High Speed Rail - Transport Committee Contents

Written evidence from Centro (HSR 92)

1.  This paper focuses on the West Midlands Metropolitan Area with due regard to national considerations as appropriate. Only questions to which Centro wishes to submit evidence have been addressed.

1.  What are the main arguments either for or against HSR

2.  Centro has assessed the evidence towards High Speed Rail (HSR) and concludes that the two headline arguments for HSR are:

(A)  Rail Capacity and Connectivity: HSR will provide the UK with the rail capacity required to meet existing and future growth on both national and regional rail networks whilst addressing the poor rail connectivity and journey times between the West Midlands and the north. This will provide the generational opportunity to enhance local rail networks to revolutionise the way people travel whether it be everyday commuting, business travel or leisure.

(B)  Economy: by providing enhanced national connectivity; new international connectivity and; reduced journey times, HSR will allow for a step-change in the economic geography of the UK, supporting sustainable economic growth across the regions of UK to the benefit of the entire UK economy reducing the UK's reliance on London to compete in the global economy.

3.  These two arguments are supported by the long term benefits of HSR towards reducing Carbon emissions which with the completion of the Y-Network will allow modal transfer onto rail particularly away from aviation and road based freight movements.

4.  To do nothing about the rail capacity and connectivity challenge facing the UK cannot be an option and instead debate must focus on the benefits of HSR against the alternative solutions to the rail capacity and connectivity challenges. The DfT's Economic Case for High Speed Two (HS2) shows clearly that that investment in a high speed network provides a higher return than that achieved from a new conventional line or upgraded network. Centro believes that this should be the key criterion for investment if the scheme is affordable which as demonstrated below is clearly the case. The supporting evidence for each argument is outlined below:


5.  Capacity to meet existing and future demand is a critical challenge facing the entire UK rail network. Rail is an overwhelming success with 1.25 billion passenger journeys per annum whilst rail freight volumes have increased 50% since 1995. To do nothing in meeting the national capacity challenge cannot be an option. The West Coast Main Line (WCML) and West Midlands rail networks are acute examples of the rail capacity challenge but similar challenges are also prevalent on key networks such as the East Coast Main Line and other regional rail networks.

National Rail

6.  Long distance rail travel has doubled since 1994-95 whilst the WCML supports 31 million journeys today double the 16 million made in 1999. London, as heart of UK economy, will continue to drive long distance travel patronage growth with for example Birmingham to London patronage forecasted to increase by 35% by 2024-25.[66] However the problems attached to capacity are not restricted to future growth. Today, the problem of capacity is starkly demonstrated by the common place overcrowding on services and the over subscription and police stewardship of passengers attempting to access services from London Euston during peak travel times.

7.  Current rail industry approach to meeting existing/ future growth is focused on running longer trains and incremental infrastructure enhancements. However there is a finite ability to meet rail growth with this approach whilst delivery is extremely disruptive to existing rail network.

Local Rail

8.  The West Midlands Local Rail network has enjoyed sustained long term growth and in 2009-10 supported 40M journeys per annum, double the number carried in 1994. The (draft) West Midlands & Chiltern Route Utilisation Strategy (WM&C RUS) predicts future growth of 32% between 2009-10 and 2019-20. During 2009-10 Rail travel accounted for 27% of all AM peak commuter journeys into central Birmingham.

9.  The West Midlands, despite being at the central point of rail network suffers from poor connectivity, frequency and journey speeds to major urban/economic areas of the UK:

Table 1

Birmingham to... Distance (straight line; miles approx) Journey Time
Average Speed
(Distance/ Journey Time)
Fast Direct Trains
Per Hour
(AM Peak)
Nottingham401:16 32 mph2
Sheffield501:13 41 mph2
Liverpool601:42 35 mph2
Manchester601:42 35 mph2
Leeds1001:59 50 mph1
London Euston1101:24 79 mph3
Newcastle1603:19 48 mph2
Edinburgh2504:01 62 mph1
Glasgow2503:57 63 mph1

10.  High Speed Rail will provide the opportunity to segregate Intercity services away from existing network releasing significant levels of rail capacity to meet demand on the existing network.

Alternative Options

11.  The alternative conventional rail enhancement options have been accessed by Centro and do not demonstrate the ability to tackle rail capacity and connectivity challenges faced by the UK on national and local rail networks to meet national travel as well as local commuter and rail freight growth. The HS2 route built as a conventional rail route would cost £15 billion whilst upgrades to the WCML (such as those proposed in Rail Package 2) could cost £5 billion but would only provide for growth on the WCML at the expense of West Midlands Local Rail and freight services whilst not addressing capacity challenges on key national rail corridors such as the East Coast Main Line nor addressing the poor connectivity between the West Midlands and the major cities across the UK, especially to the north. No international connectivity is provided by the alternative options.


