High Speed Rail - Transport Committee Contents

Written evidence from the Cardiff Business Partnership (HSR 188A)


The new High Speed Line from London to Birmingham, Manchester and Leeds (HS2) will bring most major English and Scottish cities at least 30 minutes closer to London (for example Manchester to London in 1 hour 15 minutes). The DfT also calculates economic benefits in excess of £40 billion with the first phase alone generating over 40,000 jobs.

In response, the Cardiff Business Partnership believe, that in addition to electrification, a major upgrade to the GWML is essential if Cardiff is to remain competitive in both UK and European terms. This is especially important given that Greengauge21/KPMG found that High Speed 2 (Greengauge21/KPMG, March 2010 "High Speed Rail in Britain, Consequences for employment and economic growth"), would have a negative impact on the Welsh economy thereby restricting Cardiff's capacity to address Wales' deteriorating GVA/capita Vs the UK average. That report found that HS2 would result in:

—  21,000 less jobs in Wales to 2040.

—  0.04% lower annual growth in Wales to 2040.

—  £600 average lower income in 2040.

—  This analysis assumed the GWML would be electrified with Cardiff-London journey times of 105 minutes (vs >125 mins today)

If the DfT believe that additional expenditure is necessary to mitigate the environmental impacts of HS2, then surely the same logic means that proportionate investment (in addition to that already committed) must be made on the GWML to mitigate the economic impact on Wales and SW England. This is especially important given Welsh tax payers will be paying for HS2 as well as those in England. This also would be consistent with the UK Government's stated objective of encouraging a more even distribution of economic growth across the UK.

This paper sets out further details of this position.


Economic Impact

Whilst the Cardiff Business Partnership broadly supports the UK Government's aspiration for a UK HSR network, it does not feel that what is proposed represents a truly UK National network. In fact, as currently configured, the plans ignore Wales and SW England. Furthermore, whilst the DfTs consultation paper presents a compelling business case for HS2 in terms of the positive economic benefits, it does not explore the economic impacts of the proposals on Wales and SW England. The only substantive work in this regard was undertaken by Greengauge21 in 2010. Their key findings, prepared in associated with KPMG, were as follows:

Overall UK Impact of UK HSR

"Overall, HSR could boost annual GVA (a measure of economic output) in 2040 by between £17 billion and £29 billion, depending on how effectively this network could enable other service changes on the rail network to be implemented and capacity constraints to be addressed."

"The HSR network could contribute between 25,000 and 42,000 additional jobs in Britain, as more productive businesses offer higher wages and attract people into the labour market. KPMG has only been able to model those jobs that are expected to come from domestic residents encouraged to enter the labour market but expect that attracting foreign firms and workers to the country could give rise to a further positive impact on employment."

The following are tables show the regional impact on growth and employment of HSR

Employment Impact

Table 5

RegionBase employment 2007
Base case with no HSR, 2040
HSR scenario, 2040
Employment, 2040 Annual growth rate 2007 to 2040 Employment, 2040Annual growth rate 2007 to 2040
East2,380,0003,052,000 0.76%3,012,0000.72%
East Midlands1,910,000 2,414,0000.71%2,389,000 0.67%
London4,080,0005,579,000 0.95%5,520,0000.92%
North East1,030,0001,071,000 0.12%1,117,0000.25%
North West3,040,0003,532,000 0.46%3,594,0000.51%
Scotland2,410,0002,726,000 0.38%2,790,0000.45%
South East3,730,0005,006,000 0.89%4,935,0000.85%
South West2,240,0002,937,000 0.83%2,889,0000.78%
Wales1,170,0001,260,000 0.2251,239,0000.17%
West Midlands2,360,000 2,645,0000.35%2,713,000 0.42%
Yorkshire and the Humber2,240,000 2,550,0000.39%2,599,000 0.45%
Total26,580,000 32,771,0000.636% 32,797,0000.638%

Source: KPMG analysis of data from SYSTRA-MVA

—  Wales will have 21,000 less jobs in 2040 as a result of HSR.

—  Annual employemt growth rate will be 0.05% lower as a result of HSR.

