Written evidence from the Department for
Transport (HSR 167)
SUMMARY
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.
Impact
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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