Formal Minutes
Tuesday 1 November 2011
Members present:
Mrs Louise Ellman, in the Chair
| Steve Baker
Jim Dobbin
Julie Hilling
Kwasi Kwarteng
Mr John Leech
| | Paul Maynard
Iain Stewart
Graham Stringer
Julian Sturdy
|
Draft Report (High Speed Rail), proposed by the Chair,
brought up and read.
Ordered, That the draft
Report be read a second time, paragraph by paragraph.
Paragraphs 1 to 42 read and agreed to.
Paragraph 43 read.
Amendment proposed, in line 2, to leave out from
"operated." to end, and insert "At present
levels of rail subsidy, we cannot know whether demand management
would be adequate in the long term to bring supply and demand
into balance. If capacity became seriously constrained, growing
demand and higher ticket prices would be a clear signal for further
investment, perhaps in high-speed rail."—(Steve
Baker.)
Question put, That the Amendment be made.
The Committee divided.
| Ayes, 2
Steve Baker
Paul Maynard
| Noes, 6
Jim Dobbin
Julie Hilling
Kwasi Kwarteng
Mr John Leech
Graham Stringer
Julian Sturdy
|
Paragraph agreed to.
Paragraphs 44 read, as follows:
The debate on capacity seems to us to reveal two
contrasting views. On one view, rising demand on the West Coast
corridor is essentially a problem, to be tackled by least-cost
incremental improvements coupled with measures to suppress demand.
On the other view, rising demand is, for strategic reasons, to
be welcomed and indeed fostered. As noted in Chapter 2, we consider
that the Government needs to explain more clearly this strategic
case and in particular why such arguments do not apply to road
and air transport. Provided this is done, we support the step
change that HS2 could bring to the capacity, quality, reliability
and frequency of rail services between our major cities, and to
those served by the existing WCML. Whilst the alternatives proposed
by groups such as 51m offer substantial additional passenger capacity,
they are not of the same scale as HS2. The rapid growth in passenger
numbers over the past 15 years shows the need to plan on a larger
scale and for the long term. We do not wish our successors to
be faced with a situation in ten years time where demand has continued
to grow but insufficient time remains to provide the necessary
capacity. We therefore support the proposal for a new rail line
between London and Birmingham and onwards to Manchester and Leeds.
Amendments made.
Amendment proposed, to leave out from "therefore"
in line 13 to the end of the paragraph and insert "call
on the Government to set out a clear and comprehensive long term
strategy for transport and the place of high-speed rail within
it."—(Steve Baker.)
Question put, That the Amendment be made.
The Committee divided.
|
Ayes, 5
Steve Baker
Kwasi Kwarteng
Paul Maynard
Iain Stewart
Julian Sturdy
| Noes, 4
Jim Dobbin
Julie Hilling
Mr John Leech
Graham Stringer
|
Paragraph, as amended, agreed to.
Paragraphs 45 to 62 agreed to.
Paragraph 63 read.
Amendment proposed, at the end, to add "It
is also disappointing that as a major justification for HS2 phases
I and II is the rebalancing of the economy, a full assessment
of the case for building north to south has not been undertaken.
This work should be carried out as a priority."—(Graham
Stringer.)
Question put, That the Amendment be made.
The Committee divided.
|
Ayes, 5
Steve Baker
Jim Dobbin
Iain Stewart
Graham Stringer
Julian Sturdy
| Noes, 2
Kwasi Kwarteng
Mr John Leech
|
Paragraph, as amended, agreed to.
Paragraphs 64 to 82 agreed to.
Paragraph 83 read.
Amendment proposed, in line 10, to leave out from
"changes" to the end of the paragraph and insert
"to the strategic route, detailed alignment or design
of the line proposed by HS2 Ltd.". —(Iain
Stewart.)
Question put, That the Amendment be made.
The Committee divided.
|
Ayes, 4
Steve Baker
Paul Maynard
Iain Stewart
Julian Sturdy
| Noes, 5
Jim Dobbin
Julie Hilling
Kwasi Kwarteng
Mr John Leech
Graham Stringer
|
Paragraph agreed to.
Paragraphs 84 to 95 agreed to.
A paragraph—(Paul Maynard)—brought
up and read, as follows:
We note that whilst many organisations support
high-speed rail in principle, they object to the specific route.
We would urge the Government to reconsider the criteria for the
route between London and Birmingham to seek some degree of consensus.
