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House of Lords

Wednesday, 16 September 2015.

3 pm

Prayers—read by the Lord Bishop of Sheffield.

Budget: Household Impact


3.07 pm

Asked by Lord Wood of Anfield

To ask Her Majesty’s Government whether they intend to publish a distributional analysis of the impact of the Budget on households with different levels of income.

The Commercial Secretary to the Treasury (Lord O'Neill of Gatley) (Con): My Lords, distributional analysis of the impacts of government policy across household income distribution was published by HM Treasury alongside the summer Budget. The analysis presents the cumulative impacts of policy decisions since the June 2010 Budget, up to and including the 2015 summer Budget. It shows that the proportion of public spending received by households in each income quintile remained similar between 2010-11 and 2017-18.

Lord Wood of Anfield (Lab): I thank the Minister for that Answer. The Institute for Fiscal Studies estimates that the Budget has made 8.4 million working families worse off, many considerably so, through tax credit changes. However, the Chancellor has unilaterally decided not to tell the British public from now on what the distributional impact of the Budget measures will be. It is ludicrous to argue, as he does, that having a deficit justifies not publishing information about the regressive effects of the Budget. Does the Minister agree with the Resolution Foundation, which said:

“Deciding to ditch Budget distributional analysis is a retrograde move for which there is no plausible good explanation”?

Will he urge the Chancellor to rethink this attempt to hide information from the public?

Lord O’Neill of Gatley: My Lords, contrary to that question, as a result of some discussions involving the Chancellor, the specific distributional analysis that was requested was posted on the government website on 21 July. There followed a number of conversations outlining the Treasury’s belief that the new analysis was intellectually superior to those in the preceding Parliaments. I should add, however, that the requested distributional analysis has indeed been published, despite the apparent lack of awareness of it displayed in the previous question.

Baroness Kramer (LD): My Lords, it is certainly a disgrace that the distributional analysis was not published with the Budget, a practice followed by the coalition every year so that questions could be asked during

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Budget-related debates. Can the Minister confirm the analysis of the IFS around the distribution that the only gainers from the tax and benefit changes are the richest eighth and ninth deciles, and that the big losses are all concentrated in the poorest first to seventh deciles, with the very poorest among the biggest losers?

Lord O’Neill of Gatley: My Lords, the distributional analysis subsequently published on the government website, as I just outlined, actually shows that if one needed to specifically pick where the impact was felt most severely across the different quintiles of income distribution, it was in the highest 20%.

Lord Vinson (Con): My Lords, when addressing this Question, could the Minister bring to the attention to the House that, according to Treasury figures on 21 July, the debt-servicing costs of our huge borrowings is £1,841 per household. Is it surprising that people feel hard up? That money must come out through tax, VAT and other directions somewhere. Individually per household, that is what is being paid.

Lord O’Neill of Gatley: My Lords, I cannot recollect the exact numbers but those suggested by my noble friend sound broadly accurate. It is right to refer to such parameters. Indeed, the approach towards the now preferred way of presenting the distributional analysis is predicated on taking account of the consequences of the amount of public debt and, implicitly with that, the appropriate desire of the Government to reduce that level of debt.

Lord Grocott (Lab): My Lords, I thought the Minister said that the biggest losers were those with the highest incomes. Does he have any information for the House on how they are coping?

Lord O’Neill of Gatley: My Lords, I have not had time, given a very busy schedule since returning from Recess, to conduct a personal survey but if the noble Lord would like to join me in such an activity, perhaps we should undertake it together.

Lord Forsyth of Drumlean (Con): My Lords, does my noble friend agree that the policy of subsidising low wages and creating dependency on high welfare payments was instituted by the last Labour Government? Is it not very rich of Labour to criticise this Government for unwinding that by ensuring that people have higher wages and lower taxes, and that their dependency on welfare is reduced?

Lord O’Neill of Gatley: My Lords, I thank my noble friend for that important point. As I hoped to suggest at the appropriate moment—it is here—this Government were elected with the clear intention of reducing the burden of taxation and bringing us to a lower-tax and less welfare-dependent society. That is what is being done further in this latest Budget.

Baroness Manzoor (LD): My Lords, does the Minister agree that going on the backs of the poorest and most vulnerable in our society cannot be the way forward, if we want a genuinely equal society that really looks

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after the very poor and most vulnerable—people with illnesses who cannot go out to work, or people who are on tax credits who already go out to work and are suffering because they do not get the wages due to them?

Lord O’Neill of Gatley: My Lords, I do not want to bore Members of the House by repeating things I have already said but the distributional analysis shows that the biggest burden has been on the highest quintiles. Let me highlight another important factor: this morning, we had the latest employment and earning statistics. In addition to the rather pleasant news that unemployment has fallen further, we have reached a new level of record full-time employment and, very encouragingly for all members of our earning and working society, average earnings have accelerated now to a level of 2.9% year on year, making it clear that the benefits for those in work are starting to increase more and more.

Baroness Smith of Basildon (Lab): My Lords, the whole purpose of tax credits was to make work pay, and 8.4 million people have lost income through the Government’s changes. The Minister said that his way of showing the analysis—his publication—is the preferred way. It seems to me that the only people who prefer it are the Government. Does he understand that it would be right to commit to the public being able to see the impact of the individual measures of the Budget, and that it should be published alongside the Budget at the same time?

Lord O’Neill of Gatley: My Lords, the much-quoted research of the IFS is to be complimented, as it offers an independent judgment on the Government’s fiscal policies. The Government’s own fiscal measures are presented in great detail in the Budget report and assessed independently in many details by the independent ONS. The distributional analysis that has been requested and tabled here has now been presented in the traditional format that was agreed by the previous coalition.

NHS: Clinical Commissioning Groups


3.15 pm

Asked by Baroness Meacher

To ask Her Majesty’s Government what assessment they have made of NHS England’s management of clinical commissioning group allocations under the current funding formula.

The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con): My Lords, decisions on clinical commissioning group allocations are taken independently of government by NHS England, in order that such an important issue as funding is made objectively and free from perceived political considerations. The Government set some broad principles to which they must conform. NHS England’s decisions are informed by the recommendations of the independent Advisory Committee on Resource Allocation.

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Baroness Meacher (CB): My Lords, I thank the Minister for that reply. As he will know, the Secretary of State is responsible for ensuring that NHS England allocates resources fairly across the NHS. Is the Minister aware that, at present, allocations to clinical commissioning groups are hugely variable in relation to the Treasury manual formula? For example, west London receives 31% more than the formula, while Hounslow receives 9% less than the formula, representing a discrepancy of some £110 million from one trust to another in relation to the formula? Despite some recent improvements, does the Minister share the concern expressed by the National Audit Office about the failure to end this unfairness—and, indeed, even the lack of any timescale within which to rectify this matter? Will he give an assurance to the House that within five years there will be a resolution?

Lord Prior of Brampton: The noble Baroness raises a very important issue. I think that she is raising issues not about the actual formula but about the speed at which NHS England reached the target levels of the formula. She points to the discrepancy of west London, which is 31% over the formula. I can tell her that NHS England is committed by 2017-18 to bringing all those under the formula by more than 5% up to that level. It will also be encouraged to address the issue of CCGs that are above the formula.

Baroness Walmsley (LD): My Lords, given that the expertise of the CCGs is also very variable, in some areas the commissioning support groups are particularly important. Is the Minister satisfied that both the expertise and the funding of the commissioning support groups is appropriate?

Lord Prior of Brampton: The noble Baroness is right that there is considerable variation in the performance of CCGs and, indeed, commissioning support groups. In an effort to address that variation, we are in discussions with the King’s Fund to publish in a very transparent and open way the performance of individual CCGs.

