Written evidence from PTEG (HSR 123)
1. INTRODUCTION
1.1 pteg represents the six Passenger
Transport Executives (PTEs) in England which between them serve
more than eleven million people in Tyne and Wear ("Nexus"),
West Yorkshire ("Metro"), South Yorkshire, Greater Manchester,
Merseyside ("Merseytravel") and the West Midlands ("Centro").
Leicester City Council, Nottingham City Council, Transport for
London (TfL) and Strathclyde Partnership for Transport (SPT) are
associate members of pteg, though this response does not
represent their views. The PTEs plan, procure, provide and promote
public transport in some of Britain's largest city regions, with
the aim of providing integrated public transport networks accessible
to all.
1.2 pteg welcomes the opportunity to respond
to the Committee's inquiry into this important topic and would
be willing to appear before the Select Committee, should the Committee
wish us to expand on any of the points made in this response.
Our response focuses on the key issues for the city regions and
addresses the relevant questions from the Committee only.
2. THE CITY
REGIONS NEED
HIGH SPEED
RAIL
2.1 pteg support the development of a
High Speed Rail (HSR) network for the UK. We support the government's
view that this is "a once in a generation opportunity
to transform the way we travel in Britain".1
2.2 We believe that there is a pressing need
to better connect the major urban centres of the UK, in particular
those in the North and the Midlands, with London and, critically,
with each other. Alongside improvements to the "classic"
network, HSR offers the potential to dramatically improve connectivity
of key city centres, thereby opening up new opportunities for
business growth, extended labour markets and wider economic benefits
associated with tourism and leisure markets.
2.3 Our support for HSR is therefore based on
two core, inter-related arguments - economic and regeneration
impacts; and capacity benefits.
Economic and Regeneration Impacts
2.4 HSR will reshape and rebalance the economic
geography of Britain, closing the gap between the South East and
the rest of the country over the longer term. On a per capita
basis, GVA in the city regions is lower than that of the South
East - eg the North is 80% of the South East.2 While
manufacturing in the North and West Midlands remains an important
part of the economy, and the service sector has been growing strongly,
there are greater than average proportions of public sector employment
- for example, 25% in the North East compared with 17% in the
South East.3 As a proportion of people available for
work, unemployment is persistently higher in the North and Midlands
than in the South East.4
2.5 To support the re-balancing of the economy,
there is a need to enhance the connectivity within and between
the city regions; between the North and the rest of the country
(London and the South East in particular); and to and from international
gateways, including Heathrow Airport and the Channel Tunnel.5
Growing city region economies will also generate greater demand
for travel6 between them as their economies become
more interconnected.
2.6 As the economies of our city regions grow
and restructure north-south links, particularly to London, will
become more important over time in economic terms. London is a
World City and global financial hub and as such offers financial,
legal and other services essential to businesses in the North
and West Midlands. Economic growth in these areas will increase
demand for the internationally renowned services that London offers,
not diminish it. On top of this, by virtue of its size and wealth
London and the South East is the largest domestic market for our
businesses and, of course, as the nation's capital it is the home
of government.7
2.7 HSR has the potential to radically transform
the economies not just of the major cities, but also of the surrounding
connected areas, extending its advantages beyond the places that
it directly serves. Therefore ensuring that HSR is properly integrated
into the classic rail and other public transport networks will
mean that the maximum number of people benefit from the advantages
of the network, reducing journey times for business and leisure.
2.8 For example, the economic benefits of HSR,
combined with enhancements to the existing rail network, demonstrated
that the West Midlands would benefit from an additional 22,000
jobs; generating £1.5 billion GVA benefits and, with the
attraction of higher value business sectors, an increase in average
wages of £300 per annum.8
Capacity
2.9 Evidence from the rail industry shows that
additional rail capacity is needed to prevent overcrowding on
rail services in the future (ie that demand for long distance
travel will increase by 70%; and regional rail services double
by 2034).9 Without this additional capacity, travel
conditions will decline, overcrowding will increase and services
are likely to become more expensive, damaging the economic prospects
of our cities and the country's economic competitiveness.
2.10 HSR will provide the best value for money
solution to the capacity challenge as new railway lines deliver
a step-change in capacity and reliability that cannot be matched
by upgrading the existing rail network. HSR will release substantial
capacity on the existing rail network for additional local and
commuter services and for an increase in rail freight.
2.11 Research has identified the potential capacity
benefits of HS2 route and demonstrated the potential for substantial
improvements to capacity, stating that:
"Services to most of the stations along the
route can be transformed: frequencies typically doubled, connections
dramatically improved and in some cases, quicker journeys too.