This may include either intermediate stations on the line already
under consultation, investment in further tunnelling under the
Chilterns, or a re-appraisal of proposals such as Heathrow Hub
which would allow for greater use of existing transport corridors.
Question put, That the paragraph be read a second
time.
The Committee divided.
|
Ayes, 4
Steve Baker
Paul Maynard
Iain Stewart
Julian Sturdy
| Noes, 5
Jim Dobbin
Julie Hilling
Kwasi Kwarteng
Mr John Leech
Graham Stringer
|
Paragraphs 96 to 117 agreed to.
Paragraph 118 read.
Amendment proposed, in line 1, to leave out "there
is a good case" and insert "a case can be made".—(Steve
Baker.)
Question put, That the Amendment be made.
The Committee divided.
|
Ayes, 4
Steve Baker
Paul Maynard
Iain Stewart
Julian Sturdy
| Noes, 5
Jim Dobbin
Julie Hilling
Kwasi Kwarteng
Mr John Leech
Graham Stringer
|
Paragraph agreed to.
Paragraphs 119 to 124 agreed to.
Annexes agreed to.
Summary read.
Motion made, to leave out the summary and insert
the following new summary:
The UK is sometimes accused of failing to invest
sufficiently in its transport infrastructure and of not planning
for the long term. In HS2, the Government proposes what is probably
the largest single investment in UK transport infrastructure in
modern times and what is undoubtedly a long term commitment.
In contrast to policies on major roads and airports,
HS2 has all-party support even as it is not supported by all MPs.
We note the substantial support for high-speed rail from those
businesses, local authorities and politicians in the regions which
stand to benefit under current proposals and the strong opposition
from those along the route. Indeed, HS2 is fast becoming a case
study in public choice theory.
We support the concept of a high-speed rail network
for Britain as part of the overall long term transport strategy
for the UK, also including classic rail, road, aviation and shipping.
There is no doubt that the Government's HS2 proposal would deliver
a step-change in rail capacity and connectivity while releasing
capacity for passengers and freight on the classic network. However,
we believe that the Government's HS2 proposal is premature and
that significant issues need to be addressed before a decision
to proceed with HS2 can be made.
HS2 is not commercially viable and it contains huge
financial risks: it will require substantial subsidy in both construction
and operation, even if all goes to plan. The discounted sum of
capital and revenue costs is £44.3bn against projected ticket
sales of £27.2bn[347].
If the project proceeds as planned, it will achieve a financial
loss of £17.1bn.
While the Secretary of State of the time of our last
evidence session accepted that HS2 is an infrastructure investment
that would never be made by the private sector, we question whether
the strategic economic benefits anticipated for HS2 justify the
financial risks inherent in the project, particularly given the
present fiscal and economic outlook. We have recommended 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.
The economic case for HS2 assumes that time on board
a train is wasted for business travellers. This is increasingly
untrue thanks to on-board internet access. Oxera's report indicated
that the level of productivity which can be achieved on a train
is very similar to that which can be achieved at a normal workplace.
Consequently, the economic benefits of HS2 are significantly exaggerated.
Significant environmental and social costs - including
planning blight - are not included in the assessment of the economic
case. Moreover, we heard that HS2 is likely to create demand for
further expensive, taxpayer-funded infrastructure, such as a new
underground line to cope with passengers at Euston. All this suggests
that HS2 will cost taxpayers substantially more than presently
anticipated.
Claims that HS2 will bridge the North-South divide
must be treated with caution. The evidence appears to be largely
speculative and, as we heard, regions not benefitting from HS2
would bear substantial costs through the redirection of the necessary
capital. While most taxpayers will not benefit from the scheme,
the cost of HS2 is equivalent to £1,000 per taxpayer, even
on current estimates.
In forecasting demand for HS2, the Department disregards
an approach using scenarios based on alternative futures and instead
uses past information to forecast 75 years into the future in
a single econometric variable. The uncertainty around such a method
is enormous, especially in later years. The DfT, in Delivering
a sustainable railway (2007) and Realising the potential
of GB rail (2011), accepted that forecasting demand 30 years
ahead is impossible to do accurately and recommended incremental
strategies for investment.
While opponents of HS2 have argued the flaws in the
demand forecast, supporters have argued that fare levels will
be set to enable high use of the new network[348].
