House of Commons - High Speed Rail

High Speed Rail - Transport Committee Contents

2 Government transport policy

Our most ambitious project is the delivery of a new high speed rail network that could transform the way Britain works as profoundly as the coming of the original railways.[40]

Strategic policy context

16. Since taking office in May 2010, the Government has published relatively few transport policy documents.[41] The HS2 proposal has been criticised by a wide variety of organisations for what they see as the lack of an adequate policy context.[42] The critics call for a strategy setting out overall transport objectives (not just schemes) and a multi-modal plan for major transport infrastructure priorities. Some also want to see a regional development strategy to accompany the HS2 proposal.[43] For example, in its response to the Government's official consultation on HS2, the Conservative Transport Group commented:

It is important to be very clear that these objectives require a co-ordinated policy landscape and appraisal methodology, which allows proper assessment of proposals on a network-wide, intermodal basis. This does not yet exist and it is therefore impossible to properly evaluate the current proposals for HS2.[44]

17. The National Trust,[45] the Campaign to Protect Rural England[46] and other environmental bodies that are generally supportive of investment in rail have opposed HS2 on similar grounds. The RAC Foundation does not oppose high-speed rail per se but argues that both this and the previous Government committed to HS2 prematurely:

This is for three reasons: the lack of a National Policy Statement on roads and railways, adopted in Parliament; the incomplete state of Infrastructure UK's (IUK) development of their National Infrastructure Plan; and a failure to specify how the funding and economic regulation of HS2 would fit with the current arrangement for the "classic" railway.[47]

Aviation and business interests, whilst generally supportive of high-speed rail, are critical of what they perceive to be a lack of long-term strategy for airport capacity in the south east of England, which has particular implications for the planning and funding of links between HS2 and Heathrow, the UK's international hub airport.[48] The European Commission's Transport White Paper 2011 calls for the tripling in length of the existing high-speed rail network in Europe by 2030 with all "core" airports connected to the rail network by 2050, preferably by high-speed services.[49]

18. In our report, Transport and the economy, we called on the Government to publish a White Paper on transport strategy, setting out its objectives for major transport spending and how funds would be prioritised.[50] The Government has, so far, declined to do so,[51] saying that its transport policy is set out in its departmental business plan.[52] The business plan, however, is a schedule of proposed actions, not a strategy. We also noted the Government's apparent support for national policy statements and drew attention to the importance of these for the planning and co-ordination of major transport infrastructure. Some eight months further on, we note that the DfT appears to have made little progress with publishing a national policy statement for road and rail networks, the key policy statement for transport.[53]

19. When Mr Hammond first gave evidence to us, in July 2010, he said that the Government had three clear objectives for transport:

to help to reduce the fiscal end of deficit;
to support sustainable economic growth, and
to contribute to the Government's 2020 carbon reduction targets.[54]

The DfT argues that "High-speed rail is integral to [the Government's] aims for a transport network that is an engine for growth but is also greener and safer and improves the quality of life in our communities."[55] However, some objectors have claimed that HS2 would contribute little to these three objectives: HS2 involves substantial public expenditure;[56] the evidence for HS2's wider impacts on economic growth is disputed; and HS2's impact on carbon emissions is, according to the Government, "broadly neutral" and would have no impact prior to 2020.

20. The absence of a transport strategy makes it hard to assess how HS2 relates to other major transport infrastructure schemes, regional planning and wider objectives, such as bridging the north-south divide. This seems to have deterred some groups, which might otherwise have supported HS2, from doing so. The biggest single transport investment proposed in this Parliament should be grounded in a well thought-through strategic framework and we are disappointed that the Government has not developed a strategy for transport, particularly after it rejected our earlier recommendation to publish a White Paper on transport and the economy.

21. The Government is due to publish several important policy documents soon, including a White Paper on its proposals for controlling costs in the rail industry; a 'sustainable framework' for aviation; a National Policy Statement for road and rail networks; and a revised National Policy Statement for Ports. The development of what could emerge as separate strategies for rail and aviation again highlights the absence of an overall transport strategy: this is a lacuna which must be filled. We recommend that if the Government decides to proceed with HS2 it should, in announcing that decision, set out in more detail than is available in the DfT's business plan not only why HS2 is desirable but also how it fits within an overall transport strategy. We also recommend that the forthcoming White Paper on rail and the sustainable framework for aviation fully reflect the impact on both modes of the creation of a high-speed rail network in the UK. This country has often failed to invest in transport infrastructure because all party agreement could not be reached. We have one of the lowest motorway densities in Western Europe, insufficient airport capacity in the south east with inadequate road and rail connections and our rail network is mainly a legacy of Victorian investment. Having all-party support should be seen as an advantage for this scheme.

