Written evidence from Professor Mike Geddes
(HSR 80)
SUMMARY
This paper assesses evidence about the extent to
which job creation associated with HS2/HSR may help to bridge
the North-South employment divide.
It shows that the forecasts of the regional employment
implications of HS2/HSR produced by government or by supporters
of the project are subject to serious qualifications. Consequently
it is very difficult to sustain the prediction that, overall,
the employment impact of HS2 would reduce the North-South divide.
INTRODUCTION
1. This paper assesses evidence about the extent
to which job creation associated with HS2/HSR may help to bridge
the North-South employment divide.
2. This is an important issue. Transport Secretary
Philip Hammond claims the high speed rail network will "change
the social and economic geography of Britain; connecting our great
population centres and international gateways". Hammond further
suggests that linking England's main cities via high speed rail,
with further links to Scotland, could help break down the north-south
divide. "Bringing those economies in closer reach of London,
allowing them to benefit from London's magnet effect in the world,
is going to help solve some of the most intractable postwar social
and economic problems Britain has faced."[126]
3. Similar arguments are made by other supporters
of HS2. The Yes to High Speed Rail campaign claims that
"A new high speed rail network could help the Midlands and
the North by increasing the connectivity between major urban economies,
helping transform the cities of the Midlands and the North into
a single economic area".[127]
4. The debate about the job creation impact of
HS2 falls into two parts:
— Job
creation from regeneration schemes linked to the construction
of HS2, concentrated around stations.
— Job
creation arising from the wider impact of HS2 on the economy.
5. The next two sections of the paper will comment
on each of these. A further section will then bring them together
with other data about North-South employment disparities, allowing
several conclusions to be reached.
JOBS FROM
REGENERATION
6. Current government estimates of job creation associated
with HS2 are as follows:
— 9,000
construction jobs;
— 1,500
operational jobs of which 340 are in London and 420 in Birmingham;
and
— 30,300
from regeneration around the stations, of which 22,000 in London
(Euston and Old Oak Common), and 8,300 in Birmingham (Curzon St
and Birmingham Interchange).[128]
7. Of these the construction jobs are temporary,
and the operational jobs are small in number. The regeneration-related
employment is more significant, but 70% of these jobs will be
in London. It might be hypothesised though that if and when the
full "Y" route is built to Manchester and Leeds, further
regeneration-related employment might arise at stations at Manchester,
Leeds, South Yorkshire and a station in the East Midlands.
It is not possible to do more than guess at the scale of this
but if these were on the same scale as in Birmingham, this would
be an additional 33,000 jobs. This would change the North-South
balance of the jobs "created" to the advantage of the
North and Midlands.
8. However, as the government admits, many of
these will not actually be new jobs, but relocations from elsewhere.
Moreover, they are not necessarily directly attributable to HS2:
while their location is a direct consequence of the location of
HS2 stations, they will depend heavily on other public and private
investment.
9. This is reminiscent of the case of Lille in
France, where there has been major regeneration investment around
the HSR station. Lille is frequently cited by supporters of HS2
as showing the scale of job creation resulting from HSR, but in
practice HSR has at best been only one element in a much bigger
regeneration "package".[129]
In a similar way, claims of 22,000 jobs made by CENTRO in the
West Midlands are dependent not only on the direct impact of HS2
but on an associated package of regional transport investment.[130]
10. The experience of HS1 is also relevant. The
Yes to HS2 campaign quotes a report by Colin Buchanan and
Partners to suggest that HS1 might "help to deliver"
100,000 jobs.[131]
On the one hand, were these estimates to be realised, the impact
of regeneration employment driven by the UK HSR network (HS1 plus
HS2) would reinforce the North-South divide, with many more jobs
in the South than the Midlands and North. On the other hand though,
these projections are subject to all the above qualifications
as to whether they are new jobs and to what extent they depend
on HSR. Moreover, there is so far little if any evidence on the
ground that these jobs are materialising in the manner envisaged.[132]
11. To sum up this section:
— Current
claims about the causative role of HS2 in creating employment
through regeneration are exaggerated.
— When
subjected to critical appraisal, evidence from comparators such
as Lille and HS1 also suggests that employment claims for HSR
are inflated.
