High Speed Rail (Preparation) Bill

Written evidence by Camden London Borough Council (HSR 01)

Summary

1. The London Borough of Camden (the Council) recognises the need to deliver growth for the UK economy . The Council itself has policies in place to actively encourage and support growth and this can been seen in major regeneration schemes currently in progress across our borough. The C ouncil also acknowledges that investment in rail and other transport infrastructure is key to both delivering and sustaining growth. But t he Council does not accept that this H igh S peed 2 (HS2) proposal is an effective way of achieving th ese outcomes . The current proposal s are already harming our local economy and will do so for more than a decade. The current proposals for Euston Station are a massive lost opportunity to invest in sustained future growth , which is particularly significant for the Council, which has the fourth largest economy of any borough in the UK . The proposals to link HS2 with High Speed 1 (HS1) along the North London line will have a potentially devastating impact on the Camden Town economy. Both the Euston Station and HS1 link proposals are already deterring developers from implementing granted planning perm i ssions , causing the Council and the country substantial loss jobs and growth.

2. Under the current proposals the terminus for HS2 will be at Euston Station, which is in the London Borough of Camden with a proposal for a connection between HS1 and HS2 across the North London Line, which is also located in the borough. The impact of the HS2 development in Camden as a whole will be overwhelming if the proposals remain as they are. The most significant effect would be on the area to the west of Euston Station where hundreds of homes would be demolished, public open space would be lost, schools would need to be moved and businesses would be severely affected. Of all the homes proposed to be demolished along the length of Phase 1 of HS2, eighty percent are located in Camden. There is a large Bangladeshi community located in this area that is likely to be fractured as a result of the HS2 line. Indeed, the whole community around Euston Station will be at risk if the basic infrastructure that it relies upon is removed, demolished or relocated. We have good reason to believe that the full costs of making good or mitigating these impacts have not been accounted for by the Department for Transport or HS2 Ltd. Once the costs are understood, this will further undermine the business case for HS2 and push up the full costs of the project well beyond the recently revised figure of £46bn.

3. For all those reasons, the Council opposes the idea of Parliament sanctioning an open-ended authorisation for expenditure on the project, and therefore objects to the Bill in principle. Nonetheless, the Council believes that there are a number of ways in which it could be improved for the Council’s benefit:

(i) the Bill should contain some recognition of the enormous impact of the proposals at Euston, and should contain a specific requirement that expenditure should be spent on implementing mitigating those impacts;

(ii) in respect of the proposed HS1 link, expenditure should in the first place be limited to the carrying out of a) a proper cost benefit analysis, independently reviewed; and b) a full structural survey of the North London Line viaduct. No further expenditure should be incurred on the link if the analysis results in an unacceptable cost benefit ratio or the survey shows unacceptable impacts to the structure of the viaduct;

(iii) save for expenditure on compensating and otherwise mitigating those adversely affected by the proposals in terms of loss of housing, school places, business revenue and open spaces; expenditure on the proposed route north of Birmingham should be limited in time up to the point where the government announces the proposed route, following consultation;

(iv) the Bill should be more tightly drafted so as to ensure that only expenditure on high speed railways is permitted, not other railways;

(v) the Bill should specifically provide for the payment of compensation to local authorities who are incurring significant costs themselves in relation to the HS2 proposals; and

(vi) the Bill should specifically allow for expenditure to address the blight that has already occurred around Euston Station and which will only worsen as the scheme progresses, to ensure that the station itself and the businesses around it are able to continue to operate as a contributor to the London and regional economy for the time required to construct the line into and station at Euston.

4. Comments in greater detail on some of the clauses which are of particular interest are set out in paragraphs 5 to 21 below.

Clause 1(1)

5. The Council has four issues with this clause:

(i) a general complaint at the proposal to provide unlimited funds to be spent on a project with unproven cost benefits at a time when people are experiencing financial austerity;

(ii) the cost to the London Borough of Camden has been significantly underestimated in the Department for Transport and HS2 Ltd’s calculations;

(iii) funds should not be applied to developing the proposed HS1 link. They could be more effectively used elsewhere; and

(iv) a general complaint of the incurring of cost without proper consideration of reasonable alternatives.