Lord Hunt of Kings Heath (Lab): My Lords, the Minister will be aware that the Global Burden of Diseases, Injuries, and Risk Factors Study was published in the Lancet yesterday. It showed that if the south-east of England were a country, it would come top of the 22 most industrialised countries in terms of health outcomes, whereas the north-west would be in the bottom range of countries. Does he accept that in the end this is a ministerial responsibility, and can he explain why allocations to CCGs, last year and this year, put much more money into the south-east of England than into the north-west?

Lord Prior of Brampton: The method of allocation is based around population, demographics and deprivation. The formula has developed over many years. The current formula was developed by the Nuffield Trust. There is no intention in the formula to skew the allocation from one part of the country to another. It is based in an independent and transparent way around population and deprivation.

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Baroness Murphy (CB): Does the Minister agree that the inequity of allocations to CCGs is reflected and made worse in allocations on mental health which, for historical reasons, are very skewed to where there are large hospitals? Not only that, but at the moment it seems that CCGs are not even spending the money that is allocated to them for mental health on mental health but are diverting it to other areas. What is going to be done about this in terms of the fairness of the allocations and the insistence that the money should be spent on what it is intended for?

Lord Prior of Brampton: My Lords, I am not convinced that the method of allocation is unfair. ACRA will soon be reviewing its method of allocation for 2016-17. I repeat that it is an independent process. How CCGs allocate the money they receive to mental health, physical health, public health or anything else is up to them. With the King’s Fund, we are introducing a range of measures to enable us to see how individual GGCs are performing.

Lord Patel (CB): My Lords, is not the fundamental problem that we have more than 400 commissioning bodies commissioning in different aspects for different services, and that leads to variability? The answer has to be what the Barker commission recommended: a single commissioner that commissions for primary care, community care, acute services and mental health and asks for the outcomes that we need.

Lord Prior of Brampton: The noble Lord makes an interesting and perceptive point. I have no doubt that if we look at the commissioning landscape in five years’ time there will be a lot more integrated commissioning and that social care and healthcare will be much more joined up.

Baroness Walmsley: My Lords, the criteria that the Minister mentioned sound all very well, but they do not take account of existing levels of ill-health in the most disadvantaged areas of the country. The criteria he quoted do not take account of the need for catch-up for those populations.

Lord Prior of Brampton: The report by the Public Accounts Committee raised the issue of whether deprivation was properly taken into account by the formula used by ACRA, and ACRA has agreed that in its new formulation it will look again at the adjustment it makes to the formula for deprivation.

Child Development


3.22 pm

Asked by Baroness Massey of Darwen

To ask Her Majesty’s Government what steps they are taking to encourage the sharing of information about a child’s development between children’s centres and local schools.

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Baroness Evans of Bowes Park (Con): My Lords, the Government are working to strengthen links between schools and children’s centre services. Statutory guidance stresses the importance of children’s centres working with partners for the benefit of children and their families. If centres are providing childcare, they need to comply with early years foundation stage requirements around information sharing when a child moves to a new provider, such as a school reception class.

Baroness Massey of Darwen (Lab): I thank the Minister for that response. Is she aware of the report on children’s centres from Action for Children which states that 36% of children’s centres have no arrangements for sharing information on child development with schools? Does she agree that enhancing the role of children’s centres and making them available to schools would ensure better results for children? Do the Government agree that cutting children’s centres is no way to go about things?

Baroness Evans of Bowes Park: I am aware of the report from Action for Children. The flip side is that 65% of children’s centres have arrangements. Obviously there is more to be done. We want those arrangements in place across the system, which is why the Government have awarded £5 million to 77 teaching schools alliances across the country to partner with local early years providers to drive up standards and share best practice.

Baroness Pinnock (LD): My Lords, does the Minister agree that it is only by having children’s centres that crucial data sharing can take place? The result of a freedom of information request by the Children’s Society shows that spending on children’s centres this year alone has fallen by 17%, with the consequence that even more than the 600 that have already been closed will close their doors. Does the Minister share my concerns?

Baroness Evans of Bowes Park: Children’s centres provide extremely valuable services, but I think we all agree that what is most important is the impact that these centres have on the ground and on the families that need them most. In Bromley, for instance, the number of centres did indeed reduce from 18 to six, but these centres are now located in the areas of greatest need and have universal and very targeted services. As a result, the number of families accessing this vital support has actually increased. We are now seeing a record number of families using children’s centres.

Baroness Perry of Southwark (Con): Does my noble friend agree that this Government have done more to help very young children to have the maximum opportunity in their education than any Government in the past?

Baroness Evans of Bowes Park: Indeed I agree with my noble friend. In fact, the Government are spending over £2 billion a year on early intervention. We have the pupil premium, which is helping to improve educational outcomes, and the early years pupil premium,

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which is helping to narrow the attainment gap for 3 and 4 year-olds from disadvantaged backgrounds. Crucially, we now have a million more pupils in good or outstanding schools, because we know that education is key to the life chances of young people in this country.

Lord Hylton (CB): Obviously, professionals caring for children need to have the full facts, but will the Minister confirm that information will not be passed around without informing the parents of those children?

Baroness Evans of Bowes Park: My Lords, there are rules around data sharing that cover this point.

Baroness Howells of St Davids (Lab): Would the Minister also consider extending to foster parents the courtesy shown to looked-after children? My mailbag is full of complaints about how different schools operate the funding allocated to those children. The foster parents themselves are prohibited from asking questions because they could be deregulated from the system. Several foster parents, especially middle-class black women, claim that the schools accuse them of expecting too much from those schools, simply because the children of the parents who are now fostering went to public school. This is jolly unfair, and I ask the Minister to look again at how much information is available to those foster parents.

Baroness Evans of Bowes Park: I thank the noble Baroness for raising her concern. I will certainly take it back to the department and raise the issue.

Baroness McIntosh of Hudnall (Lab): Picking up the point made by the noble Lord, Lord Hylton, will the Minister give us an assurance that other agencies, apart from schools and children’s centres, that are in possession of information that might have an impact on how children develop—this might include, for example, the health service, the police and sometimes social services—share that information appropriately within the guidelines, and that children’s life chances are not spoilt for the lack of that information circulating?

Baroness Evans of Bowes Park: As I said, there are rules around this. In fact we are having a consultation around the future of children’s services that will be very broad-ranging: it will look at how they can support young people, families and children, and at how different agencies work together. That will be a great opportunity to ensure that we are raising and dealing with any issues that might still be outstanding.

Lord Christopher (Lab): My Lords, I hope this question is relevant. One area that is not being studied, and which I think should be, is the effect of new technology on children’s development—and ultimately on that of adults. A few days ago, the press said that there is a common pattern of children waking up in the middle of the night to see if they have any messages or whether they should send some. It seems to me that

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someone should collate this information to find out exactly what is happening and what is likely to be the result.

Baroness Evans of Bowes Park: I thank the noble Lord for that question. I am sure that there is a lot of work being done. This a fast-moving area with lots of new research. It is certainly something to which the Government will remain alive.

Lord Harris of Haringey (Lab): Will the review of children’s services of which the Minister talks also consider the availability of children’s mental health services, which in many parts of the country are totally inadequate for the needs of children? Will the review cover that and look at the question of adequacy?

Baroness Evans of Bowes Park: It will be a wide-ranging public consultation on the future of children’s services and I am sure that children, families and young people with mental health needs will be included. We look forward to listening to the views of the public, carers, local authorities and all interested parties about how these services could be better delivered in future.



3.30 pm

Asked by Lord Green of Deddington

To ask Her Majesty’s Government what assessment they have made of the scope for those currently claiming asylum in other European Union member states subsequently to move on to the United Kingdom.

The Parliamentary Under-Secretary of State, Department for Transport and Home Office (Lord Ahmad of Wimbledon) (Con): My Lords, the UK operates rigorous border controls to prevent illegal migration. The Government have already introduced tough new measures and are negotiating with the European Union further to prevent the abuse of free movement rights by EU citizens. We can also refuse EU nationals at the border if we consider that they present a genuine threat to society.

