Written evidence from Ian Waddell (HSR
85)
1. INTRODUCTION
1.1 Very ambitious claims are being made by proponents
of HS2 in terms of its predicted impact on regional and local
economies. These may perhaps best be summarised in the assertion
that it will play a key role in "bridging the North-South
divide".
1.2 It is clearly extremely important that the
TSC examines carefully the nature of the evidence behind these
claims in order to assess their validity.
1.3 In order to assist the Committee in this
process my paper:
(i) Firstly summarises key evidence based on
my analysis of INSEE statistics in relation to the French experience
(France being the first European country to invest in high speed
rail).
(ii) Secondly critically reviews the evidence
being offered in support of the regeneration impact of HS2 in
the West Midlands (a region with which I am extremely familiar).
(iii) Thirdly briefly relates these findings
to the outcomes of a range of other independent national and international
studies on the wider economic impacts of high speed rail.
2. Has the French TGV network had a significant
impact on the economic fortunes of those cities and regions which
it serves?
2.1 The primary TGV network was completed nearly
30 years ago. Consequently if high speed rail investment is indeed
a significant factor in reducing local and regional growth economic
disparities, then some evidence of this should be apparent
by examining trends in relative economic well being of French
regions, departments and cities served by the TGV.
2.2 In this context the proponents of HS2 frequently
cite the examples of Lille and Lyon:
When examining the case of Lille it
is firstly crucial to remember that it is located at the cross
roads of the European high speed rail network. It therefore enjoys
levels of HSR accessibility and frequency of service, significantly
in excess of what might be expected for, say, Birmingham, Manchester
of Leeds.
2.3 Leading transport expert Roger Vickerman
of Kent University observes:
"…. the biggest gains in accessibility
accrue to the major access points to the network. These are first,
the major metropolitan areas such as London or Paris, and secondly
major interchange points, such as Lille or Lyon."
2.4 Lille has certainly seen a significant growth
in jobs particularly as a result of the large EuroLille development.
But to what extent are these genuinely new jobs and how far has
investment which would have taken place anyway been diverted from
other parts of the Lille Conurbation, local Nord Department or
the wider Region?
2.5 If these are mostly genuinely new jobs then
one would expect to see an impact in terms of a reduction in the
persistently high levels of poverty and unemployment in the Lille
conurbation, Nord Department and Nord Pas de Calais region.
2.6 Evidence (from the French National Institute
of Statistics—INSEE) shows that this has not occurred.
2.7 Between 1999 and 2009 the rate of unemployment
in the Lille conurbation[140]
has actually increased, both in absolute terms and relative to
the rest of France.
2.8 The same applies to the Nord Department and
the Nord Pas de Calais Region within which Lille is located. Unemployment
in the Nord Department has increased since the arrival of the
TGV in the early 1980s (from an average of 10.7% 1982-86 to 11.9%
2006-10), resulting in a further widening of disparities when
compared to the rest of France.[141]
2.9 Turning to the case of Lyon, this is an area
which has traditionally been amongst more prosperous parts of
France. It has not suffered the depredations of the decline of
traditional industries on anything like the same scale as the
North East of France.
2.10 Nevertheless, if claims for the wider regenerative
benefits of the TGV are to be believed, some further decline in
absolute and relative levels of unemployment might be expected
for the Rhone Department, over 75% of the population of which
live within the Lyon area.
2.11 In fact the reverse is true: unemployment
in the Rhone department has increased by nearly 1.5% since the
arrival of the TGV (from an average of 6.3% 1982-86 to 7.8% 2006-10).
It has also increased in relative terms compared to France as
a whole by 1.24% over the same period.
2.12 The picture for the region of Rhone Alps
within which Lyon is located is similar: its prosperity relative
to the rest of France measured in terms of unemployment rates
has actually declined since the arrival of the TGV in the early
1980s.[142]
2.13 In conclusion therefore there appears very
little evidence that investment in high speed rail in France has
had any significant impact in reducing regional and local economic
disparities based on the most obvious yardstick—unemployment.