WIDER EMPLOYMENT
BENEFITS
12. Government claims that the wider economic
benefits of HS2 would be of the order of £4 billion npv.[133]
However, neither the employment implications of these claimed
benefits, nor their regional distribution, are estimated. Thus
any claims that these wider economic benefits of HS2 will contribute
to narrowing the North-South divide do not rest on any evidence
produced by government.
13. Instead, when supporters of HS2 make claims
on this issue, they rest on other evidence. One widely cited source
of this type is research undertaken for Greengauge 21 by KPMG.
14. Table 1 shows employment gains and losses
by region attributed to HSR by KPMG for the period 2021-40.[134]
It will be seen that the data shows substantial gains by Northern
and Midland regions (with the exception of the East Midlands)
and substantial losses in the Southern regions. It must first
be noted that these projections assume a far larger HSR network
than that currently envisaged by government's proposals, even
taking together the HS2 "Y" + HS1, and therefore much
larger impacts, with a bias towards the North.
Table 1
JOB GAINS AND LOSSES ATTRIBUTED TO HSR BY
REGION 2021 - 2040
| North and Midlands
| 000s | | South
| 000s |
| East Midlands | -25 |
| London | -59 |
| West Midlands | 68 |
| Southeast | -71 |
| Yorks and H | 49 |
| East | -40 |
| Northwest | 62 |
| Southwest | -48 |
| Northeast | 46 |
| | |
| Scotland | 64 |
| | |
| 264 | |
| -218 |
| Net South-North redistribution |
| | 482 | |
| North-South divide reduced by 24,000 jobs a year
|
15. Moreover, there are several important methodological reasons
to question the robustness of this data:
— The
time period over which the projections are made is very long.
It must be assumed that if government considered that this kind
of projection was valid, it would either have produced its own
data, or endorsed the Greengauge/KPMG data. It has done neither.
— There
may be an "upward bias" in KPMG's calculations of the
role of rail investment in driving employment location.[135]
— One
of the factors on which the employment shift from South to North
appears to be based is that London may be too big to make further
agglomeration gains. This can however be questioned on the grounds
that key economic sectors such as banking and finance are not
subject to such constraints.[136]
16. To sum up this section: government has not
produced figures on the regional employment implications of the
claimed wider economic impact of HS2, while some figures which
are widely cited are subject to major reservations.
COMPARING CLAIMS
AGAINST A
BENCHMARK
17. Bringing together the findings from the previous
two sections shows that:
— Regeneration-associated
employment driven by HS2 is small in scale: 30,300 jobs over a
12-15 year period, about 2,000 a year, of which 70% are in London.
If these orders of magnitude are extended to the "Y"
this rises to 66,000, ie maybe 4,500 per annum, of which two thirds
are in the Midlands and North.[137]
— The
wider employment impacts, as calculated by KPMG, are more substantial,
suggesting a reduction in the North-South divide of about 24,000
jobs a year, but this is on the basis of a hypothesised HSR network
about twice the size of the HS2 "Y", so a truer comparative
figure might be in the region of 12,000 jobs a year.
— Together,
this could, in the most optimistic scenario, amount to a reduction
in the North-South employment gap by 16-17,000 jobs a year.
18. Such an impact is, as we have suggested,
subject to major methodological concerns. However, let us put
these to one side for a moment, and ask to what extent even this
highly optimistic scenario would reduce the North-South employment
gap. Asking this question highlights an important absence from
the much of the debate about the impact of HS2 on North-South
employment disparities: to wit, any benchmark of the scale of
existing regional disparities against which to measure claimed
impacts of HS2. There are good reasons for this. The claims made
for HS2 and for HS1, by government and by consultants such as
Buchanan and KPMG, are very long term. Many employment experts
would rightly be reluctant to make such projections.
19. It is therefore not possible to suggest a
benchmark which is directly comparable to the data which has been
discussed above. It is suggested, though, that a comparison can
be made which, despite these limitations, still offers a valuable
contribution to this debate.