Wage/GVA Impact

Table 6

RegionBase wage income, 2007
Base case with no HSR, 2040
HSR scenario, 2040
Wage income, 2040 Annual growth rate 2007 to 2040 Wage income, 2040Annual growth rate 2007 to 2040
North East21,80039.000 1.73%41,8001.93%
Scotland56,800111,800 2.01%118,3002.18%
West Midlands53,800 104,0001.96%109,300 2.11%
North West70,000140,700 2.08%146,1002.19%
Yorkshire and the Humber50,200 98,5002.00%102,200 2.11%
London136,700326,000 2.59%325,7002.59%
East Midlands42,900 93,3002.31%92,700 2.29%
East57,700127,700 2.36%126,5002.33%
South East96,800224,200 2.50%221,5002.46%
South West51,100115,800 2.44%114,4002.40%
Wales24,80046,000 1.83%45,4001.79%
Total662,700 1,427,0002.28% 1,443,8002.32%

Source: KPMG analysis of rail generalised journey time data and economic date from SYSTRA-MVA

—  HSR leaves Wales worse off by 0.04% in its average annual growth rate 2007-2040

—  Average wage in Wales will be £600 lower as a result of HSR by 2040

Summary of impact of Wales and SW England of UK HSR

The Greengauge/KPMG analysis as regards Wales and SW England was as follows:

"Wales sees HSR connections to Cardiff along the Great Western route, although modelled journey time savings of around 20 minutes to London are smaller than for other HSR routes as HS-WW has not been modelled as a full HSR scheme. The growth in business connectivity improves wages by some £130 per annum by 2040 and attracts around 400 new residents into the labour market. However, business and employment growth is abstracted somewhat to the most significantly affected areas in the north and Midlands of England slowing overall employment growth rates."

"The South West benefits from an HSR connection to Bristol and areas can benefit through interchange with the HSR network at Bristol, Birmingham and London. However, limited journey time improvements have been modelled for Greater Western services which explains the relatively small impacts in these areas. The impact is again to ease employment growth rates by around 1/20th of a percentage point per annum although wages are forecast to rise slightly by around 0.2% by 2040. As with the impacts in Wales, if a full HSR line to Bristol and Cardiff were modelled, the impacts would be commensurately greater."

Cardiff Business Partnership Position

It is clear then that the HSR programme as currently presented is at best neutral in economic development terms for Wales and SW England and most likely negative. Given the Government's stated ambition to encourage more balanced economic development across the UK, it is clear some compensatory initiatives are required. This has also to be set against the fact that over the last twenty years, multi-billion pound upgrades of the East and West Coast Main Lines have resulted in Leeds and Manchester having comparable or faster rail journey times to London than Cardiff, despite being 50 miles further away. Post HS2 these cities will be over 30 minutes closer to London than Cardiff.

It is also unclear from a funding perspective whether HS2 is a UK scheme, an England Wales scheme or an England only scheme. This has funding consequences for the devolved administrations:

—  For a UK scheme or even and England/Wales scheme it is the case that Welsh tax payers will contribute some 5% of the overall £32 billion cost in the next 20 years—or approx £1.6 billion—for a scheme that is, as currently proposed, damaging to the Welsh economy.

—  If it is an England only scheme then a Barnet consequential must be considered to provide an equitable amount of funds to add to the Welsh block grant—which can be spent on transport enhancements.

Given the above, it is the view of the Cardiff Business Partnership, that the current plans for a new >£32 billion high-speed rail line from London to Birmingham, Manchester and Leeds (High Speed 2) will only exacerbate the issues facing the Welsh economy. As presented above, the current proposals for HSR in the UK indicate that the economies of Wales and South West England will suffer as a direct consequence. Furthermore, that work assumed that the Great Western Main Line would be electrified. Whilst the decision to electrify is welcome, it must be viewed as a bare minimum investment and that an ongoing programme of enhancements must be planned and delivered over the next 15 years.

Cardiff Business Partnership Recommendations

—  That the DfT undertake a full economic analysis of the impact of its HSR plans on all of the UK and especially Wales and SW England.

—  That the funding arrangements and implications for the devolved administrations are clarified.

—  That a complimentary and incremental upgrade of the GWML for faster running (>140mph) and higher capacity is investigated and assessed in full (to the same standard and criteria as were used for HS2).