Lord Green of Deddington (CB): I thank the noble Lord for that Answer. Will he confirm that EU directives require that protection be granted not just for those in fear of persecution but also where there is a,

“serious … threat … of indiscriminate violence”,

to a civilian due to “armed conflict”?

Does he therefore agree that member states will be obliged to grant protection to most of those now fleeing from the terrible events in Syria as well as many from Iraq, Libya, Yemen and some countries in Africa? Given that the EU border controls have now almost collapsed, the numbers could be considerable. Finally, as most of those concerned will later become EU citizens, will the Government, in this new situation, now seek to require work permits from EU citizens migrating to Britain so as to reduce the numbers overall?

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Lord Ahmad of Wimbledon: My Lords, the EU directives, like the refugee convention and UK national policy, are based on individual need rather than nationality. That need may, as the noble Lord said, arise from indiscriminate violence, but that is again based on an assessment of the risks to the individual claimant. Briefly, on his other points, as noble Lords are aware, this Government have already introduced a series of tough domestic measures to restrict access to benefits for EU jobseekers, to punish the abuse of free movement rights on which we are leading the way in Europe. The Government maintain that free movement is an important principle of the EU, but that it is not an unqualified right and must be grounded in freedom to take up work.

Baroness Ludford (LD): My Lords, the question was about the secondary movement of people claiming asylum in another EU member state, so I do not understand the answer, which was about EU nationals and free movement of people who have EU citizenship. Can the Minister confirm that the only possibility for secondary movement of asylum seekers is a small one if, under the Dublin rules, they have a family connection to someone who is already a refugee here? Otherwise, someone can move only if they have become fully settled in another member state and some years later acquire EU citizenship. There is little evidence of substantial such movement. Is this not just an example of how Eurosceptics are trying to confuse the issue by conflating EU free movement of EU nationals with the unfree movement of non-EU asylum seekers, with which the Government, unfortunately, seem to be colluding?

Lord Ahmad of Wimbledon: The Government adopt responsible measures and have taken a responsible attitude in addressing the issue of the migration crisis across Europe. On the noble Baroness’s assessment of the Dublin convention, she is correct: that does stand.

Earl Attlee (Con): My Lords, does the Minister remain convinced that we should keep out of the Schengen area?

Lord Ahmad of Wimbledon: Evidence suggests that that was a very sensible thing to do.

Baroness Royall of Blaisdon (Lab): My Lords, Save the Children is calling on all EU member states to adopt an excellent five-point plan which would guarantee the safety of refugees as well as deal with the root causes of the problems in Syria. Will the Minister meet with Save the Children to discuss this plan and see how it can be further adopted in all member states?

Lord Ahmad of Wimbledon: The noble Baroness raises an important point. As she is aware, under the chairmanship of the Home Secretary and the Communities Secretary, a new group of senior government Ministers has been set up which also includes local authorities. The group will also meet those who are directly involved in dealing with refugees.

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Baroness Afshar (CB): My Lords—

Lord Higgins (Con): My Lords—

The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, we have time. I suggest that we go first to the Cross Benches, if we go round in order, and then to my noble friend Lord Higgins.

Baroness Afshar: My Lords, is there any awareness of cause and effect in this process as to why all these people are coming out? Which countries have contributed to this problem? Is there a moral duty to think about what has caused this process? The people who come are the best, and they serve the countries to which they go to the best of their ability. I have done so and I am sure that many others might do so also.

Lord Ahmad of Wimbledon: I recognise the point that the noble Baroness makes, and that is why we have heard both the Prime Minister and President Obama say only yesterday that we must deal with the cause of the issue. However, in terms of moral duty and obligations, Britain has shown that it has a comprehensive view of dealing with this issue, not least by the £1 billion it has thus far given for assistance to those refugees in most desperate need around the Syrian borders.

Lord Higgins: I apologise for not giving way to the noble Baroness, who I did not see intervening. Does my noble friend agree that the Government should consult urgently with the German Government to establish precisely which documents, passports and so on being issued by the Germans to those accepted as refugees into Germany will entitle them to travel elsewhere in the European Union and the UK? Will these documents be treated as if they were normal German passports?

Lord Ahmad of Wimbledon: My noble friend raises an important point. Let me assure him that my right honourable friend the Home Secretary raised these very issues on Monday at a council meeting convened with all European partners. We have made our position clear that the Dublin convention and the rules surrounding it will apply, and continue to apply, to all Syrian refugees—indeed, to all refugees who enter the European Union. They must claim asylum at their first port of entry, and normal rules will apply.

The Lord Bishop of Chester: My Lords, does the Minister think that the current European regulations are working, and indeed workable, in the face of the sheer volume of people who are seeking to migrate?

Lord Ahmad of Wimbledon: The right reverend Prelate again raises an important issue. Evidence suggests that we need to keep reviewing the situation regularly across Europe, and that is why Britain has taken a lead in ensuring that we play our role in welcoming, as we will do very shortly, an additional number of Syrian refugees to the United Kingdom, but directly from those areas and countries that are picking up the

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biggest impact of the current crisis in Syria—Lebanon, Jordan and Turkey. We are working closely with both our EU partners and those countries neighbouring Syria.

Hereditary Peers By-Election


3.38 pm

The Clerk of the Parliaments announced the result of the by-election to elect a hereditary Peer in the place of Lord Luke, in accordance with Standing Order 10.

Forty-one Lords completed valid ballot papers. A paper setting out the complete results is being made available in the Printed Paper Office. That paper gives the number of votes cast for each candidate. The successful candidate was the Duke of Wellington.

Enterprise Bill

First Reading

3.39 pm

A Bill to make provision relating to the promotion of enterprise and economic growth, and provision restricting exit payments in relation to public sector employment.

The Bill was introduced by Baroness Neville-Rolfe, read a first time and ordered to be printed.

Consumer Rights Act 2015 (Consequential Amendments) Order 2015

Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2015

Motions to Approve

3.39 pm

Moved by Baroness Neville-Rolfe

That the draft Orders laid before the House on 18 June be approved.

Relevant documents: 1st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 7 September

Motions agreed.

European Union (Approvals) Bill [HL]

European Union (Approvals) Bill [HL]

Third Reading

3.40 pm

Bill passed and sent to the Commons.

Economic Case for HS2 (Economic Affairs Committee Report)

Motion to Take Note

3.40 pm

Moved by Lord Hollick

That this House takes note of the Report of the Economic Affairs Committee on The Economic Case for HS2 (1st Report, Session 2014–15, HL Paper 134).

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Lord Hollick (Lab): My Lords, it is a privilege to introduce the report of the Economic Affairs Committee entitled The Economics of HighSpeed 2. Speaking in June this year, the Secretary of State for Transport said:

“The time to debate the various merits of high-speed rail is over”.

I am delighted that so many Members of your Lordships’ House are here this afternoon to prove him wrong.

I would like first of all to record the committee’s thanks to Tom Worsley, our specialist adviser, and to committee staff Rob Whiteway, Ben McNamee and Stephanie Johnson for their valuable support.

When he appeared before our committee last week, the Chancellor of the Exchequer made it clear that, despite the very high cost of HS2 and the many controversies over aspects of it, each generation had a responsibility to take big controversial decisions to improve the national infrastructure. In his view, HS2 is just one such decision facing this generation. The Chancellor’s enthusiasm could not be faulted, but in the absence of a rigorous, independent and transparent appraisal of the costs and benefits of this huge undertaking, HS2 has become a project of faith, all too often supported only by overblown rhetoric.