This implies greater taxpayer subsidy to induce demand, a phenomenon
which may already be significant on the current network: as the
Secretary of State said, "We have one of the most expensive
railways in the world. ... That is not acceptable. The taxpayer
is contributing almost as much as the farepayer - and the farepayer
is paying a lot more than his international comparators."[349]
We have reported the tension between two contrasting
views of rising demand: on the one hand, a problem to be managed
by least-cost incremental improvements and measures to suppress
demand and, on the other, a phenomenon to be welcomed and fostered
for strategic reasons. We have called on the Government to explain
that strategic case and why it does not apply to road and air
transport. In the meantime, it appears that this historic infrastructure
proposal is underpinned by a simplistic approach to demand forecasting
and a lack of strategic clarity.
We consider that alternatives to HS2 have not been
adequately explored. AGAHST argue that the Evergreen 3 upgrade
to the Chiltern Line between London and Birmingham has been wrongly
excluded from the Government's assessment of capacity: HS2 Ltd
says that it will be "exploring this further". The DfT
has acknowledged that it has not carried out a full analysis of
the 51m Group's proposals, arguing that "at the strategic
level, its current view is that no package of upgrades to existing
lines could offer the same level or range of benefits as a new
high-speed line." However, our own specialist advisers have
demonstrated that alternatives to HS2 might meet the background
passenger growth forecast to 2043 at peak times, just as they
demonstrate the dramatic increase in capacity which would be provided
by HS2.
The arguments around demand management are ambiguous
and the fares strategy for HS2 has not been decided. The modelling
assumes current fare levels. We consider that it would have been
helpful if the DfT had provided a more comprehensive account of
the options and implications.
The challenge panels within HS2 are not credible.
Of the three panels of 22 men, only the Analytical Challenge Panel
contains any evident critic of high-speed rail. The members of
the Strategic Challenge Panel are almost all publicly supportive
of high-speed rail and it includes the Director of Yes to HS2,
the Director of Greengauge21 and the Chairman of Network Rail.
We have recommended that the Government employs a more robust
and diverse challenge process.
In the course of our inquiry, many issues about the
Government's proposal for HS2 and about high-speed rail in general
have been raised. We have indicated a number of areas which must
be addressed in progressing high-speed rail. These include provision
of greater clarity on the policy context, the assessment of alternatives,
the financial and economic case, the environmental impacts, connections
to Heathrow and the justification for the particular route proposed.
We call on the Government to consider and to clarify these matters
before it reaches its decision on HS2.
Our inquiry has dealt with the strategic case for
high-speed rail. If the Government decides to proceed with HS2,
a hybrid bill will provide the opportunity for detailed matters,
including those of environmental impact and mitigation, to be
addressed. —(Steve Baker.)
Question put, That the new summary be read a second
time.
The Committee divided.
| Ayes, 1
Steve Baker
| Noes, 6
Jim Dobbin
Julie Hilling
Kwasi Kwarteng
Mr John Leech
Graham Stringer
Julian Sturdy
|
Amendment proposed, at the end of line 16 to insert "However,
we believe that significant issues need to be addressed before
a decision to proceed with HS2 should be made." —(Iain
Stewart.)
Question proposed, That the Amendment be made.
The Committee divided.
|
Ayes, 4
Steve Baker
Paul Maynard
Iain Stewart
Julian Sturdy
| Noes, 5
Jim Dobbin
Julie Hilling
Kwasi Kwarteng
Mr John Leech
Graham Stringer
|
Summary agreed to.
Motion made, and Question put, That the Report be
the Tenth Report of the Committee to the House.
The Committee divided.
|
Ayes, 8
Jim Dobbin
Julie Hilling
Kwasi Kwarteng
Mr John Leech
Paul Maynard
Iain Stewart
Graham Stringer
Julian Sturdy
| Noes, 1
Steve Baker
|
Ordered, That the Chair make the Report to the House.
Written evidence was ordered to be reported to the
House for placing in the Library and Parliamentary Archives.
Ordered, That embargoed
copies of the Report be made available, in accordance with the
provisions of Standing Order No. 134.
[Adjourned till Tuesday 8 November at 10.00 am
347 High Speed 2: the next government project disaster?
IEA Discussion Paper No. 36, July 2011 Back
348
High-Speed Rail: Fair and Affordable, Greengauge, 2010 Back
349
http://www2.dft.gov.uk/press/speechesstatements/speeches/hammond20100910.html Back
| 