Opportunity cost

22. The absence of a comprehensive policy context and the scale of the HS2 spending proposal caused some witnesses to raise concerns about the opportunity cost—the other projects that may be forgone—should HS2 go ahead. Christian Wolmar argued that other rail projects would inevitably suffer, not only in terms of capital investment but also due to what he claimed would be a need for operating subsidy in the early years of HS2.[57] The Association of Train Operating Companies (ATOC), West Coast Rail 250 and other organisations made it clear that, in their view, the need for investment in other rail projects remained undiminished and might even increase as a result of HS2. Their support for HS2 depended upon the current level of investment being maintained and ATOC said that it was reassured by the recent spending review in which rail investment received a favourable settlement.[58]

23. Some witnesses contended that HS2 was not necessarily the highest priority among rail investments. Mark Barry, representing the Cardiff Business Partnership, pointed out that services into London Paddington, not Euston, showed the highest levels of overcrowding and argued that those were more deserving of investment than HS2.[59] HS2 Ltd's forecasts show crowding increasing in the long term on WCML, particularly on the southern section into Euston.[60] Currently, however, as shown by a recent survey by the Office of Rail Regulation, peak period services into and out of Euston are less crowded than those at several other London terminals, notably Paddington.[61]

24. Other witnesses were concerned that the opportunity costs of HS2 might extend beyond rail to other transport investments. David Bayliss, representing the RAC Foundation, argued that:

At the moment we have this proposition to spend £30 billion or so of money on rail. National rail carries 7% of the passenger market in this country and 9% of the freight market. Of that 7%, only about a third is long distance rail. Here we are, at a time when we have barely sufficient funds to keep the existing system going, committing huge amounts of money to try and solve the problems on a tiny part of the travel market. It seems to me that in the absence of a proper thought-through national transport strategy that is foolhardy.[62]

The Chief Executive of Next, Lord Wolfson of Aspley Guise, argued that HS2 was "a very low-return project" and that roads—many of which were "already at full capacity"—should be a higher investment priority.[63]

25. Mr Hammond responded that HS2 was affordable and would not impact on other transport investment, provided that it was phased over the 17-year timescale he proposed. He pointed out that the construction of HS2 amounted to an average of £2bn per annum—very similar to the current expenditure on Crossrail. He added that the current Government had prioritised long-term investment in transport infrastructure and that it had maintained support for rail schemes in the 2010 spending review,despite the cutbacks in other budget areas.[64] He also said that the Government would be looking more favourably on investment in road schemes once a low carbon-emissions future for motoring had become "unstoppable".[65]

26. It is clearly a potential concern that, with the current economic difficulties, a long-term spending commitment to HS2 might impact adversely on investment in other valuable transport infrastructure projects.[66] We have already highlighted the importance we attach to schemes such as the Northern Hub; others, such as improvement to the Great Western Main Line and the strategic freight network, would also seem to be of high priority. However, the signs so far are encouraging and levels of rail investment have been maintained despite the concurrent spending on major projects such as Crossrail. Maintaining those levels in the future is likely to depend more on improving the efficiency and value for money of today's railway (as discussed in the industry's initial plan for the next control period) than on whether or not HS2 goes ahead. In fact, this and previous governments have separated funding for very large capital projects from "routine" investment. In our view it is extremely unlikely that the £32bn proposed for HS2 would be available for other transport schemes and, if not spent on HS2, this money would probably be lost to transport.[67] It would be unacceptable and counterproductive if investment in HS2 led to a diminution of investment in other parts of the rail network. The previous Secretary of State for Transport has told us that, assuming the costs are spread over some 17 years, HS2 is affordable and that current levels of investment in the "classic" network can be maintained into the future. We expect the Government to uphold this statement. The Government has the opportunity to secure future levels of rail spending in the next spending review period by means of the commitments it makes in the forthcoming High Level Output Specification and Statement of Funds Available for Control Period 5 (2014-19). These are due by July 2012 and will be an acid test of the Government's commitment to investment in today's railway as well as in high-speed rail.

27. We recommend that, if the Government decides to go ahead with HS2, it should, in announcing that decision, publish a summary of the financial case including the assumptions which persuade Ministers that the scheme will be affordable alongside sustained investment in the classic network. We consider that this could usefully include details of the projected capital and revenue expenditure profiles; how these compare with assumed DfT spend profiles for the rest of the rail network and for the rest of transport; and any underlying assumptions about financial contributions to HS2 from non-DfT sources. We further recommend that alongside the summary financial case the Government should announce its priorities for funding in Control Period 5 (2014-19) as part of its High Level Output Specification and Statement of Funds Available in order to meet anticipated passenger and freight capacity constraints on the classic network up to the projected start of HS2 in 2026.

40 DfT, Business Plan 2010-11, November 2010, (updated May 2011) http://transparency.number10.gov.uk/transparency/srp/view-srp/39 Back

41 DfT, Creating Growth, Cutting Carbon: Making Sustainable Local Transport Happen, 2011, which introduced the Local Sustainable Transport Fund, is the only transport White Paper to date. Back

42 For example, ATOC, Q 28. Back

43 Q 202 Back

44 Conservative Transport Group, Response to the Government's Consultation on High Speed Rail, July 2011 Back

45 Ev 117 Back

46 Ev 191 Back

47 Ev 151 Back

48 Ev 167 Back

49 European Commission, Transport White Paper - Road map to a single European transport area. Towards a competitive and resource efficient system, 2 June 2011 Back

50 Transport Committee, Transport and the economy, Third Report of Session 2010-11, HC 473, 2 March 2011, p 18 Back

51 Transport Committee, Transport and the economy: Government response to the Committee's Third Report of Session 2010-12, Fourth Special Report of Session 2010-12, HC 962, 6 May 2011 Back