The construction of the new railway and the cost of the rolling stock is estimated, in 2011 prices, to amount to £50 billion. The committee estimated that this would be £56.6 billion in 2014 prices. The overall cost of £50 billion includes an estimated £21.2 billion for phase 2, from Birmingham to Manchester and to Leeds. This estimate is a number imposed by the Treasury and, in the absence of a detailed cost plan, is simply a placeholder. The Treasury estimates that the net cost to the taxpayer is expected to be £31.5 billion at 2011 prices, or £35.6 billion at 2014 prices; the net cost taking into account the cost, the running cost and all the income—that is the final bill that lands with the taxpayer.

This cost will be borne by all taxpayers, many of whom will derive no benefit from the project. Yet the Government assume that fares on HS2 will be the same as on the existing network. Would it not be more sensible to make those benefiting most from the railway, principally business travellers, contribute more towards the cost through higher fares and relieve the burden on taxpayers generally?

It was unclear from the evidence whether all the necessary infrastructure improvements to complement HS2 were included, and this could push the overall cost much higher. The cost of construction is, surprisingly, up to nine times higher than the cost of constructing high-speed lines in France. Sir David Higgins said that the UK cannot hide behind the idea that the UK is more densely populated than France. We welcome his commitment to learning from international examples to reduce cost.

We heard that there are a number of ways that HS2 could be built at a lower cost. The Department for Transport told us that the additional cost of designing the train to run at 400 kilometres per hour, as opposed to 300 kilometres per hour as in Europe, was 9% of the total cost. Significant savings could also be made by terminating the line at Old Oak Common. This would

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eliminate the need for expensive tunnelling under London and substantially reduce the cost and disruption over many years of redeveloping Euston station, which has already risen to £7 billion from the original £2 billion estimate. Many witnesses raised concerns about cost escalation. These concerns appear to be shared by the Major Projects Authority, whose recent report gave HS2, for the second year in a row, an amber/red rating. Will the Minister please explain the reason for this high-risk rating and why the Government are refusing to publish its report?

The Government’s principal justification for building HS2 is to provide capacity to meet long-term rail demand and for long-distance travel. From the limited information on rail usage in the public domain, the capacity problem on the west coast main line is caused mainly by commuter traffic, particularly travelling into London. The Government have failed to make a convincing case that there is a capacity problem on long-distance services. The Secretary of State for Transport told us that long-distance services arriving in London in the morning peak hour,

“are already at full capacity”,

but that is not borne out by the statistics that we received. Long-distance services arriving in London between 7 am and 10 am have 57% seats taken on average. Virgin Trains, the operator of long-distance services on the west coast main line told us that its busiest train is the first off-peak train leaving London on a Friday evening. That is hardly surprising when the ticket cost of the last peak train to Manchester is six times more than the cost of the first off-peak—one would wait another 10 minutes or so. This cries out for the introduction of variable pricing to manage capacity bottlenecks, which is often routine in the airline industry.

The crowding statistics published by the Department for Transport last week showed that the busiest trains from Birmingham, Manchester and Sheffield, are the local services. The Secretary of State has now acknowledged that HS2 will mainly relieve congestion on commuter trains, principally into London, yet he continues to claim that intercity west coast services will be overwhelmed by the year 2033-34 under the projections of a 2.2% annual growth in long-distance travel. However, in the Government’s economic case for HS2—a document published last year—a chart showing projected demand for Virgin services from Manchester Piccadilly to London up to 2026, which assumed not 2.2% growth but 5% annual growth, revealed that the trains are only 75% full most of the time. The spike in demand between 4 pm and 6 pm is again most likely to be commuter traffic as the Manchester to Euston services stop at Stockport, Wilmslow and Macclesfield.

The problem with the statistics on long-distance rail is that no distinction is made between passengers travelling between Manchester and London and between Manchester and Stockport on long-distance trains. Both are counted as long-distance journeys. In the absence of detailed ticket sales data, it is difficult to assess the actual demand for intercity travel and therefore assess the validity of the Government’s growth projections.

We were not satisfied that the alternative ways of improving capacity have been rigorously and fully assessed. Additional capacity could be provided by

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incremental improvements to the existing network—longer trains, fewer first-class carriages and in-cab signalling to allow trains to travel more closely together, for instance. Professor Stephen Glaister told us that these incremental improvements could provide significant extra capacity at a much lower cost than HS2 and at the very least delay the need for the decision to be taken on the need for an additional railway line for some years.

Incremental improvements were rejected by the Government, however, for two main reasons. They would provide only a third of the number of extra seats that HS2 would and the work required would be too disruptive. But the committee concluded that the Government had failed to make a convincing case for why the capacity that HS2 would provide was required. The Government have yet to reveal the price of disruption that HS2 would cause. On both grounds, the comparison is unproven.

The Government’s other reason for building the line is that the improved connectivity between cities would support economic growth and contribute towards rebalancing the economy. That is an important objective that we fully support, but is HS2 the right answer?

While investment outside London is long overdue, the committee was not convinced that the Government had shown that HS2 is the best way of stimulating growth in the cities of the north and the Midlands. Evidence from other countries suggests that London will be the biggest beneficiary economically from a project like HS2. We heard evidence from Emile Quinet, an expert on TGV, that although cities such as Lyon had indeed benefited from TGV, it was Paris which had benefited the most. Studies in Spain and Japan came to similar conclusions. If London commuters benefit the most from the increase in capacity and London benefits the most economically, HS2 could actually widen the north/south divide.

We heard widespread support for improving the regional links between cities in the north to stimulate growth. We agree with the noble Lord, Lord O’Neill, now the Commercial Secretary to the Treasury, who told us in January when he was chairman of the City Growth Commission, that connecting cities in the north is,

“‘way more important’ than making it faster to travel to London from those cities”.

The 2006 Eddington study came to a similar conclusion. As east/west links are poor and north/south links are already good, there is a strong case for prioritising the former over the latter, but following the recently announced pause to work on the electrification of the TransPennine railway, the Government are doing precisely the opposite. This pause seems to be an excuse straight out of “Yes Minister”, dreamt up by Sir Humphrey himself. Can the Minister please decipher its meaning for us?

The cost-benefit analysis of HS2 published by the Government in 2013 relies on evidence that is out of date and unconvincing. To calculate the value of a rail project, the Department for Transport places a value on time saved as the result of a faster journey. For business travellers this is calculated at £31.96 an hour. But this assumes that time spent on the train is unproductive, and that 70% of the transport benefits,

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which come to a whopping £40.5 billion, derive from this business value of time. As many witnesses have pointed out, time spent on a train is not at all unproductive. Virgin told us that it plans to introduce free superfast internet connectivity on board for all passengers. Following a review by the Institute for Transport Studies which concluded that there is no consensus on how business travel time should be valued, the Department for Transport admitted that fresh evidence of businesses’ willingness to pay was required due, in their words,

“to the uncertainties and inconsistencies in the existing evidence”.

A further 33% of net transport benefits worth some £19.3 billion are derived from the value placed on non-work travel time; that is, people either commuting or travelling for leisure. These values are based on a survey of motorists that was carried out in 1994. This cannot be the best basis on which to assume almost £20 billion-worth of benefit for a major rail project. Again, the department concluded that the data are old and that fresh evidence is required. We simply do not understand why this work did not take place before the project was launched.

Much of the evidence presented to justify HS2 is either defective, unconvincing or out of date, and the process of oversight falls short of what is required for a major infrastructure project relying on substantial taxpayer money. The Department for Transport and HS2 have both carried out significant analyses of the benefits and costs of HS2, but as the sponsoring body and the implementation body respectively, neither can claim independent objectivity. That, and the failure to put into the public domain the information on capacity that is essential to evaluating the case for additional capacity for HS2, means that we have a £56 billion project requiring £36 billion of public subsidy on which no return is expected and which has failed to be independently and objectively assessed. In my opinion, this points to the urgent need for the creation of an independent body—an OBR for public investment, if you like—charged with the responsibility to review major publicly funded infrastructure projects. Such a body could provide the public, Parliament and the Government with a robust and dispassionate assessment of projects like HS2 and Hinkley Point and help us to determine whether these great schemes are the most cost-effective and appropriate way of investing public funds to meet the infrastructure needs that our country so badly requires.

