High Speed Rail - Transport Committee Contents

Written evidence from the Department for Transport (HSR 167)


1.  The Department for Transport has published a consultation document, economic case and extensive supporting documentation for its current consultation on the case for high speed rail. These documents set out robust and detailed economic, engineering and environmental analysis and are the product of collaboration between Government and industry experts. All of the consultation documents are of relevance to this inquiry.

2.  In the interests of brevity, this submission to the Committee provides only some key points about the basis of the Government's support for a high speed rail network. For this reason it should be read in conjunction with the consultation documentation.

What are the main arguments either for or against high speed rail?

3.  The Coalition Government's key economic objective is to achieve strong, sustainable and balanced growth that is more evenly shared across the country and across sectors. Transport is crucial to achieving this objective. Transport infrastructure drives competitiveness and supports economic growth by increasing productivity, reducing business costs and diversifying means of production. Transport provides the crucial links that allow people and businesses to prosper.

4.  HS2 Ltd's analysis indicates that the Government's proposed Y-shaped network would generate monetised economic benefits with a net present value of around £44 billion and the first phase (from London to the West Midlands) alone would support the creation of more than 40,000 jobs. Significant benefits to our largest conurbations outside of the capital, as well as to London itself, would reshape our economic geography and help to bridge the north-south divide.

5.  We have reached the point where we need to plan for a step-change in rail capacity, not only to meet demand for long-distance travel over the next 30 years and beyond, but to ensure that anticipated growth in demand for commuter, regional and freight services can be accommodated.

6.  Demand for rail travel has been growing steadily for well over a decade, with demand for long-distance journeys more than doubling in the 15 years to 2009. For this reason, the Government has invested substantially in inter-city rail and will continue to do so, for instance through the electrification of the Great Western Main Line. However, as Network Rail recognised in its recent draft Route Utilisation Strategy, despite the recent significant modernisation of the West Coast Main Line, by 2024 it will effectively be full. Options for further feasible upgrades will have been essentially exhausted and a new line will be required. Similar patterns can be discerned on the East Coast and Midland main lines, on which further significant capacity increases will be increasingly hard to achieve, particularly following the completion of the current Thameslink upgrade.

7.  Of all the options that the Government has considered, only a high speed rail network can provide the necessary step-change in capacity, whilst also enhancing intercity connectivity and reliability, minimising disruption to the existing network, and supporting the Government's objectives for reducing carbon emissions.

8.  Benefits to transport users are not the only advantages offered by high speed rail. It offers a vital opportunity to support economic growth over the long-term. Both the local socio-economic benefits in the areas surrounding proposed stations and the wider national economic benefits could be substantial. Experience overseas demonstrates that well planned and integrated stations offer potential for dramatic urban regeneration and significant job creation. Wider economic benefits include better linkages between firms, increased business productivity and larger and more skilled labour markets.

9.  The alternatives to high speed rail offer only an interim solution to growing demand and would not deliver the wider economic benefits of a national high speed rail network. Alternatives involving upgrades to existing lines are likely to cause far greater levels of disruption to the existing network than building high speed rail lines.

10.  In terms of carbon, rail generally creates significantly fewer emissions per passenger mile than either car travel or aviation. Whilst high speed trains consume more power than conventional trains, the continued greening of electricity generation and high speed rail's greater ability to attract travellers from more carbon intensive modes, will enhance its competitive advantage. Prompted by improvements in capacity, reliability and inter-city connectivity, we expect as many as 6 million air trips and 9 million road trips a year would shift onto high speed rail.

11.  A high speed rail network, as with any new transport infrastructure, would have consequences for the communities and landscape along the route. Although it is impossible to eliminate such impacts for a project of this scale, the revisions to the proposed route for HS2 demonstrate the scope to reduce them significantly through sensitive design and effective mitigation. The Government is committed to reducing environmental impacts wherever practical.