12.  The West Midlands economy suffers from the lowest productivity of the UK major economic centres compounded by road congestion, high unemployment and; unrepresentation of high value business sectors. HSR provides the opportunity to expand rail capacity and connectivity providing businesses with access to new or enhanced local, regional, national and increasingly international destinations whilst providing connectivity between people and employment to the benefit of the economy. Providing the capacity to meet rail freight growth would also provide further economic benefits to the UK with rail freight already contributing £6 billion benefits per annum to the UK economy.

13.  The subsequent 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; £1.5 billion GVA benefits and; with the attraction of higher value business sectors an increase in average wages of £300 per annum.[67] HS2 operationally will create 1,500 permanent jobs including 300 jobs at the HSR rolling stock depot at Washwood Heath in Birmingham, one the West Midlands most socially deprived areas.

14.  HSR provides rail based national and international connectivity for businesses providing access to new/expanded markets; HSR reduces journey times between major economic centres such as London, Manchester, Leeds and Newcastle with international connectivity to cities such as Paris, Lyon or Frankfurt. This connectivity will attract national and global companies to invest in the West Midlands ensuring benefits beyond Birmingham including Wolverhampton and Coventry.


15.  The full Y-Network will provide the national and international connectivity and fast journey times that will encourage people to undertake journeys by rail rather than car/ aviation. By maximising the opportunities of the released capacity on the existing network, carbon savings can be made by inducing modal shift onto rail for people making journeys on the West Midlands rail network.

2.  How does HSR fit with the Government's transport policy objectives

Q.  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?

16.  Centro believes that HSR, covering HS2 and the full Y-Network, is consistent with the Governments objectives for transport to support sustainable economic growth and reduce carbon emissions.

Q.  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?

17.  Centro is of the view that traditionally the funding of major transport infrastructure which provides national economic benefits has been funded outside of national rail budgets and there is no evidence to suggest the delivery of HS2 would be different. The funding of Crossrail requires £2 billion per annum up to 2015-16 from which point the funding can simply be allocated to HSR without impact to public services or planned/future investment in the existing rail network. Indeed, the opportunity to maximise the released capacity on the existing rail network and revolutionise the way people travel will be intrinsically linked to continued and sustained investment in the existing rail network and rolling stock.

Q.  What are the implications for domestic aviation?

18.  HSR can provide the connectivity and journey times which can reduce demand for domestic aviation and international aviation to destinations such as Paris. However, crucially, HSR can also provide the journey times and connectivity to Birmingham Airport from London which would prove attractive as an alternative for people making flights from major airports such as Heathrow. Major carbon savings are realised from the full Y-Network.

3.  Business Case

Q.  How robust are the assumptions and methodology- for example, on passenger forecasts, modal shifts, fare levels, scheme costs, economic assumptions (eg about the value of time) and the impact of lost revenue on the "classic" network?

19.  Centro believes that the business case methodology and assumptions used by HS2 are robust and in alignment with standard Treasury Appraisal. However, Centro's assessment of the Business Case provides evidence to suggest that the business case understates HSR because:

Future Growth

20.  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 especially on the WCML and West Midlands Rail Network. 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.

21.  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.

22.  Therefore, the future growth outlined by HS2 needs to be assessed against actual and historical growth in rail travel demand. The (draft) WM&C RUS states that passenger journeys on the West Midlands rail network will grow by 30% by 2019-20 equating to a 2.4% per annum growth whilst journeys to Birmingham are predicted to increase by 32% in the peak by 2019 and broadly the same for off-peak travel. However rail patronage in the West Midlands has increased by 6.4% during 2009-10 to 40 MILLION, nearly 3% above the average 2.4% increase predicted by the WM&C RUS. Table 2 outlines historical rail growth in the West Midlands whilst Table 3 outlines growth in long distance rail journeys from London 1999-2000 to 2009-10.

Table 2

Year2004-05 2005-062006-07 2007-082008-09 2009-10
Patronage (million)29.3 30.932.835.5 37.640
% change per annum6.9 5.96.4

Table 3

London toTotal Growth Average Annual Growth Rate
Liverpool 41%3.5%

23.  By 2043 HS2 Ltd have estimated that 136,000 passengers per day will use HS2. This represents an additional 53,000 passengers per day, with the majority of HS2 passengers coming from the existing rail network. Whilst this appears to be significant increase in rail users overall it is in fact a very small increase in additional passengers per annum over a 30 year period (circa 1.5% per annum).