Lord Vinson (Con): My Lords, I think the House may be interested that I saw Professor Richard Wellings of the Institute of Economic Affairs this morning to get the latest figures. He has done a great deal of research on this, and is mentioned in the publication today. Allowing for all the enormous add-ons that are bound to happen and the linkages necessary to link the new system with the old system, which is an apparent weakness, he considers that the overall cost will be at least £80 billion.

3.55 pm

Baroness Blackstone (Lab): My Lords, as a member of the Select Committee that produced the report on the economics of High Speed 2, I stress that we were

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unanimous on the need for infrastructure investment in the UK. It is vital to the success of our economy, and if we neglect it we will not attain the economic growth that we need to build prosperity. We also agreed with the Government’s aim to rebalance the UK economy by creating a northern powerhouse with high growth and increased productivity in the north of England. However, after taking evidence from many expert witnesses, we were unconvinced that this costly project was the right infrastructure investment to which to attach such high priority. We were unconvinced, too, that it was the best way to achieve the Government’s goal of a northern powerhouse.

The Government claim in their response to the Select Committee report that the case for HS2 is clear and robust. Regrettably, it is neither. Of course there is a case for it, but much more clarity is needed about its value, about alternatives using existing lines, about the opportunity costs of the investment, about the robustness of the Government’s claims about capacity, about long-term projected demand for rail travel on this line and about its value with respect to connectivity to the north of England.

These questions are particularly pertinent in the context of austerity policies in which the Government are cutting public expenditure in many areas. Nearly all government departments are struggling to produce illustrative cuts of 40% and 25% for the spending review. Apparently, there will be little money for capital development. In such circumstances, many will ask whether allocating £50 billion for this project is justified. Moreover, as has just been suggested, it will be an underestimate when the extra work needed to mitigate environmental effects and the extra compensation that is likely to be demanded are taken into account.

Another reason for questioning it is that a high proportion of the beneficiaries will be the business people who travel on this line, who will not, according to the Government’s current plans, be charged higher fares, in spite of the time they will save on these ultra-fast trains. Can the Minister say why the Government are not assuming any upward adjustment of fares to reduce the high cost to the taxpayer? Not raising fares will increase the regressive nature of this investment. Why on earth is the Department for Transport treating Network Rail capital spending on an as-incurred basis rather than as an asset on which a return is required from fare revenues and access charges?

The second question of context about which I raise concerns is the Government’s projections of demand. I readily concur that the demand for rail travel has gone up greatly over the last 20 years. It does, however, seem dangerous to assume that demand from business travellers will go on rising exponentially. High-speed broadband, video conferencing and further technological developments seem likely to reduce the need for inter-city rail travel by business men and women. Will the Minister tell the House why there has not been more explicit consideration of these factors, which are likely to affect demand?

On capacity on the west coast main line, is it not odd to attach so much importance to capacity problems, when, as my noble friend Lord Hollick mentioned, long-distance trains for Euston are only 43% full on

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average and even at peak times are between only 50% and 60% full? Indeed, there is more spare capacity on this line than on any other main line out of London, with the exception of HS1.

As to alternative solutions, the Government concede that extending all trains to their maximum length makes an important contribution, but this solution has by no means been fully implemented. Would not a further substantial reduction in the number of first class carriages also help, as my noble friend Lord Hollick suggested? Railway experts also suggest that technological improvements to signalling can increase the number of trains using existing tracks. Why have the Government made no reference to this in their response to the committee?

Is there not a danger that many other parts of the railway system where investment is needed will be neglected while HS2 is given priority? We have already seen recent cancellations in starts for electrification schemes elsewhere. The mere fact that HS2 is planned to travel at a maximum speed of 400 kilometres per hour suggests that it has become something of a vanity project. This ultra-high speed, considerably higher than that of high-speed trains in other countries, adds a great deal to the cost and uses resources that might be applied to improving other lines. Will the Minister comment on this, too?

On connectivity in the north and the stimulation of economic growth, the Government have failed to respond to the committee’s evidence that capital cities appear to be bigger beneficiaries of high-speed links than provincial cities connected to the capital via these lines. Nor have the Government given adequate consideration to comparing the relative contribution of £50 billion of other forms of investment in the north of England, such as further education and skills training or investment grants for SMEs to give but two examples. The committee also suggested that improving conventional rail links in the north, and starting the investment in high-speed trains across the north of England, might make a greater contribution to its economic reinvigoration. The Government’s claim that HS3 can be built later is not a satisfactory response.

To conclude, I ask the Government to do further work on the many issues raised by the committee before the enabling legislation for HS2 goes through Parliament. To do otherwise, in the words of one of the experts who gave us evidence, is simply taking a punt.

4.02 pm

Baroness Kramer (LD): My Lords, I supported HS2 in government and I support it out of government. I will deal with just a limited number of the issues as I have just six minutes.

That trains today are 60% to 75% full and that there will be no new source of capacity is probably the most frightening statement for anyone in the railway industry to hear. The forecasts for capacity are among the most conservative that anyone could imagine in the industry. Our year-on-year experience already overwhelms those forecasts. Without HS2, I dread to think what we will do with passengers who need to travel when we get to 2026.

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I shall address capacity in terms not just of seats, but of train paths. This August, the west coast main line was able finally to offer six to seven additional services from London to Blackpool via Shrewsbury, only off-peak. That was done only by the most strenuous reworking of that timetable. We are out of train paths. With so many cities in the Midlands and the north telling us that they need additional train services for their business communities to grow and to remain viable, the department and the industry would be most grateful to know which trains Members wish to take off to free up the train paths that are very evidently needed. They are coming to the department with very significant business cases behind them. We are out of capacity.

The alternatives offer only about one-third of the capacity that HS2 offers. Consider the impact of delivering those alternatives. They require virtually every tunnel, viaduct, bridge and embankment to be rebuilt, taking virtually every weekend, year in, year out, causing the most extraordinary disruption. We live in a society in which people travel on weekends, not just on weekdays. We have the experience of the west coast main line to go by. A £10 billion investment over 10 years, causing disruption virtually every weekend and indeed on a significant number of other days, and delivering almost no increase in capacity because it is so challenging to deliver on the existing lines—very many of which, frankly, Brunel would recognise—constitutes a huge challenge and does not deliver very much. Living with it in the interim would be a nightmare as it would in effect shut down business for a significant number of communities. Of course, this project matters for regeneration. Even the methodologies used by the department, which are dictated by the Treasury, and which I think most of us would consider underestimate the benefits and the cost-benefit ratio, demonstrate that it would deliver a cost-benefit ratio of more than 2.3. However, that assumes that passenger numbers are frozen three years after phase 2 opens in 2036. I do not think that anybody in this Chamber believes that that is a viable scenario, so we are looking at a cost-benefit ratio far more like 4.5 or even higher, and that is phenomenal. The systems that we use to assess cost-benefit ratios significantly understate major long-term project benefits, and that is a reality which I think many in this House understand.

There is an argument that this project benefits only London. The people who say that should talk to those driving growth in the Midlands and the north who negotiate with investors who will come in and build new businesses, because they argue that they need local connectivity. I will come to that, and it is absolutely crucial. When we compete for an investment that could be placed in Poland, France or Spain, we have something to offer that those countries cannot, which is excellent access to London, the largest financial, legal, PR, advertising and technology market in Europe. That tips the balance in a highly competitive environment. When we compete for every penny of investment we get, it is a question of whether it goes not to another part of the UK but to another part of the EU. That is absolutely crucial. I have heard this from people involved in the day-to-day hard negotiations, and I take their word for it.

