Written evidence from the Cardiff Business
Partnership (HSR 188A)
SUMMARY
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.
1. IMPACT OF
HS2 ON WALES
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
REGIONAL EMPLOYMENT GROWTH RATES, 2021 TO
2040
| Region | Base employment 2007
| Base case with no HSR, 2040
| HSR scenario, 2040
|
| | Employment, 2040
| Annual growth rate 2007 to 2040 |
Employment, 2040 | Annual growth rate 2007 to 2040
|
| East | 2,380,000 | 3,052,000
| 0.76% | 3,012,000 | 0.72%
|
| East Midlands | 1,910,000 |
2,414,000 | 0.71% | 2,389,000
| 0.67% |
| London | 4,080,000 | 5,579,000
| 0.95% | 5,520,000 | 0.92%
|
| North East | 1,030,000 | 1,071,000
| 0.12% | 1,117,000 | 0.25%
|
| North West | 3,040,000 | 3,532,000
| 0.46% | 3,594,000 | 0.51%
|
| Scotland | 2,410,000 | 2,726,000
| 0.38% | 2,790,000 | 0.45%
|
| South East | 3,730,000 | 5,006,000
| 0.89% | 4,935,000 | 0.85%
|
| South West | 2,240,000 | 2,937,000
| 0.83% | 2,889,000 | 0.78%
|
| Wales | 1,170,000 | 1,260,000
| 0.225 | 1,239,000 | 0.17%
|
| West Midlands | 2,360,000 |
2,645,000 | 0.35% | 2,713,000
| 0.42% |
| Yorkshire and the Humber | 2,240,000
| 2,550,000 | 0.39% | 2,599,000
| 0.45% |
| Total | 26,580,000
| 32,771,000 | 0.636%
| 32,797,000 | 0.638%
|
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
REGIONAL CHANGES IN WAGE INCOME USED AS A
PROXY FOR
GROSS VALUE ADDED (GVA), £M, 2040
| Region | Base wage income, 2007
| Base case with no HSR, 2040
| HSR scenario, 2040
|
| | Wage income, 2040
| Annual growth rate 2007 to 2040 |
Wage income, 2040 | Annual growth rate 2007 to 2040
|
| North East | 21,800 | 39.000
| 1.73% | 41,800 | 1.93%
|
| Scotland | 56,800 | 111,800
| 2.01% | 118,300 | 2.18%
|
| West Midlands | 53,800 |
104,000 | 1.96% | 109,300
| 2.11% |
| North West | 70,000 | 140,700
| 2.08% | 146,100 | 2.19%
|
| Yorkshire and the Humber | 50,200
| 98,500 | 2.00% | 102,200
| 2.11% |
| London | 136,700 | 326,000
| 2.59% | 325,700 | 2.59%
|
| East Midlands | 42,900 |
93,300 | 2.31% | 92,700
| 2.29% |
| East | 57,700 | 127,700
| 2.36% | 126,500 | 2.33%
|
| South East | 96,800 | 224,200
| 2.50% | 221,500 | 2.46%
|
| South West | 51,100 | 115,800
| 2.44% | 114,400 | 2.40%
|
| Wales | 24,800 | 46,000
| 1.83% | 45,400 | 1.79%
|
| Total | 662,700
| 1,427,000 | 2.28%
| 1,443,800 | 2.32%
|
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.
2. A STRATEGY
TO MITIGATE
THE NEGATIVE
ECONOMIC IMPACT
OF HS2 ON
WALES
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.
ABOUT THE
AUTHOR
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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