24.  HS2 (London to Birmingham) has a BCR of 2:1 (1.6:1 Without Wider Impacts). Centro believes that this could be higher if further work is undertaken on maximising the benefits of capacity freed on the existing rail network. These additional benefits would be spread across the country and generate a significant non-rail user benefit stream as trips from private car users transfer to the improved existing rail network.

Wider Impacts

25.  Centro believes that while the Wider Impacts included in the HS2 appraisal are significant they are still an underrepresentation of the impact that HSR could have on the UK economy. If a more dynamic approach to modelling the interaction between changes in accessibility and land use were employed, that reflected changes in the location and mix of businesses in an area as a result of improved transport connections, then 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 HSR which is not consistent with international case studies of HSR as outlined in para 36.

Wider Network Benefits

26.  The appraisal of the completed "Y" Network estimates a BCR of 2.6:1 (2.2:1 without wider impacts) which Centro believes is understated as the appraisal excludes the benefits of stopping in Carlisle and Edinburgh. Again Centro believes that wider impacts are an under estimate not only because of the methodological approach but also because the current figure is based on work carried out for the London to Birmingham business case.

Q.  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?

27.  Whilst High Speed rail is marginally more expensive than upgrading the existing infrastructure it offers a number of significant advantages in terms of additional capacity and reduced disruption to passengers. The experience of a previous upgrade to the existing "live" rail infrastructure is relevant. The WCML Route Modernisation project costs were estimated at £2.1 billion. The outturn cost was £9 billion and it entailed a decade of on-line works, which was hugely disruptive to rail users. There is much greater risk and uncertainty around early line of route cost estimates than those made for new-build. Upgrades also typically take longer than originally programmed.

28.  Such an approach to tackling capacity challenges would do very little for the West Midlands in terms of improving connectivity (as demonstrated in Table 1) to key cities served by the East Coast Main Line such as Nottingham, Sheffield, Leeds and Newcastle compared to what would be delivered by the "Y" network. Improvements to the WCML to facilitate additional long distance services would also reduce the ability to improve local services as the railway would remain an inefficient mixture of fast long distance and slow local and regional services.

29.  Building a new conventional rail line would save only around 9% of the cost of HS2 but without the international/ national connectivity and journeys times savings delivered by HSR meaning fewer quantifiable benefits, especially economic benefits, and is therefore not considered by Centro to be a credible alternative to HS2.

Q.  What would be the pros and cons of alternative means of managing demand for rail travel, for example by price?

30.  Centro has previously undertake studies into the impacts of pricing to reduce travel demand which provides evidence that pricing would result in:

—  Lower economic growth and jobs. These stem from faster and expanded travel opportunities and if these do not materialise then the economic benefits do not occur or will be constrained by the extent to which benefits can be achieved on the conventional network.

—  Social Exclusion. A policy of pricing to manage demand will result in rail only been affordable to selected socio-economic groups which would have major impacts to social inclusion and create barriers for people, especially from lower income groups, to use rail in accessing jobs and educational opportunities. Centro's Local Transport Plan promotes social inclusion and therefore pricing would counter to this objective.

—  Increased Carbon Emissions. Those unable to afford to travel by rail would be forced to travel by road or air increasing carbon emissions. Demand in these areas would ultimately increase the case for expanded roads/ airports which have high costs and would be counter to many Government objectives.

4.  The Strategic Route

Q.  The proposed route to the West Midlands has stations at Euston, Old Oak Common, Birmingham International and Birmingham Curzon Street. Are these the best possible locations? What criteria should be used to assess the case for more (or fewer) intermediate stations?

31.  Centro believes that the proposed stations on the West Midlands to London route are in the best possible locations. A key issue in determining their success will be ability to interchange with other modes and in particular at Birmingham Interchange it will be necessary to ensure that the HSR Interchange Station, the existing Birmingham International rail station, Birmingham Airport/ NEC are as closely located as possible.

Q.  Which cities should be served by an eventual high speed network? Is the proposed Y configuration the right choice?

32.  Centro supports the proposed Y network as it creates significantly improved connectivity between the West Midlands and the North, with both Manchester and Leeds being the key locations needing access. It will be important to consider how improved connectivity to Newcastle and Scotland beyond the proposed Y network can be delivered as part of the HSR strategy, and whether the current network can be sufficiently upgraded to deliver the capacity and journey time benefits needed for High Speed services.