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It is also true that we must build local connectivity but these issues are not alternatives. I will enjoy hearing from the Government how they are progressing with the review of electrification and other programmes in the north but I am very aware that Network Rail struggles with skills, capacity and management issues. That is entirely separate from the investment in HS2. I honestly do not believe that this is an investment issue: it is a capacity issue within the current system. It has to be resolved but these are not, frankly, alternatives.

This scheme should have been built 15 years ago. There is genuine opposition to it. It would go through beautiful countryside and many people are appalled by that. I understand that. However, we are at the point where we simply cannot delay any longer. People need to move to live the lives that they want and to generate the economy that we need.

4.08 pm

The Lord Bishop of Chester: My Lords, HS2 will pass through my diocese from south of Crewe until it reaches Manchester Airport. I read the committee’s report with great interest and was struck, above all, by the levels of uncertainty which evidently still exist around the project.

The response of the Government to the EAC’s report seems to contain little direct analysis of the pros and cons of the arguments advanced by the committee but simply restates previous positions. It is the rather poor level of evidence and analysis offered in support of HS2 which concerns me most. Perhaps I should be in favour of acts of faith, as the noble Lord, Lord Hollick, suggested. However, there is a huge investment of public funds dedicated to this project, unlike the 19th-century railways.

The strongest aspect of the case seems to be on the grounds of capacity, relating not so much to inter-city capacity—as we have heard—but rather to the congested commuter routes in north London. The problems around London look set to grow, since economic success breeds more economic success, with consequent population increases. I would be interested in the assumptions made by the Government about population increases through this century. All the indications are that the population will grow rather more than previously estimated. If so, the arguments on the basis of capacity gain even more traction, especially in relation to commuter capacity.

However, to argue for HS2 on the grounds of commuter capacity around London is a little like the tail wagging the dog: it seems a very indirect and expensive argument as presently put. Perhaps the case for major infrastructure improvements often has a speculative aspect—a long-term character—and a judgment has to be made. HS2 has clearly caught the imagination in many quarters. I am among those, however, who have major questions about the scheme as presently designed. I rather favour a new north-to-south railway, but one that would not be so expensive.

Will the Minister comment on two aspects of the proposals? The first aspect—to which reference has already been made—concerns the proposed speed of the trains of up to 400 kilometres per hour, which is

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250 miles per hour. We are a much smaller country than most of those which have high-speed rail lines. What is the real basis for wanting the fastest trains in the world? Bishops are rather coy about quoting the Bible in this Chamber, but the noble Baroness, Lady Blackstone, encourages me to do so:

“vanity of vanities; all is vanity”,

from the Book of Ecclesiastes.

The business case is largely built—as we have heard—on the assumption that travel time is largely wasted time, so the shorter the journey the greater the saving. I travel regularly on the present west coast main line and I observe a great deal of work being done during the journey. So what is the real basis for the assumption that the journey time is wasted time? With better broadband connection even more work would be done.

There is also the impact on the design of the railway if you want to go at 250 miles per hour: lots of tunnels, cuttings and embankments to make sure that the line is as straight and level as possible. You need that for very high speeds. A slower railway—quite fast, but slower—would have much more flexibility in its possible route. In relation to speed—I have not heard this commented on—my reflections from a previous incarnation as a scientist tell me that the kinetic energy of the moving object is proportional to the square of its speed. That means that if you double the speed of something you quadruple the energy required to get it to that speed. So going from 125 miles per hour to 250 miles per hour does not require twice the energy to get it that fast: it is four times, unless my A-level physics was just too long ago to get that right. I would, however, like to know what assessment has been done of the energy consumption relating to different speeds. As we look to a more energy-conscious world we ought to ask these questions rather carefully.

Finally, I ask the Minister about the impact of HS2 on Chester and north Wales. Table 18 in the EAC report—reproduced from the Government’s own strategic case—claims that there will be faster journeys to Chester and north Wales. However, no actual savings are listed. I assume that there would need to be a change of train at Crewe, from electric on HS2 to diesel, since the Chester line is not electrified beyond Crewe or into north Wales. At present Chester and north Wales are well served by 125-miles-per-hour diesel units in a direct service which runs hourly to and from Chester. What assurance can the Minister give me and the people of my diocese, and beyond in north Wales, that journey times from London will be much faster than now? Do the Government have any figures for what will become an indirect, rather than a direct, service, if I have understood correctly? I would be grateful if the Minister elucidated and illuminated that for me.

4.14 pm

Lord Adonis (Lab): My Lords, I declare an interest as the Secretary of State who initiated HS2, and now as a member of the HS2 board. The House is indebted to my noble friend Lord Hollick and the committee for their report.

On the case for HS2, I gave extensive evidence to the committee on the capacity and connectivity arguments. I do not have time to repeat those here,

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but perhaps I could respond to two points that my noble friend made. He rightly said that capacity constraints are greatest on the commuter services, but a crucial point is that HS2 frees up substantial capacity on these commuter lines, not only into London but into every other major city of the Midlands and the north that it serves, by taking it off the long-distance services.

My noble friend also said that conventional upgrades of existing lines might be better value for money. On this, we do not need to speculate, as we have real experience. HS2 trebles west coast main line capacity. The last, highly-disruptive upgrade of the west coast main line, which many of your Lordships will remember because it inconvenienced you year after year and which was completed seven years ago, cost £9 billion. In today’s money, that alone is more than half the cost of building HS2 from London to Birmingham. Upgrading a Victorian railway is hugely disruptive and expensive, as the noble Baroness, Lady Kramer, explained. Yet that upgrade delivered only a fraction of the capacity of a new line, and further expensive and disruptive upgrades will be needed if we do not build HS2. There is, I am afraid, no free lunch in this business.

Without HS2, we will most likely end up spending as much on upgrading the three existing Victorian main lines from north to south—not only the west coast main line to Birmingham and Manchester but the midland main line to Derby, Nottingham and Sheffield, and the east coast main line to York and the north-east. For this we would, yet again, secure only a fraction of the capacity benefits of HS2. There would also be few or none of the other benefits, including far greater reliability and resilience, much faster journey times—an hour off Manchester to London, halving the current journey time—as well as a direct connection to London’s new Crossrail line, greatly improved access to Heathrow and much better connectivity between the north and the Midlands, as well as between London and the Midlands and the north. In straight value-for-money terms, I therefore believe that HS2 is justified.

However, now that it is set to be built, I want to highlight one critical aspect where crucial decisions now need to be taken: namely, on the HS2 stations. Overseas high-speed networks have seen huge regeneration dividends from new stations. In Lyon, the TGV station at Part-Dieu has spawned a massive new business quarter: La Part-Dieu is now the second largest in France, after La Défense, employing more than 50,000 people, cementing Lyon’s place as France’s second city. Shinagawa in southern Tokyo has been similarly successful in the 12 years since the high-speed interchange station was opened there. By the way, the economic geography of Japan, which pioneered high-speed rail, is much more similar to that of the UK than is that of France. That takes up the right reverend Prelate’s point. However, there is no need to look abroad for inspiration. St Pancras has had the same effect since it was renovated and expanded to become the terminus of HS1 eight years ago. St Pancras is now at the heart of one of the biggest regeneration zones in London—the St Pancras and King’s Cross railway lands—which goes far beyond previous expectations.

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The first phase of HS2, from London to Birmingham, serves four stations: Euston, Old Oak Common—on the new Crossrail line between Paddington and Heathrow—Birmingham Interchange, near Solihull, and Birmingham Curzon Street, near Birmingham Moor Street and New Street stations. At Old Oak Common, a new superhub station linking HS2, Crossrail and London Overground will serve an estimated 250,000 passengers a day. That is the equivalent of London Waterloo, the busiest station in Europe. As well as being a major interchange, Old Oak Common is part of a 155 hectare regeneration zone, an area the size of Hyde Park. There is an estimated potential for 55,000 new jobs and 24,000 new homes, as well as university campuses and other public institutions. All this depends on the new mayoral development corporation master-planning effectively and resolving land-use, landownership and financing issues. This is a key priority for the next Mayor of London.