12.  A national high speed rail network offers significant strategic benefits for Britain. It is a once in a generation opportunity to transform the way we travel in the 21st century, and to meet the economic, social and environmental challenges this century poses. We must make a strategic investment now - just as our European and Asian counterparts have done and continue to do—in a high speed rail system that both complements and improves our current networks.

How does high speed rail fit with the Government's transport policy objectives?

13.  The Government's transport policy is set out in its latest Business Plan, in which a high speed rail network forms the first of five transport priorities. High speed rail is integral to our aims for a transport network that is an engine for economic growth but that is also greener and safer and improves quality of life in our communities.

14.  The Government is investing in infrastructure across modes and networks in three major ways; maintenance and smarter use of assets; targeted development of existing networks; and investment in large-scale transformational projects (as noted in the National Infrastructure Plan). This investment is targeted to promote integrated urban, inter-urban and international corridors, which combine rail, road, air and local transport systems.

15.  In terms of rail infrastructure, investment in major projects has focused over recent decades on London and the South East. The HS1 line to the Channel Tunnel has delivered international rail connectivity and the current Crossrail and Thameslink projects will radically improve London and the South East's urban networks, as did the earlier extension to the Jubilee Line. The electrification of the Great Western Main Line will extend investment further, providing significant benefits for the South West and Wales.

16.  High speed rail would continue this programme of strategic investment, spreading the benefits to the broader inter-urban rail network and particularly the Midlands, North of England and Scotland. High speed rail supports the Government's aim for sustainable, geographically balanced, long-term economic growth by connecting the hearts of our largest conurbations, where a large proportion of the country's most productive businesses and jobs can be found. The Government believes, as stated in its Carbon Plan, that high speed rail is best placed to provide significant and sustainable additional capacity to meet increasing demand for travel between the UK's largest and most productive conurbations over the next 20-30 years. It would also comprise a step-change in journey times and connectivity.

17.  High speed rail would therefore form an important part of a coherent and wide-ranging programme of transport investment, but would remain only a part of this programme. In the same way that the Government is maintaining investment in London and the UK's existing rail infrastructure during the Crossrail project, the Government does not see high speed rail as an alternative to investing in other rail improvements.

18.  The Government has committed to provide £14 billion of funding to Network Rail to support maintenance and infrastructure investment during the Spending Review period (in addition to Crossrail). We will also fund light rail schemes in Birmingham, Tyneside, Nottingham and Sheffield, the Tube upgrade programme, the entire Thameslink programme, and provide additional funding to franchisees for extra rolling stock. In total, the Government will deliver more than 2,100 new rail carriages onto the network by May 2019. We are committed to the electrification of two railways, and are considering the case for further electrification schemes.

19.  In addition, the Government is working with the rail industry to identify opportunities to reduce its cost base and improve efficiency, in line with the aims of Sir Roy McNulty's independent rail value for money study. This will further secure the sustainability of the industry.

20.  In the longer term, high speed rail itself would be a significant investment in the existing rail network—the capacity released on the latter as a result of transferring long-distance inter-city services to the high speed rail network would allow for a significant increase in commuter, regional and freight services to meet growing demand.

21.  It is also important to consider the increasing demands that may be placed on our rail networks as a result of the aviation industry's imperative to reduce its global and local environmental impacts. We do not expect to return to a world where aviation growth is unconstrained by environmental factors and since it is unclear at what rate technological change can deliver the environmental 'headroom' for aviation to expand, the industry is being forced to prioritise available capacity where demand exceeds supply. Particularly at key airports in London and the South East, the aviation market is reacting to capacity constraints by altering airport operator charges to protect profitable international routes and reducing domestic flights to London from key destinations such as Glasgow and Newcastle. Rail passenger numbers on routes such as this are rising fast, as figures released recently by ATOC show—for example, the London-Glasgow route has seen the number of journeys made increase by over 80% in just four years.

22.  The Coalition Government has made clear its opposition on environmental grounds to additional runways at Heathrow, Gatwick and Stansted airports. Therefore, it is likely that capacity constraints will persist on busy air routes, which will subsequently contribute to the very high levels of overcrowding forecast on inter-city rail services over the coming decades. The Government's plans for a high speed rail network would address this capacity issue and offer a long term, environmentally sustainable and efficient alternative to domestic and some international aviation.