Q.  Is the Government correct to build the network in stages, moving from London northwards?

33.  The scale of the project will inevitably require delivery in stages, although it would clearly be highly desirable for the northern legs of the Y to be constructed as soon as possible after the phase from London to the West Midlands, as the interim situation with HSR services operating on the West Coast Main Line north of Lichfield will create considerable capacity problems for the existing network. Given that a key driver for the project is the relieving of capacity on the WCML at its southern end, it is imperative that the London—West Midlands HS2 route is delivered in time to achieve this.

Q.  The Government proposes a link to HS1 as part of Phase 1 but a direct link to Heathrow only as part of Phase 2. Are those the right decisions?

34.  Centro believes that these are the right decisions, as the Old Oak Common Interchange will provide excellent connectivity to Heathrow as part of Phase 1, while the link to HS1 needs to be delivered as part of Phase 1 both for practical construction reasons, but also to deliver the international connectivity benefits of the route as soon as possible. When (or whether) the Heathrow connection is delivered ought to be reviewed as part of how effectively the Old Oak Common Interchange can deal with Heathrow traffic, given that it will have a far better HSR service than could ever be justified for Heathrow alone.

5.  Economic Rebalancing and Equity

Q.  What evidence is there that HSR will promote economic regeneration and help bridge the north-south economic divide?

35.  Centro believes that the dramatic change in accessibility brought about by HSR will support economic regeneration and growth in UK regions by bringing major employment and population centres close together. This change in accessibility will offer greater opportunities to reach new markets, suppliers and employees for businesses and jobs and services for residents. International examples of HSR provide evidence to support this view.

36.  For example, Lyon is on France's HSR network with a population of three million people, providing similarities with the West Midlands. As a result of HSR, Lyon is now recognised as France's second largest economic centre with domestic HSR connectivity to economic centres such as Paris, Lille and Marseilles with international connectivity to Brussels and Frankfurt. The Lyon Part Dieu high speed rail station has underpinned wider regeneration of Lyon city centre and the area hosts 5.3 million square feet of office space and around 20,000 jobs. Lyon is home to five high value business sector clusters, driving economic growth and attracting greater inward investment. A similar story is seen in Lille where the opening of HSR in 1993 has led to the creation of 50,000 jobs in the Lille metropolitan area.

Q.  To what extent should the shape of the network be influenced by the desirability of supporting local and regional regeneration?

37.  Centro believes that the Y-Network has been fully influenced by the need to support local and regional economies. To remain competitive globally the UK cannot simply rely on the London economy alone. The benefits of HSR will spread prosperity across the regions to the benefit of the UK economy as a whole.

38.  HSR stations in Birmingham and Solihull are expected to act as a catalyst for significant private sector development. Development focused on strong regional centres, supported by HSR, will generate benefits that are spread across the wider hinterland of these locations supporting large areas of population and employment outside the South East.

Q.  Which locations and socio-economic groups will benefit from HSR?

39.  As discussed in paragraph 30, Centro believes all socio-economic groups will benefit from HSR either:

—  directly through the HSR journey speed and connectivity benefits or by the released capacity on the existing network been used to improve local rail service provisions and connectivity; or

—  indirectly through a more prosperous economy creating jobs and wealth for all residents to enjoy.

40.  Greater capacity in the rail travel market is also likely to have a positive impact on rail fares ensuring all socio-economic groups can access the rail network and particularly ensuring that rail doesn't becoming a "mode of the few" for long distance trips post 2026.

Q.  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? Should the Government seek support from the EU's TEN-T programme?

41.  Centro believes that it is fair that those who benefit from HSR should contribute towards its cost but only if the appropriate financial regulations and tools are in place. For example, if Local Authorities are allowed to keep the additional business rates generated by HSR (using mechanisms such as Tax Incremental Financing) then these areas should contribute towards appropriate HSR infrastructure eg stations. However, if the Treasury keeps the additional tax raised from HSR then it's appropriate that the Government and major private sector developers pay for HSR.

May 2011

66   Source: Network Rail (Draft) West Coast Main Line Route Utilisation Strategy Back

67   Source: Centro Commissioned Report by KPMG "High Speed Rail and supporting investments in the West Midlands Consequences for employment and economic growth". Back

68   Source: Centro Annual Statistics Report 2010. Back

69   Source: Network Rail (draft) West Coast Main Line Route Utilisation Strategy. Back

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Prepared 8 November 2011