Curzon Street HS2 station in central Birmingham will be at the heart of a regeneration zone as large as Old Oak Common—a light industrial district which has languished for decades. Birmingham City Council has created the Curzon Urban Regeneration Company, and there is the potential for 36,000 jobs and 4,000 homes to be realised. The decision to extend the Midland Metro to Curzon Street is a welcome first step, but early agreement on plans and financing mechanisms for wider infrastructure developments is now vital.

The second West Midlands station, Birmingham Interchange, on the edge of Solihull and near to Coventry, is another 145 hectare site with the potential for 20,000 new jobs and thousands of homes, transforming access to the National Exhibition Centre and Birmingham airport. The area is home to high-tech manufacturing, including Jaguar Land Rover, and it could become a major enterprise zone, but there are major unresolved green belt issues and the site is at the juncture of three local authorities, so this will not happen without strong leadership.

London Euston is the fourth of the HS2 stations: an 85 hectare site of huge commercial potential, given its prime location, but it is also the most vexed of the four because of the need to expand the station westwards and to rebuild the existing Euston station, preferably locating the platforms below ground to maximise over-site development. The latest plan for the HS2 part of Euston was published last week, but there is a long way to go in agreeing a plan for the Network Rail part of the station, and a decision on Crossrail 2, which would serve Euston, is also vital. All this needs to be joined up with commercial development partners.

In short, hundreds of thousands of jobs, tens of thousands of homes and thousands of companies could be generated by the four HS2 stations and the areas around them—but only with strong leadership and more unified and powerful planning and delivery agencies. Putting this in place is a key priority for HS2.

I end with one observation. In high-speed rail, it is a universal truth that everyone wants the stations but no one wants the lines. However, the stations alone are not enough; they need to be gateways to ambitious development and regeneration, and this needs to be planned from the outset.

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4.22 pm

The Earl of Caithness (Con): My Lords, I have no interest to declare, except that I once was an Under-Secretary of State for Transport, but that was many years ago. There will always be difference of opinion between sides when it comes to major infrastructure projects, but there should be clarity of facts and evidence for the rest of us to decide which side is right and whether we are going in the right direction. That evidence and those facts should be respected by both sides and agreed. On that basis, people can make valid judgments. I do not believe that one can make a valid judgment as an outsider on the evidence that we have in front of us today.

Coincidentally, I travelled on the west coast line last week—I do not travel on it as often as the right reverend Prelate. It was fascinating, having heard the stories of how overcrowded it was. It was wonderfully empty. People were working on their computers on both the way up and the way down. On the way up, the train was absolutely on time and very quick; on the way down it was not quite so good, but that happens on every line. On the question of whether one needs HS2, one probably needs HS4, 5, 6 and 7 if HS3 is to be built, to satisfy the point made by noble Baroness, Lady Kramer, because it is not only people from the Midlands and the north-west who need better access into London, it is people from the west, because Paddington is hopelessly overcrowded.

The reason I decided to speak in this debate was that I was appalled by the response from the Government; it is not satisfactory. In the other place, the day after a big, detailed House of Lords report was published, the Under-Secretary of State, my honourable friend Robert Goodwill, said,

“I most heartily disagree with their report”.—[

Official Report

, Commons, 25/3/15; col. WH533.]

He must have had it on his desk for less than 12 hours. To make a comment like that demeans the enormous hard work of the committee, on which I congratulate it. The written response is not much better. We have heard that it has not answered the specific points of the committee, and that is what prompted me to speak today.

I therefore want to ask my noble friend on the Front Bench a number of questions. We are all in favour of promoting regeneration, but what has been the growth in east Kent since HS1 opened? How does this compare with other areas in the south-east? What are the cost benefits on that line? If we have that sort of information, we can perhaps transpose some of it to HS2.

For every plus, there is a minus, and there are undoubtedly pluses coming from HS2. The noble Baroness, Lady Kramer, said that there was a huge demand for it. That is not what people have told me: people in Coventry, Stoke-on-Trent, Leicester, Chesterfield, Wakefield, Durham, Chester, Lancaster, Carlisle, and Berwick-upon-Tweed have told me that their services will be reduced as a result of HS2. Their services will be less good. What savings will be made from the reduction in services on those lines?

I agree with the noble Lord, Lord Adonis, about Euston station—it is a more detailed matter of city planning. It is very confusing for those of us who are

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interested in this subject to find that HS2 has changed the plans that it submitted two years ago, and that Euston station is going to take seven years longer to redevelop than was predicted two years ago. Where does that leave those of us who are trying to take an independent view? Does it give us any confidence in what is proposed? No, it does not. It seems to me that there will be considerably more blight for a longer time, for more people and for more existing passengers, as a result of what HS2 has decided.

Could the Minister clarify the situation on the trans-Pennine link? I mentioned it in my remarks on the gracious Speech, as I think it is the most important piece of infrastructure, linking east and west, which needs improvement, rather than north and south.

In conclusion, given the confusion and the polarisation on both sides, why do the Government not have an independent cost-benefit analysis? If we had that, we could at least refine our discussion and make up our mind, with clear facts agreed by all.

4.27 pm

Lord Prescott (Lab): My Lords, I have been actively involved in the development of high-speed trains from when I first entered government in 1997, when I was given the first bill within two weeks for a further £2 billion from a collapsed private HS1 project, which had made difficult statements about the cost and the people travelling on it. These estimates, which are shown and exposed in the committee’s report, which I fully support, are therefore not new to me: they show the great uncertainties involved in making an analysis on a huge amount of money, a third of which will be paid by the taxpayer. We are talking about almost a public-private operation here, so I very much support that evidence.

Of course, I was faced with the difficulty of finding £2 billion. I immediately had to bring it into public ownership, because, after all, the Government are the lender of last resort in these situations. My flatmate Dennis Skinner thought it was marvellous: he thought that the revolution was already starting. In reality, however, they are costly and there are difficult decisions to be made about them, but they are important.

The committee does not recommend—despite its criticisms—that it does not want to see a high-speed train. It might want a different one; it might want to change it, as the recommendations suggest. I am like that: I am not against it, but when I was arguing with my noble friend Lord Adonis, in the early stages when he brought this project forward, I did not like the idea justified on 30 minutes to Birmingham. I did not think that it justified that kind of money. What I did argue was, why not connect it to the northern investment in the railway transport system? That is underfunded and being left at a disadvantage compared to the billions poured into the London system. I thought the northern part, if you linked it with what they then called HS3—though it will not be at 250 miles an hour, I suppose—which is the east-west connection, is an important part of connectivity for the cities in the north, as well as for the cities in the south.

To my mind, the northern extension is the important part. I remind the House of all the argument about the north over HS1, where northern towns were told,

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“Don’t worry, we’ll get you trains”. They even built the sleeper trains, then found they could not run on the southern electrification, so I had to sell them to Canada.

The north is a critical part of this. That is what I want to talk about here: how we can we get the rebalancing that the Government talk about? All that I have just heard was about rebalancing to the south, not the north, on something that is very unequal at the moment. I welcome David Higgins’ recommendations and the reassessment he made, but the way we have it at the moment is still not right. I will refer to a recommendation in the committee’s report which I think is necessary.

My concern is with delay. You need only listen to people talking about either Euston station, where it will be or the line, the route, the costs and further inquiries—all that means delay. It is already estimated to start by 2020 and arrive in the north by about 2035, though we cannot get an exact date. Nobody mentions it, just like the cost. In the north, we will be waiting 20 years for HS2 to arrive. But we can avoid that. Most of the delay will be on legislative procedures, arguments of cost, tunnelling wherever it is and all the arguments going on at the moment—and there are more from this committee. I would like HS2 to arrive at the north, at whatever stations we want, a lot earlier than that.

