High Speed Rail - Transport Committee Contents


Written evidence from the Association of North East Councils (HSR 121)

INTRODUCTION

1.  This evidence is submitted by the Association of North East Councils (ANEC), the representative body for local government in the North East. It encompasses all 12 local authorities throughout Northumberland, Tyne and Wear, Durham and the Tees Valley, on issues of concern to them and the communities they serve.

SUMMARY OF MAIN POINTS OF OUR EVIDENCE

2.  There is strong support from local authority leaders and elected mayors in the North East for HSR which offers a once in a generation opportunity to transform the economic geography of the UK, support sustainable growth and international competitiveness and to rebalance the economy in line with Government policy. However, it is essential that a new HSR network is developed in such a way as to maximise opportunities across the UK from the beginning, to ensure that the whole nation benefits. There are compelling economic arguments for the North East to be part of a HSR network and failure to be connected from the start will undoubtedly have a detrimental impact on the North East economy.

3.  It is also essential that high speed lines should form part of a coherent strategy for the wider national rail network. The development of a high speed network needs to be considered, not in isolation, but should form one important part of the long term strategy for rail in the UK. Investment in high speed should not come at the expense of conventional rail. Since the planned high speed network is predicated on having a limited number of stopping points, it will be essential for the North East to ensure that improvements in local connectivity are planned and implemented in parallel to, or in advance of, HSR development such that the whole of the North East can share the benefits. It is vital that such complementary rail and public transport improvements are considered now and committed within other rail investment programmes within the next two years, to align with the next Spending Review periods and new rail franchises. The potential to generate localised economic development by the introduction of new stations that meet the needs of HSR services and customers better than existing stations should not be underestimated.

4.  High speed fits well within national, regional and local transport policy objectives to improve connections between our key centres, supporting economic growth and reducing carbon emissions. The North East's location, relative to UK and European markets, means the North East regards air services and high speed rail as being complementary rather than competitive. The North East has consistently argued for the importance of good air, rail, road and sea connections in the context of overall improvements to transport infrastructure that support economic growth and competitiveness, and HSR is an important element of such infrastructure.

5.  The business case for the HSR network is based around improving journey times between significant centres. Research and experience from other European countries demonstrates that to maximise the capacity of high speed, there needs to be relatively large centres of population and activity along the entire route. The Local Enterprise Partnership (LEP) areas around Leeds, Sheffield, Tees Valley and Tyne and Wear, and Derby/Nottingham/Leicester have a combined population of 9.1 million to connect with Scotland, London and the West Midlands. An east coast route therefore makes economic and financial sense from the outset, with the wider economic benefits of this route totalling £4.2 billion.

6.  ANEC's response to the main headings within the Terms of Reference for this Inquiry is outlined as follows.

Main arguments for and against HSR

7.  The North East is committed to building a competitive and dynamic economy and HSR can play a key strategic role in delivering this vision. In addition to delivering unprecedented improvements in rail capacity and connectivity, significant economic benefits will accrue as a HSR connection transforms the area's economic geography. Consequently, ANEC believes that there is a strong case for HSR, with the main arguments in favour being ones of capacity, connectivity, speed and economic benefit.

8.  Growth in rail demand has been significant over the past decade across the UK, and in the North East. Passenger numbers on the East Coast Main Line increased by 36% up to 2007-08,1 whilst on the local networks, there has been an average increase of 58% in passenger numbers at stations across the Tees Valley since 2000.2 Despite the recent economic climate, passenger numbers have continued to rise, and this trend will continue.

9.  Through its Route Utilisation Strategy process and as part of its New Line Programme work, Network Rail has identified that, even with incremental enhancements, forecast growth in passenger demand is such that each of the north-south main lines—the West Coast Main Line (WCML), the Midland Main Line (MML) and the East Coast Main Line (ECML)—will reach their effective capacity for long distance services in the 2020s.3 Additional capacity on these corridors is vital for the UK economy.