These points are discussed separately below.

Unlimited Expenditure

6. The Secretary of State for Transport recently announced an additional £10b contingency allocation for HS2, thus increasing the total projected cost of HS2 to £46b. This £10b increase is almost exactly the amount of money that the Chancellor identified as "essential cuts" in his recent Spending Review. These figures are also based on 2011 figures, so are already out of date, especially considering the start date for the development is currently projected for 2017.

7. At a time when the country is trying to recover from the recent recession and is experiencing more pushes for austerity and cuts to services from central government, it is difficult to understand how the promoters of HS2 are able to justify the enormous spend on the HS2 line, particularly when there is doubt about the cost benefits of the scheme.

8. Recent reports from two important and influential bodies who have investigated the financial statements and forecasts of DfT in relation to spending on HS2 have been very critical of the project. Margaret Hodge, the Chair of the Public Accounts Committee stated on 16 May 2013:

"There is virtually no evidence in this business case to support claims that HS2 will deliver regional economic growth, one of the key aims and justifications for this project".

9. The National Audit Office’s report [1] concludes that the strategic case for HS2, in terms of increasing rail capacity and generating regional growth, has still to be demonstrated clearly.

10. On 1 July 2013, the Public Accounts Committee took evidence from HS2 Ltd and DfT officials and scrutinised the cost of HS2. After hearing the evidence, Margaret Hodge stated that the projected timetable for completing the HS2 railway is "complete madness" and that there would be even greater costs as a result of any delay in the promotion of the hybrid bill.

11. Further, the recent New Economics Foundation report concluded that the Department for Transport (DfT) has omitted a vital step in what should be a fair, transparent and prudent appraisal of the proposed High Speed 2 (HS2) rail line in that it has failed to explore alternative options properly and that spreading the capital across many diverse projects, in a way that is responsive to local as well as national needs, could reap much wider economic, social and environmental dividends.

12. The Council cannot see why such a large part of its borough should suffer such extreme disruption and see residents, business owners and visitors deprived of local infrastructure without any guarantee (to date) that these will be re-provided. To date the Council has not received guarantees that the open spaces lost will be re-provided, that homes lost will be re-provided within the community that residents currently live in or that the school will be suitably relocated. If the government is to be able to incur unlimited expenditure, then the Council is of the view that the Bill should say explicitly that funds should be directed towards achieving those ends.

13. Notwithstanding that there was a majority vote in favour of second reading of this Bill, it is noticeable that there is more general dissent for this particular high speed proposal from politicians across the political spectrum as well as from economists and other commentators than when the proposal was first put forward by the Secretary of State for Transport in January 2012. This is important to note, considering the Bill effectively allows an open cheque for the Department to use in progressing the project.

The Cost to Camden

14. The financial impact of HS2 that the government has allocated to Camden and in particular the area around Euston has not been accurately calculated. The Council considers that the government has not properly considered the costs to the Council’s economy around Euston, which in turn has further impacts on London’s economy. HS2 Ltd has set aside £1.3bn [2] for compensation payments for Phase 1 of the route. The Council is undertaking a "True Cost to Camden" study which was commissioned to provide a comprehensive detailed and in-depth appraisal of HS2’s cost to the people, communities and businesses based in the borough. Early indications show that the cost of HS2 to the London Borough of Camden will be in the order of £1billion. We are undertaking detailed work to account for this sum, which will be released shortly. It is worth noting that not all of these costs are compensable under the statutory compensation scheme.

It follows that the cost to rest of the country is likely to have been similarly underestimated by HS2 Ltd and the government, meaning the already vast amount set aside by the government for HS2 will be grossly exceeded in the construction of the line.

15. Where the Council is particularly concerned is the reported [3] increase of expenditure required to construct a smaller, less comprehensive Euston Station terminus. The original scheme as announced in January 2012 was for a complete demolition of the existing station, the lowering of the tracks and the construction of a comprehensive new station which would allow development above. These plans have now evolved into nothing more than a side extension to the existing Euston station which is going to cost £400m more than the original estimates of comprehensive station developments with less benefits. The potential for maximising above-station development has been severely reduced by this change and significantly limits the ability for a proper regeneration of the areas around Euston station.