Over a period of nearly 30 years since TGV services started running,
there has clearly been no "transformational" effect,
in fact the evidence shows that disparities appear to have worsened.
3. A critical review of evidence being offered
in support of the regeneration impact of HS2 in the West Midlands
3.1 A number of ambitious claims have been made
for the job creation and wider regeneration benefits of HS2 on
the economy of the West Midlands. Most notably they are contained
in a document:
"High Speed Rail and supporting investments
in the West Midlands—consequences for employment and economic
growth."
KPMG/CENTRO June 2010
3.2 The document purports to be an independent
analysis, however CENTRO (the West Midlands PTE) have been active
proponents of HS2 since well before its publication and KPMG had
previously been commissioned by pressure group Greenguage 21 to
produce similar material nationally.
3.3 To do the report justice, headline figures
such as 22,000 new jobs for the region from HS2 have been widely
quoted in an unqualified manner and totally out of the context
of the report, which contains many significant caveats.
3.4 A close examination of this report and its
methodology reveals that, even if the report's own conclusions
are accepted uncritically, then it implies:
(i) the figure of 22,000 jobs is based upon a
huge investment in local transport in addition to HS2, without
this investment the report admits the jobs created would reduce
to 10,000. Any "fare premium" required for HS2 over
other rail services would further significantly reduce the jobs
created - the report examines the impact of a 30% fare premium,
concluding that jobs created would be further reduce to around
5,000.
(at an estimated cost of £17
billion for phase 1 of HS2 this would give a cost per job created
of £340,00 compared to the DfT VFM guideline of £27,000
per job.)
(2) In terms of the distributional impacts of
HS2, the report admits that employment in Birmingham and Solihull
will increase at the expense of employment elsewhere in the region:
"The benefits are concentrated
in central Birmingham and around the new Birmingham International
HS station."
(Para 6.1 of the report page 38)
3.5 In terms of connections with Europe, the
report admits the benefits to Birmingham are, in the final analysis,
marginal, modelling links with just one European city they the
report concludes:
"With the introduction of a direct high speed
rail service, Paris could become some six times more important
as contributor to Birmingham's effective business to business
market. However, it begins from a very low base and remains far
enough away to form only a very small part of Birmingham's effective
business to business market, even with a high speed rail link."
3.6 The methodology itself is based upon a highly
academic analysis of projected connectivity improvements which
is in turn based upon highly tenuous base data. In summary key
weaknesses are:
— no
account taken of jobs attracted away from the region as (particularly
business and financial sector enterprises) are enabled by HS2
to service their WM region clients from London;
— no
account taken of the fact that time spent on trains can be productive;
— no
account taken of the future impact of IT developments on the need
to travel/business efficiency; and
— the
report bases its benefit calculations on assessments of productivity
increases based upon a (highly dubious) assumption that relative
wage levels can be used as a proxy for this. However it fails
to identify appropriate local data sources, admitting:
"It has not been possible to source data for
productivity that is more disaggregate than district level. This
has weakened the analysis of productivity impacts using local
data. Model results are therefore not based on relationships derived
from local data but on composite assumptions drawing on findings
from other studies."
3.7 In conclusion the report's findings cannot
in any way be relied upon to provide trustworthy evidence of positive
regeneration impacts. Where it is in tune with other studies however
is that it supports the view that high speed rail will have significant
re distributional impacts—resulting in jobs and investment
moving to areas in close proximity to projected stations from
other (already less prosperous) parts of the region.
4. How the above findings relate to the outcomes
of a range of other independent national and international studies
on the wider economic impacts of high speed rail
4.1 The above analyses (of unemployment impacts
in France and of the probable redistributional impact of HS2 on
jobs and investment in the West Midlands region) fit well with
the vast body of independent research on the wider impacts of
high speed rail key aspects of which are highlighted below.