Impact re: Heathrow Access and interchange with HS1 and HS2

The CBP is disappointed that the Heathrow access question ignores the potential of an interchange with and access from, the GWML corridor from the west. As the DfT found in its 2002 review of UK airport capacity, "Future Airport Capacity in the UK", Wales and SW England has a greater need for better access to Heathrow than any other region in the UK (outside the SE England). The study found the leakage of passengers to other regions, mainly South East of England Airports and especially Heathrow, was about 65% for both Wales and South West England, the highest in the UK. For each region, the total annual trips were estimated at 3.4 million and 7.2 million respectively. That was 10.6 million in total, with about 6.5 million using airports in SE England and in particular, Heathrow. Most of these Heathrow journeys are by car indicating a latent demand for better Great Western Main Line connectivity to Heathrow. The report also made some other relevant statements:

"… it does appear that Wales is suffering in attracting inward investment because it does not offer a wide range of air services to European centres."

"It is important for Wales to maintain access to key London airports, especially Heathrow and Gatwick. Even if Cardiff was to provide a much wider range of services and frequencies than it currently offers, it is likely that a large number of Welsh air passengers would continue to use airports in the South East of England."

"Their [South East England airports] route networks especially for long haul, will continue to be wider than the route networks offered by regional airports. Links to London are also important, particularly for the business community."

There are also at least 10 return flights per day from Cardiff and Bristol airports to Schipol. Better access to Heathrow could deliver a significant modal shift and reduce the need for this number of short haul flights and resulting CO2 emissions.

This position should be set against a situation in which Wales has historically been disadvantaged by competitive transport investment elsewhere in the UK and a significant deterioration in services from Cardiff Airport since 2002.

Finally, current plans for HS2 envisage a direct link to HS1—no integration between HS1 and the GWML is proposed.

Cardiff Business Partnership Recommendations

That the discussions and investigations of HSR access to Heathrow are broadened to include enhanced access from the GWML corridor from the west and in particular the potential, in the first instance, of a Heathrow Express from Reading direct to Terminal 5 using a new link between the GWML and the airport.

That the exploration of options to link HS2 to HS1 should also be extended to include the GWML and its connectivity to both HS2 and HS1.


Cardiff City Region

The Cardiff City Region, home to 1.4 million people within 20 miles of the city centre or half the Welsh population, has the potential to transform Welsh economic performance. Cardiff itself contains a leading UK Russell Group University, has a diversifying employment base, has achieved amongst the largest growth in the private sector in UK and now has ~80,000 inward commuters in a total work force of nearly 200,000.

From a business perspective transport connectivity is crucial—especially inter and intra regional transport. For example, a leading member of the Cardiff Business Partnership, Admiral Insurance's (one of Wales leading company's with over 3000 staff and a >£4 billion Mkt Cap) recent statements as regards public transport provide a stark warning:

—  Admiral would not locate in Cardiff today with >2hr travel time to London.

—  Improved connectivity to Heathrow maybe needed to maintain a Cardiff HQ in the long term.

—  The provision of an effective Cardiff City Region public transit system is essential for the long-term success of its business.

These statements underline the need to invest in transport connectivity to help address Wales' economic problems.

Current Plans for the GWML

In March 2011, the DfT announced that the GWML would be electrified (alongside introduction of ERTMS and other enhancements) as far as Cardiff; returning Cardiff-Paddington journey times to those that existed in 1980, at 1 hour 45 minutes. However, given the journey time benefits that will accrue to cities on HS2, the electrification programme will still leave Cardiff at a significant disadvantage. This will continue a trend that that has seen journeys from Cardiff to London go from 30 minutes faster to 20 minutes slower when compared to the journey from Manchester to London.

However, there is an opportunity to develop a more strategic and ambitions vision for the GWML and one that could see a TOC and NR develop a far closer, longer term and more cost effective partnership as McNulty recently recommended. This, in part, is due to FGW's decision, in May 2011, not to take up the option to extend their franchise beyond 2013, bringing forward the tendering process for the route.