The Economic Case

23.  DfT has a well established approach to appraisal that is recognised across the transport industry and we believe conforms to the highest standards of evidence. The approach is consistent with HM Treasury Green Book advice and is clearly set out in the Department's WebTAG Transport Appraisal Guidance. As part of our drive to keep our approach to appraisal up-to-date we regularly research a number of its components. However, only once we have thoroughly tested new evidence is it accepted and incorporated into our guidance.

24.  HS2 Ltd's work on the economic case for HS2 was carried out on the basis of WebTAG and we believe the assumptions and methodology used are robust and appropriate to the current stage in the project's development. The economic case for HS2 is kept under review and is periodically refreshed to take account of any new evidence or changes in circumstances (for example, new economic forecasts from the Office for Budget Responsibility.)

25.  HS2 Ltd's evidence to the Committee includes a detailed description of the approach and methodologies used in developing the economic case, which is supported by DfT.

26.  The Government has considered alternatives to high speed rail, including enhancing existing lines. However, as any regular traveller on the London Tube knows, upgrades to existing networks are unavoidably disruptive and always bring with them the risk of delays and overruns. On the national network, the recent upgrade of the West Coast Main Line took a decade to complete and cost almost £9 billion. It involved a huge number of lengthy and disruptive line closures, forcing passengers repeatedly onto rail replacement bus services or off the rail network altogether.

27.  Whilst the great majority of Network Rail's enhancement works are delivered to time and to budget, they can still inconvenience passengers where sections of line are closed or service patterns altered to enable works to take place. This inevitable disruption and inconvenience, in addition to the risk of delays and cost overruns, is further exacerbated by the increasing intensity of usage on existing lines. The number of passenger journeys on the West Coast Main Line is twice as high now as in 2004. As a result, this line—like other major routes—sees high levels of usage on all seven days of the week, meaning that the impact of any works would be still greater.

28.  For these reasons, even if major upgrades of this kind could clearly deliver significant benefits in terms of capacity and connectivity, caution would still be required before taking the decision to proceed. In practice, however, this is unlikely to be the case. The most valuable improvements on West Coast Main Line have already been delivered through the recent upgrade and the scope for further improvements is likely to be comparatively modest. The picture is broadly similar on the other key north-south lines.

29.  This conclusion is confirmed by work carried out by Atkins for the Department for Transport on strategic alternatives to high speed rail, which shows that major enhancement packages can provide only a fraction of the potential benefits of a national high speed rail network. Furthermore, the delivery of the most significant benefits (and best value for money) from such enhancements would jeopardise service reliability by squeezing more services onto already crowded infrastructure and removing timetabling allowances.

30.  Finally, it is important to remember that the Government's objectives for high speed rail are broader than can be achieved by simply upgrading current lines. The changes to Britain's economic geography that would be made possible through new high speed rail lines cannot be delivered through the existing network. The same is true of high speed rail's potential to promote regeneration and enhance connectivity between inter-urban, urban and international networks, for example via new links to Crossrail and HS1. For these reasons, the Government does not consider that enhancements to the existing network are a viable or attractive alternative to high speed rail.

31.  Similarly, the Government does not believe that new conventional speed lines could offer either the same strategic benefits or value for money as high speed lines; they would generate much lower benefits and revenues whilst not being significantly cheaper to construct and operate.

32.  As outlined above, travel connectivity has national economic and social benefits. For many journeys within the UK, rail is the most sustainable and efficient option, and we seek to strike an appropriate balance between rail users and the taxpayer in funding investment in our rail networks, in particular through policy on regulated fares. In addition, the rail industry has developed yield management techniques to encourage efficient use of capacity, which are reflected in the modelling underpinning HS2 Ltd's analysis.