10.  Increasing the capacity of the rail network to meet forecast demand using the existing routes, over and above the recently announced incremental improvements that we welcome, is predicted to give a poor rate of return.4 More importantly, a large scale online upgrade would be extremely disruptive to existing services during construction and have an adverse impact on passenger numbers. This would have a damaging effect on the North East economy at a time when we are seeking to nurture sustainable long term growth and moving from recession to recovery.

11.  The preferred way to address future capacity issues is by constructing new routes. Such an approach has a secondary benefit that is even more important to those areas without a direct connection to the ECML at present, capacity would be released on the existing network through the transfer of services to a new line. This released capacity can be used to support growth in commuter services, as well as strengthen existing linkages and create new connections between LEP areas in the North, and between the North and the rest of the UK, bringing economic benefits of around £0.8 billion to the eastern side of the UK.5 Changes to the ECML timetable could facilitate improved frequencies from London to Bradford, Halifax, Harrogate, Hull, Sunderland, or the introduction of wholly new trains to the Tees Valley, Huddersfield, Grimsby or Scarborough. Released capacity can also be used to accommodate growing freight traffic, an important element of the North East's economy.

12.  In supporting the construction of a new route, it is important to ensure that this provides the speed of connection between the major centres that people and business require. Reduced journey times benefit all travellers—for business travellers, less time spent travelling means that more time can be spent in productive work; for non-business travellers, there is a less direct economic benefit, but new markets can be encouraged, such as tourism. In 2008, the North East was the only region outside London to increase its visitor numbers.6

13.  Both capacity and speed improvements support the most important argument for HSR with resultant benefits to the economy. Improvements to the availability and speed of rail connections with the rest of the UK will benefit the economy of the North East in two ways. Firstly, it will make the existing economy more productive and provide economic benefits to non-business users and secondly, it creates the opportunity to support the further economic growth and regeneration of the North East and the re-balancing of the economy. It is estimated that HSR could result in a £3.1 billion productivity increase for the North East.7

14.  Potentially much more significant than the productivity and traditional economic benefits is the transformational impact that HSR can have on the size of the economy of the North. By effectively bringing the LEP areas of the North closer to Scotland, London and the West Midlands, HSR will affect where economic activity takes place. As the North's economy grows and as it restructures, north-south links, particularly to London, will become more, not less, important over time. Improved connections to London are not at risk of draining economic activity from the North in the same way that the evidence from France is that HSR has not resulted in a concentration of economic activity in Paris at the expense of other towns and cities served by HSR. Indeed, there is evidence that cities such as Lyon and Lille have experienced significant economic benefits from HSR due to the enhanced connections to Paris.8

15.  The main arguments against HSR would appear to relate to the cost and environmental impacts of the proposals.

16.  The supporting evidence for HS2 shows that the cost of building a new rail line between London and the West Midlands that would operate at maximum speeds currently found on the national network would be only 9% less than building a line that can operate at high speeds.9 Hence, the marginal cost of building a high speed line is small, whilst the benefits are much greater.

17.  In terms of environmental impact, any project of this type will have environmental impacts, but the evidence presented10 demonstrates how these impacts will be minimised during construction and operation. It is important to achieve a sense of balance between localised impacts and a project that is of such importance to the UK economy.

Fit with Government's transport policy objectives

18.  The Department for Transport's (DfT) stated vision is "for a transport system that is an engine for economic growth but one that is also greener and safer and improves quality of life in our communities".11 HSR presents a real opportunity to revolutionise the economy by bringing places and people closer together, with national and international markets, in line with the first part of this vision. It also presents the opportunity to achieve the wider Government ambition to "create a fairer and more balanced economy".12

19.  To support the re-balancing of the economy, there is a need to enhance the connectivity within and between the North's LEP areas. Current transport links between many of the large centres are often relatively weak, with slow journey times being a common characteristic. Whilst the importance of connections to London was stressed above, almost 60% of the productivity benefits forecast for the North East from HSR result from improved connections to other UK centres outside London including South Yorkshire, the East Midlands and Birmingham.13

20.  Given the North East's geographical location, inter-urban connectivity is paramount to the well-being of the economy, and the North East has consistently argued for the importance of good air, rail, road and sea connections in the context of overall improvements to transport infrastructure that support economic growth and competitiveness. Recent announcements regarding the roads investment programme14 has seen the postponement of the A1 upgrade to motorway standard between Leeming and Barton, and the focus of investment on the strategic road network has moved towards congestion management. Therefore, rail offers the preferred means of improving inter-urban connectivity, although there is still a need for investment in improving capacity in the North East's strategic road network.