Opportunities for Economic Regeneration on the GWML

The Cardiff Business Partnership believes that the electrification programme and franchising process should be used as a catalyst to develop and implement a long term and incremental upgrade of the Great Western Corridor. This position acknowledges that whilst a dedicated new high-speed line is desirable, it would be at least 25 years before such a scheme could be delivered at a cost of over £15 billion. A pragmatic approach would see a series of ongoing upgrades to the existing rail corridor (as suggested by the Bow Group in their report, "The Right Track", in January 2010), with electrification as the foundation. This approach would deliver significant benefits in terms of capacity, journey times and Heathrow access, which collectively will help provide a stimulus to the Welsh economy and mitigate the impact of HS2. A deliverable target is:

—  Cardiff to London journey times of less than 80 minutes at least twice an hour.

—  Cardiff to Heathrow journey times of less than 90 minutes at least twice an hour.

It is anticipated that these performance criteria can be delivered from a range of enhancements to both infrastructure and service patterns, for example:

—  In the first instance, for inclusion in CP5 (Network Rail's 2015-19 planning period), a new western link should be constructed to Heathrow from the GWML. BAA recently cancelled plans for Airtrack which would have linked Heathrow Terminal 5 to the Staines-Windsor commuter line from Reading (in blue on diagram). A far better option for Swansea, Cardiff, Newport, Bristol, Swindon and The Thames Valley is a new western route into Terminal 5 to link up with the existing Heathrow express line as shown in red below (from Network Rail's Great Western Route Utilisation Strategy). This would allow a Heathrow express service to operate from Reading to serve passengers from South Wales, South West England and The Thames Valley.

—  In addition, a series of ongoing incremental upgrades to the GWML (see diagram) should be implemented over the next 15 years, that will allow non-stop services to run at speeds of >140mph. The GWML should also be intergrated with HS2 and HS1 to allow through services to Europe. In terms of "termination" stations in South Wales, aside from Cardiff Central, consideration should be given to: Pontypridd, Cardiff Airport (new station) and Swansea Parkway (new station).

Given the ~145 miles distance between Cardiff and Paddington, an 80-minute journey would require an average speed of approximately 109 mph. As a comparator, the WCML service between Manchester Piccadilly and Euston, as a result of its £9 billion upgrade, now provides a 1 hour 58 minute service for the 185 mile journey, at an average speed of ~95mph (on a line with a max running speed of 125mph). Even achieving this average speed on the GWML between Cardiff and Paddington, would deliver a journey time of approximately 90 minutes.

It is essential therefore that the DfT and WAG commission a strategic, Great Western Corridor study the objective of which is to develop a clear business case, with a focus on the wider economic benefits, of a programme of incremental upgrades to the GWML. This work should be undertaken on the same basis as the work completed to date by the DfT in developing the business case for HS2. After all, the wider Severnside region has a population in excess of 5 million people and includes the Cardiff City Region (1.4 million), Swansea City Region (0.5 million) the Bristol City Region (>1 million). That's the same as Scotland.

A complementary investment in a Cardiff City Region Metro

As has been demonstrated across Europe, to maximise the returns from the investment in HSR between cities there also needs to be a complementary investment in city/city region transport infrastructure. The same applies to the Great Western Corridor. Specifically, The Cardiff Metro (illustrated below) presents just such an opportunity and one, which, using the planned electrification of the valley lines as a catalyst, can be delivered incrementally over perhaps 15 years from 2015. The Cardiff Metro concept was fully explored in, "A Metro for Wales's Capital City Region—Connecting Cardiff Newport and the Valleys", written by Mark Barry and published by the Cardiff Business Partnership and The Institute of Welsh Affairs in February 2011.

The benefits to the Cardiff City Region are significant:

—  Stimulate economic growth throughout the region leading to increased GVA/capita Vs UK.

—  Major modal shift (>20%) and reduction in CO2 emissions.

—  A coherent & sustainable city region plan for housing, transport and the economy.

—  A psychological and confidence boost to the residents of the valleys.

Both the upgrade of the GWML and the Cardiff Metro could deliver a major economic stimulus to the economy of South Wales and especially the Valleys and halt a long-term decline in Wales' economic fortunes. Given plans for HS2 it is essential that both schemes are progressed to ensure the Welsh economy does not suffer as a result of HS2.


Mark is the author of the paper, "A Metro for Wales' Capital City Region—Connecting Cardiff, Newport and The Valleys" published by the Cardiff Business Partnership and the Institute of Welsh Affairs in February 2011.

June 2011

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© Parliamentary copyright 2011
Prepared 8 November 2011