33.  In investing in the national rail network, it is important that we learn the lessons of major rail infrastructure projects in the UK. This note has previously considered the challenges of upgrading live railways and we must learn particularly from the experience of the West Coast Main Line Modernisation Programme. In contrast, the UK's first high speed line, HS1, was delivered on time and on budget in 2007. Similarly, the experience of other countries in developing high speed lines shows that with careful project planning they can be delivered with similar success.

The Proposed National Network

34.  The Government supports a Y-shaped national high speed rail network connecting four of the five most significant economic centres of the UK, both improving regional connectivity and links with the capital. It would also serve many of the principal destinations on each of the three main north-south routes out of London, and therefore relieve capacity on all of these important lines, for potential use by regional, commuter and freight services. HS2 Ltd analysed a range of network options, of which the Y network provided the best value for money.

35.  Phasing the delivery of the project has a number of important advantages: it ensures rapid progress on developing a high speed network; it lessens the length and complexity of parliamentary processes; it manages the finances for this major new infrastructure; and, it provides a predictable pipeline of rail civil engineering projects around which the construction industry can plan. Linking London with the West Midlands as the first stage of a wider network, ensures that the UK's two largest conurbations are connected and that the rail corridor with the most urgent need for capacity in the near term is complemented by a high speed link.

36.  As part of the London to West Midlands phase, there is a strong strategic case for a direct link between the proposed high speed rail network and the HS1 line to the Channel Tunnel. We need to connect any UK high speed rail network with the growing continental network, which is already a key mode of travel between major European cities, to ensure that through-services to continental Europe do not remain the preserve of London and the South East. This link would have to be constructed as part of the first phase, since the tunnel for the line would need to be dug from Old Oak Common before services became operational, in order not to halt services at a later date.

37.  Equally, the Government believes there are numerous strategic and economic advantages to directly connecting Heathrow airport to the high speed rail network, including direct and greatly shortened journeys to the airport from the Midlands and the North, the development of Heathrow as a multi-modal transport hub, and released capacity and carbon savings from modal shift.

38.  The demand for a direct high speed link to Heathrow airport would be stronger once any second phase of the proposed network—extending to Leeds and Manchester—was in place and demand for high speed services was beginning to mature. The link would then provide a strong alternative to aviation on routes from, for example, London to Glasgow and Edinburgh, and address the current lack of connectivity to Heathrow for major cities in Yorkshire and the East Midlands. For these reasons the link is proposed as part of the second phase of construction.

Economic Balancing and Equity

39.  The benefits to transport users of high speed rail would amount to over £37 billion for the proposed Y network over a 60 year appraisal period. HS2 Ltd's analysis of the geographical spread of the benefits from just a London to West Midlands line indicates that more than 50% of the benefits would fall outside of London and the South East. In relation to a wider Y network this proportion could be higher because high speed rail journeys between regional centres (and therefore not involving the capital city) would become a possibility. This spread of benefits in favour of the cities of the North and the West Midlands would help to narrow the North-South economic gap.

40.  In addition there would be more than £6 billion of monetised Wider Economic Impacts (WEIs) from the Y network, principally from agglomeration.

41.  Aside from these monetised benefits, the UK stands to benefit from more strategic economic impacts across the cities and regions that would be connected by a high speed rail system, and across many towns and cities that are not on the proposed high speed line (for reasons of released capacity on the existing railways).

42.  For the major conurbations of the Midlands and the North, increased rail capacity and reliability, improved connectivity and reduced journey times, would boost economic productivity in two ways. First, the connected cities would be able to benefit more directly from, and complement, the economic strength and diversity of London; they would be better placed to attract new businesses and to increase productivity by merging labour markets and customer bases. A direct connection from the Midlands and the North to Heathrow would also enhance its attractiveness to international investors and access to international markets. In the French city of Lyon, for example, the high speed link has enabled service sector firms to access the Paris market and to gain a valuable competitive advantage from their experience working with small- and medium-sized enterprises. The reverse effect has not been seen, as Paris-based firms have continued to focus on the larger and international client base in the capital city.