Irritating limitations on the commuter peak timetable will become
history".10
2.12 We might expect to see similar gains from
the properly planned implementation north of Birmingham of the
two legs of the Y network to Leeds and Manchester.
3. HIGH SPEED
RAIL: KEY
ISSUES
What are the main arguments either for or against
HSR?
3.1 Our core arguments for supporting High Speed
Rail are set out above.
How does HSR fit with the Government's transport
policy objectives?
3.2 The government's high level objectives relate
to long-term and sustainable economic growth, rebalancing the
economy and carbon reduction - HSR clearly fits with these high
level objectives, albeit over the long term.
3.3 Making the link between major projects such
as HSR and local transport will be important. This is recognised
at a high level in the government's Local Transport White Paper.11
We believe that HSR and the White Paper's objective of "making
public transport more attractive"12 go hand-in-hand;
that it is important for HSR to be seen in the context of "end-to-end"
journeys; and that it therefore remains vital to continue to invest
in local transport schemes that allow the free flow of people
out of HSR stations in a sustainable way.
3.4 We also believe that there is a need to strengthen
the supporting policy framework to deliver HSR. The government
is due to produce a National Policy Statement (NPS) on transport
networks, which will set out the strategic context for major transport
infrastructure. We believe that this NPS should provide the strategic
framework that sets out transport's role in promoting sustainable
economic growth and regional balance. The NPS needs to sit alongside
the National Infrastructure Plan13 so that clear links
are made to the delivery of national policy objectives, as set
out in NPS, and which would include HSR.
HSR is designed to improve inter-urban connectivity.
How does that objective compare in importance to other transport
policy objectives and spending programmes, including those for
the strategic road network?
3.5 We believe that improved inter-urban connectivity
has significant economic benefits and is a worthwhile policy objective
in this regard. This does not reduce the importance of other transport
policy objectives, in particular the spending programmes within
city regions.
3.6 We note the government's conclusion that
"the road network cannot offer an effective solution"
and that "the unreliability and delay caused by congestion
in cities… make road travel an unattractive option for the
journeys into city centres which are seeing the highest levels
of demand growth on the rail network",14 and
therefore we would question whether investment of a similar order
in the strategic road network could achieve the same outcomes
as HSR.
Focusing on rail, what would be the implications
of expenditure on HSR on funding for the "classic" network,
for example in relation to investment to increase track and rolling
stock capacity in and around major cities?
3.7 HSR should be treated as a national project
whose significance stretches far beyond its transport role and
therefore funding for it should fall outside of the normal spending
limits for classic rail, in which case the impact on the classic
network would be limited. By way of example, the funding for CrossRail
has been allocated as a distinct line of funding from government
and we believe that funding for HSR should follow this approach.
3.8 To extract the maximum benefits from HSR,
there is a need to continue to invest in and upgrade "classic"
rail services. For example, in the short to medium term there
is a continued need to address the capacity constraints on the
existing network, including rolling out electrification and major
infrastructure schemes, such as the Northern Hub.
3.9 It is essential that HSR is placed within
the context of a long term strategy for the enhancement of the
longer distance rail links between city regions. This needs to
establish an affordable and value for money programme of enhancements
to the West Coast Main Line, Midland Main Line and East Coast
Main Line in advance of HSR, and ultimately to complement a HSR
network. Also needed is a strategy to enhance the transpennine
routes which may not be part of the national HSR, but which evidence
demonstrates are so important to the economy of the entire North.
3.10 Additionally we believe that HSR increases
the need for complementary measures to maximise the benefits -
a key concern for us is that local transport, including local
rail services, can be properly integrated so that when HSR services
arrive at our city centres, we have adequate and sustainable means
of distributing passengers to their final destinations. A key
objective in this regard is therefore the devolution of local
rail services to PTEs which will help integrate rail more effectively
and, potentially, unlock mainline station capacity through the
wider implementation of light rail conversions and tram-train.15
3.11 If funding for HSR comes from within existing
rail funding sources then it will have a major negative impact
on other rail investment, particularly for the North and Midlands,
which already suffer from under-investment in terms of rail expenditure.
Business case
How robust are the assumptions and methodology?
3.12 At present the DfT business case does not
fully reflect the business case benefits that accumulate the further
north the HSR network is extended. The development of a HSR network
through the reduced journey times allows for transformational
economic change and benefit to the north of England and Scotland.
The benefits of this transformational change have not been quantified
in the DfT's appraisal which means the total benefits already
calculated are likely to be conservative. Furthermore, the experience
of European and other countries in the development of HSR networks
suggests that there are significant transformational benefits
to regional economies (see Lille in France as a good example).
