are naturally much more concentrated to the parts of the country
the lines run.
End of Abstracts
The table refers to estimates of annual (2002 £) agglomeration
benefit and are for a 2 line plus Pennine link scheme not the
current Y scheme under evaluation by HS2 Ltd. A reasonable estimate
for the current scheme based on these figures would be £160
million per year. When adjusted to 2010 £ and discounted
(Treasury Green book guidance) they give a PV (2010) of £2.8
billion for the 60 year period. Over the 60 year period London
and the South East gain £1.1 billion, the North (East, West,
Y&H) gain £1.2 billion, Scotland £0.25 billion and
the West Midlands £0.3 billion.
HS2 Ltd have not claimed significant agglomeration benefits and
this would seem to be supported by the Northern Way (Steer Davies
Gleave) analysis. The HS2 Ltd / Imperial College estimates are
significantly lower than the Northern Way predictions.
However it appears that other organisations and MPs have established
much higher estimates. At the 23 November HS2 adjournment debate
Andrew Gwynne stated that "A boost to the west midlands economy
is anticipated to the tune of ?5.3 billion a year, and to that
of the north-west of £10.6 billion a year at today's rates".
These figures are more than 200 times greater than the Northern
Way assessment. I am trying to source the studies that predict
these figures via FOI and other requests.
I am not familiar with the Barcelona study Mr Rukin referred to
but the main "redistribution" effect of
transport schemes is associated with the enabled spending and
work patterns of passengers. People are familiar with the impact
out of town shopping centres have on town centre commercial communities
and it is a similar effect for longer distance travel.
HS2 estimate that about 70% of passengers will be leisure travellers
and that travel (based on the data referred to by Ms. Munro) will
be greater from the regions to London. HS2 Ltd predict there will
be in excess of 70,000 leisure travellers going to/from the regions
and London (return trips) every day, assuming that in addition
to ticket cost they spend £50 at their destination, (evidence
shows that travellers to London spend much more than £50)
this will redistribute a about £1 billion annually or about
£15 billion PV over the 60 year evaluation period.
The extent to which travel is greater from the low economy to
the high economy (the normal pattern) will dictate how much of
this PV is distributed to London. DfT assumptions in webtag guidance
suggest that the rate of travel growth will be at least 2 times
greater from the regions to London than vice versa so the redistribution
to London could be in excess of £3 billion about twice the
regions PV of the total agglomeration benefits. It appears that
the DfT and HS2 Ltd have not calculated this redistribution effect.
I suspect the HS2 consultation period will bring forward further
academic support for Mr Rukin's view.
I do not know Mr Jarvis or Mr Rukin however it seems to me that
they were commenting on different aspects of the appraisal benefit
calculations. The Northern Way seem very professional and responsible
in their approach - based on their 2007 report even if the UK
annual agglomeration benefit were £274 million (two N-S HSR
lines and a trans Pennine link), PV (2010 - 60 year evaluation)
would be less than half the £13 billion (at Treasury discount
rates) mentioned. It maybe there are other studies that support
this higher figure or that benefits in addition to agglomeration
benefits were being referred to.
The lack of the inclusion of "redistribution" effects
in the current DfT appraisal calculations is further evidence
that the DfT appraisal calculations are not adequate to make major
investment decisions. Hopefully I will be able to establish whether
Mr Gwynnes figures are due to over enthusiasm on the part of the
rail industry lobby, in support of encouraging HSR expenditure,
a simple mistake or whether HSR is indeed alchemy and they are
based on sound academic/economic theory.
TRANSPORT SELECT
COMMITTEE - EVIDENCE
SESSION 30 NOVEMBER
2010 - ABSTRACT
Joe Rukin: Yes. The thing
that we found is that there is evidence and research going back
all the way to the 1960s, and it has been highlighted again, in
that if you join a stronger economy to a weaker economy, the weaker
economy is disbenefited and the stronger economy benefits. The
most recent study on that was a Barcelona report looking into
high speed rail in Spain, which found that the stronger economies
benefited. This will be exacerbated in a country like the UK where
London is so much of a primate city. You will just suck more things
towards the capital. Also, in terms of-
Q373 Chair: Mr Rukin, can I just stop you? That actually
is not what we have heard in evidence this morning. We have heard
evidence this morning about a number of studies done in the north
of England which don't show that at all. There is always a proviso
about having proper links and infrastructure in local areas and
across regions as well. What you are saying in fact has not been
shown to be the case in the UK.
Joe Rukin: If you look
at studies that have taken place like the Barcelona report-
Q374 Chair: But not in the UK. The evidence we had
this morning did not show that at all.
HANSARD 23 NOVEMBER
WESTMINSTER HALL
ADJOURNMENT DEBATE
- ABSTRACT
Andrew Gwynne: A boost to the west midlands economy
is anticipated to the tune of ?5.3 billion a year, and to that
of the north-west of ?10.6 billion a year at today's rates.
Christopher Pincher: The hon. Gentleman said that
there would be a benefit to the west midlands. Is he aware that
I asked a parliamentary question of the Department for Transport
in order to ascertain what the benefits would be to Staffordshire?
The Department responded that it had made no such analysis.
Andrew Gwynne: I was referring to the west midlands
metropolitan area, but I am not responsible for the replies given
by the Department for Transport.
David Mowat: On that point, the figure cited by the
hon. Gentleman of just over ?5 billion came from the West Midlands
chamber of commerce. The figure was generated in the region, and
one would imagine that it is most unlikely that some of the money
did not come from Staffordshire.
Andrew Gwynne: I am grateful to the hon. Gentleman
for clarifying that point.
December 2010
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