21.  The North East's location, relative to UK and European markets, means we regard air services and HSR as being complementary rather than competitive. Newcastle International and Durham Tees Valley Airports play a major role in supporting the competitiveness of existing business in the region, including knowledge based and global industries in chemicals, steel and engineering/architectural design, which rely on scheduled services providing direct links to key markets. To achieve its potential, the North East needs both modes, as well as continued investment in our ports. It is also essential that high speed lines should form part of a coherent strategy for the wider national rail network. The development of a high speed network needs to be considered, not in isolation, but needs to form one important part of the long term strategy for rail in the UK.

22.  Investment in high speed should not come at the expense of the conventional rail network. The announcement of the Intercity Express Programme new rolling stock, means that it is necessary to continue to invest in conventional rail in order to address capacity constraints on the ECML. Since the planned high speed network is predicated on having a limited number of stopping points, it will be essential to ensure that improvements in local connectivity are planned and implemented in parallel to, or in advance of, HSR development such that the whole of the North East can share the benefits.

23.  It is vital that such complementary improvements are considered now and committed within other rail investment programmes within the next two years. For example, in the North East, proposals have been developed to a relatively advanced stage for Darlington and Newcastle stations, and the re-opening of the Leamside Line, all of which will have capacity benefits for the ECML/HSR network, and could be included within the scope of the project with minimal additional cost. ANEC strongly suggests that HS2 Ltd engage with regional partners during the latter part of 2011 to examine such opportunities now, such that they can be included where appropriate in the December 2011 report to Government of route options for the wider network, as well as specifications for the next relevant rail franchises.

24.  In terms of environmental considerations, HSR is thought to be broadly carbon neutral in absolute emissions terms.15 However, given the increased demand generated by HSR, carbon emissions per trip will be lower with HSR, and so fit with national, regional and local policy objectives.

Business Case

25.  The business case and economic appraisal presented by Government follows standard DfT methodology and HM Treasury's Green Book. Whilst there continues to be some misgivings about how this process is applied to public transport schemes in particular, it appears valid for giving a relative comparison between options.

26.  It is appropriate that demand forecasts have been revised since the publication of the previous Government's proposals16 to reflect recent economic conditions and changes to Government policy in relation to the third runway at Heathrow Airport.

27.  One important point to note is that the business case has been developed from assumed service patterns, the one for the wider "Y" network being included as Figure A2.17 This service pattern includes a peak hour frequency of 18 trains per hour (tph) using the HSR network between London and Birmingham, with six of these services serving the eastern side of the UK. No high speed line elsewhere in the world currently operates at a frequency of more than 12tph—the planned 18tph frequency is to be delivered by a new signalling system to be developed by the time of opening.

28.  Given that well over 60% of the benefits of the wider HSR network accrue to the eastern side of the UK,18 it is vital that, should the 18tph frequency not be achievable in practice, the frequency of East Coast services is maintained. If not, there is a risk of implementing a project that creates an economic imbalance across the North.

29.  The relatively poor business case of the alternative of investing exclusively in the existing network has been outlined previously, and we would have significant concerns about managing demand for rail travel through other means such as increased pricing. Having articulated how important fast and reliable rail links are to the economy of the North East, pursuing a policy that increases rail fares in real terms to manage demand such that it does not exceed the available capacity, would have a significantly detrimental impact on the North East economy. Using fare increases to reduce rail travel numbers could also disadvantage the North East in respect of increased levels of carbon taxation.

30.  In terms of learning lessons from other major projects, experience of such large infrastructure projects in the North East has suggested that having private sector involvement in the detailed design and implementation process, aligned to minimum direct Government interference, has driven value through the construction process.