20. Table 2 shows estimates by Cambridge Econometrics
of employment change by region over the recent past and short
term future. This shows that the current period is one of job
losses or small increases in the North and Midlands, and large
job gains in the South. The North-South divide is currently widening
annually by about 62,000 jobs. The 16-17,000 pa reduction in the
divide which is the most optimistic scenario for the impact of
HS2 would not come anywhere near stemming the current widening
of the jobs divide, let alone start to close it. This seriously
questions any statement that HS2 could bring "transformational
change" to the economic geography of the UK.
Table 2
EMPLOYMENT CHANGE BY REGION 2010-15[138]
| North and Midlands
| 000s | | South
| 000s |
| East Midlands | 1 |
| London | 145 |
| West Midlands | 21 |
| Southeast | 66 |
| Yorks and H | 23 |
| East | 54 |
| Northwest | 7 |
| Southwest | 72 |
| Northeast | -21 |
| | |
| Scotland | -6 |
| | |
| 25 | |
| 312 |
| Net North-South redistribution |
| 312,000 | |
| North—South divide WIDENS by 62,000 jobs a year
|
CONCLUSIONS
21. This short paper has produced evidence which questions
assertions that employment growth attributable to HS2 will reduce
the North-South employment divide. It shows that:
— The
forecasts of the regional employment implications of HS2 produced
by government or by supporters of the project are subject to serious
qualifications. This is especially the case regarding the wider
employment impacts.
— When
these qualifications are taken into account, it is very difficult
to sustain the prediction that, overall, the employment impact
of HS2 would reduce the North-South divide. This is consistent
with the weight of wider evidence, relating to both the UK and
other countries, that the geographical impact of new transport
investments is likely to principally benefit the largest cities
(in this case, the London region).[139]
— Even
on the most optimistic—and highly unlikely—scenario
for supporters of HS2, any reduction in the jobs gap would fail
by a large margin to stop the North-South divide widening at its
current rate, let alone produce "transformational change".
May 2011
126 The Guardian, 3 and 4 October 2010. Back
127
http://www.campaignforhsr.com/the-north-south-divide Back
128
HS2 Ltd, High Speed Rail: Investing in Britain's Future-Consultation.
DfT 2011. Back
129
http://hs2theregionalimpact.wordpress.com/2011/05/09/french-lessons-is-hs2-a-cost-effective-tool-for-regional-regeneration/ Back
130
http://hs2theregionalimpact.wordpress.com/2011/02/10/how-will-high-speed-rail-impact-on-the-west-midlands-economy/ Back
131
In fact, Buchanan suggests HS1 might "drive" the delivery
of 70,000 regeneration jobs over 60 years.
http://www.colinbuchanan.com/uploads/cms/files/147e7dfc-2a53-4267-83d7-72bdde92062e.pdf Back
132
In Ashford, where "huge economic benefits" were claimed,
unemployment has fallen more slowly than in towns not served by
the high speed line
http://blogs.telegraph.co.uk/news/andrewgilligan/100082403/high-speed-rail-more-doubt-over-the-economic-case/ Back
133
The £4 billion figure is for Phase 1. These "wider economic
benefits" are in addition to potential benefits for rail
travellers such as business time saving and improved reliability. Back
134
High Speed Rail in Britain: Consequences for Employment and Economic
Growth. Greengauge 21, 2010. The projections are from a base date
of 2007. 2021 is the date when it was envisaged that the HSR network
would become operational. Back
135
Laird J and Mackie P, 2010, Review of Methodologies to Assess
Transport's Impacts on the Size of the Economy, Institute for
Transport Studies, University of Leeds for The Northern Way. Back
136
Ibid. If this is the case then the impact of HS2 will be
to make the North a more accessible market for London businesses
in these sectors. Back
137
If however regeneration-related jobs from HS1 are added in, the
majority are in the South. Back
138
http://www.camecon.com/UK/UKRegions_Local_Cities/PressReleaseUKRegionsLocalAndCitiesSectors.aspx Back
139
See for example Eddington, R, 2006, The Eddington Review of
Transport. London: Department for Transport; De Rus, G, 2008,
The Economic Effects of High Speed Rail Investment, Discussion
Paper 2008/16. OECD-ITP Joint Transport Research centre. Paris:
OECD. Back
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