3.13 Additionally, the current business case
understates the demand for services. The future patronage forecasts
used by HS2 for growth on the rail network appear to be conservative
when compared to historical and actual passenger growth. The demand
forecasting work undertaken by HS2 Ltd uses an estimate of underlying
growth in rail demand of 3.4% per annum across the entire UK rail
network, and a net 1.5% per annum growth for HS2 passengers by
2043.
3.14 The key drivers of rail patronage growth
include increased economic and population growth. Future growth
levels of both are projected to be in broad alignment with historical
trends meaning that unless the rail industry introduces policy
tools such as pricing to reduce demand, future rail demand is
likely to be consistent with historical growth levels.
3.15 Therefore, the future growth outlined by
HS2 needs to be assessed against actual and historical growth
in rail travel demand (rather than the estimate above). Table
1 outlines growth in long distance rail journeys from London 19992000
to 200910:
Table 3
HISTORICAL GROWTH LONG DISTANCE RAIL TRAVEL16
| London to | Total Growth
| Ave. Annual Growth Rate |
| Manchester | 70% | 5.4%
|
| Birmingham | 58% | 4.7%
|
| Liverpool | 41% | 3.5%
|
| Glasgow | 23% | 2.1%
|
3.16 Furthermore, if a more dynamic approach to modelling
the interaction between changes in accessibility and land use
were employed (reflecting changes in the location and mix of businesses
in an area as a result of improved transport connections) this
would represent a more realistic estimate of the economic impact
of HS2. The Department for Transport have assumed no changes to
land use will occur as a result of HS2, which is not consistent
with international case studies of HSR which prove otherwise.
What would be the pros and cons of resolving capacity issues
in other ways, for example by upgrading the West Coast Main Line
or building a new conventional line?
3.17 There are worthwhile and value for money proposals for
increasing north-south rail capacity on the existing main lines
and these should be pursued. However, the capacity increment that
such enhancements will bring is finite and not sufficient to meet
the needs of the/our economies if they are to grow to their full
potential. Any further capacity increases would be highly disruptive
to implement (eg the experience of the West Coast Route Modernisation
programme), as well as being very costly.
3.18 The most cost effective way to provide the north-south
capacity that is required is to build new railway lines. The extra
benefits that come from operating this new capacity at high speed
transforms the economic and productivity benefits that the new
capacity will deliver. Building a new conventional speed line
would save around 9% of the cost of HS2 but would deliver only
two thirds of the benefits and is therefore not considered to
be a credible alternative to HS2.
What would be the pros and cons of alternative means of managing
demand for rail travel, for example by price?
3.19 Managing demand through pricing for longer distance rail
travel will have a negative impact on the economy through discouraging
economic activity and business; the environment through increased
demand for motorway travel and domestic aviation; and quality
of life through increased congestion, noise, and additional land
take for extra road space. Whilst pricing clearly has a role in
spreading demand for rail to encourage better utilisation of capacity,
any choking off of inter-city rail demand by pricing would, in
our view, be a retrograde step for the our economies.
The strategic route
Which cities should be served by an eventual high speed network?
Is the proposed Y configuration the right choice?
3.20 There is a need for a national HSR network that connects
the major cities of the UK together. The Y network therefore represents
a good starting point, but further connections are required to
Newcastle and Scotland, as well as connecting other major centres
such as Liverpool. A possible network is set out in Greengauge
21's "Fast Forward" strategy.17
3.21 There is also a need to ensure that the proposed Y shape
has sufficient capacity to ensure that future demand from all
parts of the country can be accommodated to facilitate not only
inter-city links, but also connectivity to Heathrow and also HS1
to mainland Europe.
Is the Government correct to build the network in stages, moving
from London northwards?
3.22 Whilst it is inevitable that a national HSR network will
need to be delivered in phases given the complexity of the task,
it is important that the full network is delivered at the earliest
possible timescale. We believe that there should be a firm commitment
to the whole of the network - either through provision in the
Hybrid Bill or through the National Policy Statement on transport
networks. It is particularly important that both legs of the "Y"
to Manchester and Leeds are delivered in parallel to avoid any
economic imbalances.
3.23 The option to build more than one section of route in
parallel has not been fully explored within the strategy. Given
that the benefits of HSR are about rebalancing the economy and
that there are huge wider economic benefits to be had by bringing
northern cities closer to other city regions and London, there
is a strong argument for beginning construction of HSR simultaneously
in London and the north, although there is clearly a cost to this
(financially and procedurally). It may be that there is scope
to develop sections in parallel over the life of the project,
particularly if there is an improvement to the macro-economic
context.