43.  Second, the significantly improved connectivity between the major cities of the North and the West Midlands could enable those cities to work more effectively as a coherent whole. Research commissioned by the Northern Way has suggested that the lack of connectivity between major northern and Midlands conurbations has contributed to them functioning more as isolated economies than as a single functional economic area. New high speed rail connections could play a central role in addressing this; the cities would reap benefits from increased competition, specialisation and from access to wider markets. Furthermore, they could increasingly act as a counterweight to the economic strength of London and the South East and help to bridge the North-South divide.

44.  In addition, all of the proposed station locations along the proposed network would see regenerative benefits, including commercial, retail and residential development, increased land values, new jobs and wider increases in economic productivity. International experience, for example in the French cities of Lille and Lyon, the Spanish city of Ciudad Real and the German city of Cologne, has proven the potential for economic regeneration.

45.  The Government intends to follow international best practice in order to maximise potential for economic activity around any new stations. We have chosen city centre and interchange locations with good local accessibility and would work closely with public and private sector partners to plan for station-area development and local transport integration. Old Oak Common, Euston Station and the Eastside area of Birmingham city centre would undergo significant regeneration and redevelopment as a result of an initial London to West Midlands high speed line.

46.  Crucially, the benefits of high speed rail would not be restricted to the towns and cities on the high speed line itself. Many other places currently experiencing high levels of demand growth, such as Milton Keynes, Northampton, Peterborough and Kettering, would also stand to benefit, as inter-city services are switched to the high speed lines and routes are freed up for additional regional and commuter services.

47.  It is important also to note that the socio-economic catchment for a high speed rail network would be similar to the existing railways. It would not be the exclusive preserve of the wealthy, nor would it be used exclusively by business people. HS2 Ltd's modelling assumes a fares structure in line with that of the existing railway, meaning that a new high speed line could operate effectively, generating sufficient demand and revenues, without needing to charge premium fares. As with our existing railways, off-peak fares could be highly competitive, making high speed rail travel accessible to most people. It is also possible that fares in the off-peak would fall as a result of the increase in supply.

48.  Our analysis demonstrates that the majority of passengers (70%) would be travelling for reasons other than business, with leisure trips likely to be particularly important. Both social connectivity and tourism stand to benefit. The pricing structure and the appeal of the railway to leisure travellers demonstrate the potential for wide usage of high speed rail across socio-economic groups.

49.  While the network would certainly require substantial Government investment, it is not appropriate to specify precise funding arrangements at this early stage in the process. Construction would be phased to manage the finances responsibly: for example, main construction of the initial London to West Midlands line could be sequenced with the completion of Crossrail to form a continuous programme of major transport infrastructure investment. We would expect to make use of trans-European network funding for high speed rail, and intend to make a bid in due course.

50.  Significant numbers of individuals and organisations would stand to benefit directly from the construction of new high speed rail lines. This could include property developers, airport operators, businesses close to the high speed rail stations and local authorities. The Government expects that parties who stand to reap significant benefits from high speed rail would therefore make a contribution to its costs.


51.  We have reached the stage on our busiest rail corridors and stations where maintaining the status quo is not a sustainable option. This is most immediately true of the West Coast Main Line and of Euston Station, where redevelopment of some kind, with the associated disruption to current services, is inescapable if we wish to meet demand for services. So we do not face a choice between disruption and no disruption, but a choice about the outcomes to be delivered.

52.  We must also recognise the need to begin work now to address the long-term challenges facing our existing rail network, due to the time required to plan, develop and deliver any significant piece of infrastructure. Furthermore, we should avoid wasting valuable time, national resources and potential for economic growth by making the wrong decision about high speed rail, since the inadequacy of the alternatives is likely to force a revisit of the proposals in years to come.

53.  In sum, the Government believes that we should choose a transformational and ambitious addition to national infrastructure, rather than a temporary fix to the challenges facing our rail network. The UK needs a rail network that is worthy of the effort and investment it involves, one that reflects an ability to prepare adequately for the future, and one that promotes our economic, environmental and social aspirations.

May 2011

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© Parliamentary copyright 2011
Prepared 8 November 2011