HS1/HS2 Link

16. The Council considers that there is no business case for the link to High Speed 1, even on the government’s own evidence. The significant cost that the borough and London would incur with the disruption caused by the current plans to widen the viaduct to allow the high speed trains through the city to link to HS1 has not been accounted for properly in the government’s benefit cost ratio so the business case is even worse than that presented by the government. There is no evidence of any strategic advantage promoted by the government for having this link. Therefore, should HS2 proceed in spite of the overwhelming evidence that it will cost the country billions with strictly limited financial benefit, the Council would like to see the expenditure allocated to create this link reallocated to providing a comprehensive redevelopment of Euston Station.

Failure to consider alternatives

17. While the focus of the Council’s concerns is on the immediate negative impact that will be inflicted on the borough, of further more general concern is the significant amount of public money that the Bill would allow to the government to spend on a project that makes no sense financially or strategically. This is especially so when considering that the government has not undertaken a full and proper investigation of the environmental impacts of the alternatives to High Speed 2. There has been some assessment of alternatives as was seen in the 2012 decision issued by the then Secretary of State, Justine Greening. However, given the substantial amount of public money that is currently committed to the project it is incumbent upon the government to undertake a comprehensive study of the alternatives to show whether the strategic objectives of the schemes can be better met by options that are less expensive and have less impact environmentally. This was not done in the run up to the 2012 decision and (in breach, in the Council’s view, of the Strategic Environmental Assessment Directive), and it shows a lack of basic common sense when handling substantial public funds.

Clause 1(2)

18. The Council is of the view that it is fundamentally wrong for the government to be spending any money on Phase 2 of the HS2 route without undertaking a proper budgeting exercise on Phase 1 and more especially the cost to Euston. The additional £400m increase in the cost of constructing a smaller HS2 station at Euston than the original comprehensive station that was proposed (see paragraph 15 above), shows how incredibly important it is to have accurate detailed up-to-date information on costing and budgets. Not to have such is not a proper way to spend public money. Whilst it is accepted that expenditure will need to be incurred in consulting on the proposed route and other route options, the Council is of the view that no further expenditure should be permitted by the Bill after the point at which the final choice of the route is made (save for expenditure in compensating those affected by the proposals). Any further expenditure should be authorised by a further paving bill.

Clause 1(3)

19. There is a concern that the wide wording of this clause could potentially allow expenditure on Crossrail 2 to enable the government to address the issue of dispersal of passengers from Euston Station. The wording in the clause is very wide-ranging. Terms such as "any railway line" and "any other infrastructure" are very broad, particularly when read with the words "at least" in clause 1(2)(a). There is a requirement that expenditure must be incurred in relation to clause 1(1), but that provision is not restricted to HS2, and includes "a high speed railway transport network". This needs to be more carefully drafted to ensure that expenditure is limited to infrastructure which is part of or directly related to the provision of high speed railways, and not other railways such as Crossrail 2 (save for any connecting infrastructure).

Clause 1(4)

20. The Council simply notes that compensation is referred to without the revised scheme having been formulated yet.

21. Conspicuous in its absence is any reference to the payment of costs incurred by local authorities and other bodies in responding to the HS2 proposals. A significant amount of money has been and is being spent by the Council in responding to the various consultations, keeping local residents and businesses informed, negotiating (or attempting to negotiate) with HS2 and working on alternative proposals. At a time when central funding of local government is being cut further than any other area, it is unfair that the councils who are affected by these proposals should have to bear the significant costs involved. Clause 1(4) should be amended so as to enable expenditure on recompensing local authorities for these costs.

July 2013


[1] Entitled High Speed 2: A review of early programme preparation dated 16 May 2013

[2] DfT announcement with release of Property Compensation Consultation 25 October 2012

[3] Alison Munroe response to PAC questioning 1 July 2013 – increase by £400m for reduced scheme

Prepared 10th July 2013