Economic rebalancing and equity
What evidence is there that HSR will promote economic regeneration
and help bridge the north-south economic divide?
3.24 See the section above on economic impact.
To what extent should the shape of the network be influenced
by the desirability of supporting local and regional regeneration?
3.25 There are clear benefits in making sure that the full
HSR network extends to all the major urban centres to ensure that
they are effectively connected. As stated above, we believe that
the Y network represents a good starting point.
Which locations and socio-economic groups will benefit from
HSR?
3.26 City centre locations near to HSR stations will be the
primary beneficiaries. Research by KPMG18 illustrates
how public transport accessibility to the city centres can make
a critical contribution to higher productivity and wages, job
creation and direct foreign investment. They argue that rail plays
a crucial role in supporting the shift of economic activity towards
the densest and most productive locations and sectors of the economy.
3.27 These findings are echoed by the analysis of the Northern
Hub in Manchester19 and the Centre for Cities20
report on agglomeration and growth in the Leeds City Region. These
reports agree that public transport schemes improving city centre
accessibility can generate wider economic benefits corresponding
to 20-25% of total benefits, which are not currently taken into
account by the Department for Transport.
How should the Government ensure that all major beneficiaries
of HSR (including local authorities and business interests) make
an appropriate financial contribution and bear risks appropriately?
3.28 We believe that it is fair that those who benefit from
HSR should contribute towards its cost if the appropriate financial
regulations and tools are in place. For example, if local authorities
are allowed to keep the additional business rates generated through
HSR (using mechanisms such as Tax Increment Financing) then these
areas should contribute towards appropriate HSR infrastructure,
such as stations. However, if government captures the additional
uplift in tax raised through HSR, then it is appropriate that
the government and major private sector developers pay for HSR.
REFERENCES
1 Department for Transport, "High Speed Rail:
Investing in Britain's Future Consultation Summary" February
2011, p3.
2 Calculations based on - Office for National Statistics, Regional Gross Value Added, NUTS1 GVA (1989-2009) Data (Table 1).
GVA is defined as Headline Workplace Based GVA for 2009 (provisional
estimates). North is defined as the Government Office Regions
of Yorkshire and The Humber, The North West and the North East.
The South East is defined as the Government Office Region of the
South East.
3 Table 1, Public Sector Employment and Expenditure
by Region, House of Common Library, July 2010.
4 Calculations based on - Office for National Statistics, Regional Labour Market Statistics February 2011, (Table S1).
5 The need to improve links within and between city
regions, between the North and the South and to and from international
gateways was identified in the Northern Way's March 2007 Strategic
Direction for Transport and then reaffirmed in the Northern
Way's September 2007 Short, Medium and Long Term Transport
Priorities.
6 See Transport Demand in the North, The Northern Way,
March 2010.
7 For a fuller discussion of the North's position in
the national economy see the Northern Way commissioned report
Northern Connection: Assessing the Comparative Economic Performance
and Prospects of Northern England Institute for Political
and Economic Governance, University of Manchester and Centre for
Urban Policy Studies, University of Manchester January 2008.
8 Centro Commissioned Report by KPMG "High
Speed Rail and supporting investments in the West Midlands Consequences
for employment and economic growth".
9 Network Rail, ATOC and RFOA "Planning Ahead
2010", 2010.
10 Greengauge 21, "Capturing the benefits of HS2
on existing lines", 2011, p5.
11 Department for Transport, "Creating Growth,
Cutting Carbon: Making Sustainable Local Transport Happen"
January 2011.
12 Ibid.
13 HMT, National Infrastructure Plan, 2010.
14 Department for Transport, "High Speed Rail:
Investing in Britain's Future Consultation Summary" February
2011, p8.
15 See "Rail Cities in the 21st Century: the case
for devolution", pteg, 2010 http://www.pteg.net/NR/rdonlyres/F5FB1E6E-EF2F-4EAD-B9D2-E4A235544B51/0/Railvisionfinalforwebsml.pdf
16 Network Rail (draft) West Coast Main Line Route
Utilisation Strategy.
17 Greengauge21, "Fast Forward: A High Speed Rail
Strategy for Britain", September 2009.
18 KPMG. "Value for money in tackling overcrowding
on northern city rail services". Report to the Northern PTEs,
2010.
19 The Northern Way, "Manchester Hub Phase 2 -
Transport Modelling and Benefit Assessment", 2009 http://www.thenorthernway.co.uk/document.asp?id=718
20 Centre for Cities, "The case for better transport
investment: Agglomeration and growth in the Leeds City Region",
2007 http://www.centreforcities.org/assets/files/pdfs/071127LeedsPaperFINAL.pdf
May 2011
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