Strategic Route

31.  As one of the benefits of HSR is journey time reductions, it is important to achieve a balance between serving as many key centres as possible, without compromising the benefits of speed. Recent DfT policy has concentrated on defining a strategic national network based around the 10 cities with the largest centres of population and major international gateways.19 For consistency, it would seem sensible to use similar criteria when examining possible station locations, bearing in mind that not all locations will be served directly or with city centre stations.

32.  We strongly support the principle of the Y network proposed for HSR in that it creates opportunities on both sides of the Pennines. It is critical that the North East is linked to high speed rail infrastructure and investment in the UK, in the context of the compelling economic arguments already outlined. Achievement of the North East's ambitions to be a world leader in the low carbon economy and to maximise its strengths and assets in areas including digital and creative media, process and chemical industries, healthcare and life sciences, is significantly dependent upon North East being linked into a high speed network. The potential to generate localised economic development by the introduction of new stations that meet the needs of HSR services and customers better than existing stations should not be underestimated.

33.  Whilst the North East recognises a need to develop the network in phases, an approach where one route is developed in advance of the other will create imbalanced economic growth and exacerbate regional disparities. It is clear that development of a high speed network will give an early economic advantage to those areas connected first and so it is critical that the North East is connected from the start, in order to make the most of the opportunities HSR presents. Otherwise, this would potentially send a signal to investors which will be difficult to turn back from and could result in creating lop-sided growth in the UK.

34.  Research and experience from other European countries demonstrates that to maximise the capacity of high speed, there needs to be relatively large centres of population and activity along the entire route, such as that offered by an eastern route. The LEP areas around Leeds, Sheffield, Tees Valley and Tyne and Wear, and Derby/Nottingham/Leicester have a combined population of 9.1 million to connect with the Scotland, London and the West Midlands. An east coast route therefore makes economic and financial sense from the outset, with the wider economic benefits of this route totalling £4.2 billion.20

35.  The evidence is strong that additional capacity between London and the West Midlands to relieve the southern sections of the WCML should be the first stage in developing a national network. However, beyond this, there is little published evidence to support the notion that the remainder of the national network should start from Birmingham and work northwards. As the first phase of HS2 will include a connection to the WCML, and a connection to the MML could benefit the East Midlands and South Yorkshire, there is an argument on equity as well as economic grounds that the next investment should concentrate on linking Scotland, the North East and the rest of Yorkshire into the HSR network.

Economic rebalancing and equity

36.  HSR offers a once in a generation opportunity to transform the economic geography of the UK, support sustainable growth and international competitiveness, and gives a strong opportunity to rebalance the economy in line with Government policy. However, it is essential that a new HSR network is developed in such a way as to maximise opportunities across the UK from the beginning, to ensure that whole nation benefits.

37.  In addition to conventional transport benefits, the eastern leg of the Y network is forecast to contribute some £2.6 billion in productivity benefits.21 Although the majority of the benefits are through productivity benefits in producer services, all major sectors of the economy show predicted productivity benefits. The North East has significantly higher benefits through productivity benefits in manufacturing, one of the sectors leading the UK in its current recovery.

38.  On a per capita basis, GVA in the North is 80% of the South East.22 Whilst manufacturing in the North remains an important part of the economy and the service sector has been growing, the North has a greater than average proportion of workers in public sector employment—for example, 25% in the North East compared with 17% in the South East.23 As a proportion of people available for work, unemployment at 8.6% is notably greater in the North than in the South East where it is 6.1%.24 Therefore, if the economy is to be rebalanced, it is vital that HSR serves the whole of the North of the UK.

39.  Recent research on the line between Cologne and Frankfurt has shown that that towns connected to a new high speed line saw their GDP rise by at least 2.7% compared to adjacent towns not on the route.25 This was based on the results from two towns (Limburg and Montabaur) that were included on the high speed route due to lobbying by regional government and not because their economies were particularly powerful or expanding. The study also found that increased market access through HSR rail has a direct correlation with a rise in GDP—for each 1% increase in market access, there is a 0.25% rise in GDP. The economic growth associated with HSR came before the line entered into service, as businesses and individuals changed their economic behaviour in anticipation of the arrival of HSR, ensuring an early realisation of benefits.