4.2 This research shows that there is no evidence
of any dramatic transformational effect on regional and local
economies as a result of high speed rail. To the extent that there
is a provable impact, it is in influencing the distributional
patterns of jobs and investment:
— from
less prosperous to more prosperous regions; and
— from
more peripheral (and often less prosperous ) parts of regions
to those areas in close proximity to the few HSR stations (often
already the more prosperous areas).
4.3 Professor Henry Overmann of the LSE in giving
evidence to the TSC (19 October 2010) stated:
" … broadly speaking, the evidence that
High Speed 2 will lead to a reduction in disparity is pretty limited".
4.4 This view was echoed by Professor John Tomaney
of Newcastle University:
" … the evidence that HS2 will have a positive
impact on rebalancing the national economy, to use the current
jargon, is not really there. I think the international evidence
suggests that, where you make these big investments in this kind
of infrastructure-particularly high speed train networks-as important
to the investment in the infrastructure itself is investment in
the conditions of the nodes around the lines that stimulate economic
benefit and economic development. There is some evidence from
European high speed train systems, and from Asian high speed train
systems, that this is a critical ingredient, and in the debates
around HS2 I haven't really seen that discussed."
4.5 In the case of the KMPG/Centro work discussed
above, investment in a package of local transport improvements
is shown to be equally, if not more effective in creating local
jobs than the investment in HS2 and offers far higher VFM ratio
in terms of jobs created.
4.6 At a broader level an OECD report[143]
evaluating the impact of transport infrastructure investment on
regional development concluded:
" … there is a lack of information derived
from ex-post studies which could provide a firm, quantitative
basis for claims about the impact of infrastructure investment
on regional economies and regeneration."
4.7 Lastly, as exemplified by the following extracts,
there is a strong body of independent European research shows
that a connection to high speed rail may actually disadvantage
poorer regions:
" … for regions and cities whose economic
conditions compare unfavourably with those of their neighbours,
a connection to the HST line may even result in economic activities
being drained away and an overall negative impact."
(Givoni, 2006; Van den Berg and Pol 1998;Thompson 1995).
"Medium size cities may well be the ones to
suffer most from the economic attraction of the more dynamic,
bigger cities."
High-Speed Rail: Lessons for Policy Makers from Experiences Abroad"
—Daniel Albalate and Germà Bel GiM-IREA Universitat
de Barcelona 2010
"Roads and rail tracks can be used to travel
both ways. A better connection between two regions with different
development levels not only gives firms in a less developed region
better access to the inputs and markets of more developed regions.
It also makes it easier for firms in richer regions to supply
poorer regions at a distance, and can thus harm the industrialisation
prospects of less developed areas."
The Economic effects of High Speed Rail Investment Ginés
de Rus, University of Las Palmas 2008
16 May 2011
140 The INSEE website provides localised trend data
for "Zones d'Emploi" for the period 1999-2010 (Q2),
the metropolitan area of Lille is defined by INSEE as comprising
the two Zones d'Emploi of Lille and Roubaix-Tourcoing . Both
show an adverse trend in unemployment rates over this period-taking
the average rates for the first and last four quarters of the
period unemployment in Roubaix-T went up from 13.2 to 14.7 % and
in Lille from 10.7 to 11.1%. Back
141
Taking INSEE figures for Q4 of 2009 and the first three quarters
of 2010 (the latest currently available) and the equivalent quarters
for 1982-83 the unemployment rate in the Nord Departrnent has
increased by 3.9%, and the Nord pas de Calais Region by 3.3%.
Over the same period the unemployment rate in metropolitan France
increased by 2.3%. Back
142
INSEE figures based on an average for the four quarters of 1982
and 2010 show an increase in the unemployment rate for the Rhone
Alps region of 2.8% compared to an increase of 2.4% for metropolitan
France. Back
143
Impact of Transport Infrastructure Investment on Regional Development
OECD 2002. Back
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