40.  As noted above, to maximise the benefits of HSR, there needs to be detailed consideration given to how the released capacity on the existing networks could be utilised. The DfT has indicated, for example, that the implementation of HSR between London and the West Midlands could allow up to 12tph from London to serve Milton Keynes. Whilst there will be some sense in providing additional commuter services into and out of London, the real opportunity to spread the benefits of HSR by using spare capacity to provide other towns and cities with a direct service to London and to enhance links between LEP areas outside London.

41.  There also needs to be an immediate review of how local and regional networks connect into the HSR network, as improvements in advance of HSR to these networks and services can not only support the realisation of the predicted benefits, but bring additional passengers to the service over and above that predicted. The international evidence is that integrating HSR with the local transport networks further increases the area over which the benefits of HSR are felt.26

Impact

42.  Previous comments have addressed the issue of carbon emissions and the possible environmental impacts of HSR, as well as the need to minimise any disruption to the existing network during construction.

43.  In terms of freight, just as there is an opportunity to use released capacity on the ECML and other main lines for passenger services, so the same is also true for freight services, and a part of the North East's plan for economic recovery includes the development of the two major ports in the North East; Tees and Hartlepool and Port of Tyne. Both of these have proposals to expand, and so it is vital that onward connections by rail are possible to minimise additional lorry miles. To illustrate the point about complementary investment, some £2.4 million will be invested in the Tees Valley's rail network over the next two years to allow the passage of larger containers and support the expansion of Teesport.

CONCLUSION

44.  There is strong support from local authority and business leaders for HSR in the North East. The North East occupies a special place in the rail industry's history as the birthplace of the modern railway. For the region to compete effectively in the 21st century, it is vital that the North East continues to play its full part in the rail industry's future, particularly the development of HSR and the connecting rail infrastructure required to maximise the transformational benefits that HSR can bring.

May 2011

REFERENCES

1  East Coast Route Utilisation Strategy, Network Rail, February 2008.

2  Transport Monitoring Report, Tees Valley Unlimited, July 2010.

3  Network RUS—Scenarios and Long Distance Forecasts, Network Rail, June 2009.

4  High Speed Rail Strategic Alternatives Study—Strategic Alternatives to the Proposed "Y" Network, Atkins, February 2011.

5  High Speed Rail Eastern Network Partnership—Technical Business Case Work, Arup, May 2011.

6  High Speed North East, ANEC, October 2009.

7  Because Transport Matters, Atkins, 2008.

8  High Speed Rail: International Comparisons, Steer Davies Gleave, 2004.

9  High Speed Rail: Investing in Britain's Future, Department for Transport, February 2011.

10  HS2 London to the West Midlands: Appraisal of Sustainability, Booz & Co and Temple, February 2011.

11  http://www.dft.gov.uk/about/vision

12  Local Growth: Realising Every Place's Potential, HM Government, October 2010.

13  ibid, Arup, May 2011.

14  http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=202&NewsAreaId=2&ReleaseID=416118&SubjectId=36

15  ibid, Department for Transport, February 2011.

16  High Speed Rail Summary, Department for Transport, March 2010.

17  Economic Case for HS2: The Y Network and London—West Midlands, Department for Transport, February 2011.

18  ibid, Arup, May 2011.

19  Delivering a Sustainable Transport System Main Report, Department for Transport, November 2008.

20  ibid, Arup, May 2011.

21  ibid, Arup, May 2011.

22  Office for National Statistics, Regional Gross Value Added, NUTS1 GVA (1989-2009) Data (Table 1).

23  Public Sector Employment and Expenditure by Region, House of Common Library, July 2010.

24  Office for National Statistics, Regional Labour Market Statistics February 2011, (Table S1).

25  From Periphery to Core: Economic Adjustments to High Speed Rail, Gabriel M Ahlfeldt (LSE) and Arne Feddersen (University of Hamburg), September 2010.

26  High Speed Trains and the Development and Regeneration of Cities, Greengauge21, 2006.


 
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Prepared 8 November 2011