I suggest that one possibility we take into account is to carry on, even if—as the committee said—it is with the electrification of the Pennine link. That is an important link of east and west across the north. Everybody agrees with it: the argument is over when it will come. At the moment, if you go on a train from Leeds to Manchester, it is a disgrace. It is unsafe. You cannot even get on the train and there are no rules about how many passengers can get on it. To that extent, we need higher priority for the north.

To take some of the recommendations from the committee, its report talks about prioritisation. That is a very important point. Where I disagree partly with the committee is that its prioritisation is to start it in phase 1—the northern part of HS2—and then that will be the path. I would go further than that. Look, if you want to start it, start it in the north. You will have to wait five or six years, or more than that, before you can get the first sod out of the ground. That is what is happening. We need to do it now.

That was in my report of 2004 called TheNorthern Way. We started that with the hub of Manchester. Let us complete that now. Let us do the Pennine link, make it a real national one at a fraction of what is being spent on Crossrail and other connections planned at present. Let us start that investment in the north now and give the north the advantage since, as the committee points out, the greater growth and economic contribution comes from the north, for a number of good reasons. We could get the better advantages by starting this whole project in the north, by connecting the east-west link. Then, when we have finished arguing about what we want done in phase 1 and phase 2, we will wait for it. Why hold up the north from getting investment now, which will bring more jobs, more investment and more growth in the economy? That seems a northern answer to the proper question that we have at the moment.

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To help the Government, I give them a suggestion of something that they might be able to do. The Government, as I said in my own reports back in the 2000s, recommended most of these things. We did some of them but you came along and cancelled them—it was called an election. Then you came up to us in the north and said, “We’re going to give you some money for the trans-Pennine link”. Blimey, within two weeks you were telling us that it would be delayed. Why was that? It was for another cost consideration, a calculation made by a network that the cost for the Great Western is no longer £450 million but will be £1.3 billion. What do you do? Do you rebalance to the north? No, you take the money away from the northern investment you promised and put it down in the south. It is no wonder that the Prime Minister goes to Yorkshire and thinks Yorkies hate each other. For God’s sake, they hate you for not carrying out what you promised. That is what you promised and that is what we do.

It makes good common sense, it is something we should do and if you really believed in helping the north to develop and in rebalancing—an important point—then do the essential thing now: start the development of the train network and the strategic investments that we want in the north. Then come along later with the Channel Tunnel—I mean HS2; I call it the Channel Tunnel—and connect it to HS1. You know what that is? It is called transport planning. It means thinking of them all together instead of starting on one and trying to justify everything else, which has now just been exposed by the committee.

4.34 pm

Lord Shipley (LD): My Lords, it is always a pleasure to follow the noble Lord, Lord Prescott, and I agree with much of what he said, not least about investment in the north and the importance of having a transport investment plan.

I was a member of the Economic Affairs Committee that undertook the HS2 inquiry, and I believe that our report asked a set of pertinent questions that deserve clear answers. The report was supported in a letter at the end of May to the Prime Minister from 35 very senior engineers, transport planners and economists in the UK, which called for a pause to,

“look again at alternative ways of tackling the problems that HS2 is supposed to address, and allow a thoroughgoing review of how best to bring our national rail system holistically into the 21st century”.

I think that they are right to ask for that review, but it should be done during the passage of a hybrid Bill.

I have been a very strong supporter of HS2 for many years, and I remain a supporter in principle because a high-speed rail link that can increase capacity of train paths, reduce journey times and improve connectivity in the UK has to be of benefit. However, I have to admit that some of my preconceptions were challenged by hearing evidence. I have concluded that if such a large sum—and it is a very large sum of public money—is to be committed, we have to be certain that it is spent in the best way to improve our rail network.

Ten years ago, I thought that HS2 would be part of a UK-wide transport infrastructure plan, but that is absent, as our very first conclusion demonstrates. I thought

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that HS2 would include Scotland. I thought that it would integrate places and modes of travel. I fear that those early expectations are unlikely to be met, and I find that a matter of increasing concern.

The noble Lord, Lord Prescott, mentioned the Northern Way. I was a member of the Northern Way Transport Compact when it looked at northern priorities for HS2. From the perspective of the north-east of England, I expected that HS2 would give links to London much faster than the east coast main line, and that is likely to happen. I expected that the cities and conurbations of the north, the Midlands and Scotland would be linked to each other and to London by high-speed rail, but if you look at the map in the committee’s report, you can see that, mostly, that is not the case—they will not all be interlinked, as I had hoped that they might.

I had thought that there might be high-speed links from the north, Scotland and the Midlands to Heathrow, the UK’s airport hub. There were even suggestions some years ago that passengers would check in on the train and have their baggage moved on arrival at Heathrow. We now have a stop at Old Oak Common, and there are some understandable reasons for that. However, we must be very clear about how access to Heathrow Airport can be made available to people, particularly those who do not have air links to Heathrow.

A few years ago, I thought that we would have a high-speed direct link with Eurostar at St Pancras. Well, we are not going to. I thought that there would be no negative impact on future investment on the east coast main line, most of which will not be served by high-speed rail, either the full HS2 or the classic compatible system—that is, the link between Newcastle and Edinburgh and the line south of York to London. The Secretary of State said to the committee that there would be no negative impact on future investment on the east coast main line, and I hope very much that the Minister will be able to confirm that that still remains the case.

Finally, I thought high-speed rail would integrate properly with local and regional transport services, but our committee discovered that the £50 billion cost of HS2 does not include any connectivity between HS2 stations and the local transport network and that there are no plans for how that provision will be made.

Mention has been made of whether HS2 will take investment money from other rail services. HS2 documentation suggests that a large number of towns and cities will have a worse rail service as a consequence of HS2. In the north, I mentioned Berwick, Carlisle, Durham and Lancaster as examples, but there are others. The TransPennine route has been mentioned. The Government have again said that the delay to what we termed HS3 is temporary and that it will work, but will they confirm that that remains the case and say how HS3 is going to integrate with HS2? I was very struck by the comment the noble Lord, Lord Kerslake, made in July. He pointed out that HS2 will go to a station in Sheffield which is four miles away from the station to which HS3 would go.

We then have issues around Euston and whether HS2 should stop at Old Oak Common. And then we have Scotland. There may not be a business case, as

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High Speed Two (HS2) Limited has said, for linking Scotland fully to the HS2 system, but my view is that there is a political case for doing that.

In conclusion, I understand what the noble Lord, Lord Adonis, said. It was noticeable that what his speech omitted was that most of the economic gain from HS2 will go to places with HS2 track and stations, and HS2 track stops halfway up the United Kingdom. My great fear now is that investment which might otherwise go further north and go into Scotland may be made further south. I do not think that would encourage an integrated United Kingdom, so I hope that the report and the issues that we have raised in this debate will be fully considered in the next few months before the hybrid Bill comes before your Lordships’ House.

4.42 pm

Lord Desai (Lab): My Lords, I come into this debate very much as an amateur. My noble friend Lord Hollick said that I should read the report and maybe speak on it. I would say immediately that I am very much for HS2 and HS3, and I agree with my noble friend Lord Prescott that delay is not a good idea. As soon as we can build HS3 or HS2, wherever we can build it, we ought to get on with it.

Cost-benefit analysis seems to be the major ground of debate in this report. In my career as an economist, I do not think I have ever seen a cost-benefit analysis where you could not say, “No, we could do a better job: we should have more and better estimates and surveys”, and so on. The way I read the report, it says, “Yes, get some better numbers”, but it does not say that we should not do this. But maybe I have misread the report. My view is that HS2 is still a good idea, and that HS3 is an even better idea, and that we need to make the decision using animal spirits rather than detailed calculation.

Let me give one example. The classic study of cost-benefit analysis for transport economics was the Foster and Beesley paper which led to the Victoria line. It was published in the Journal of the Royal Statistical Society way back in 1964. It totally underestimated the complete impact of the Victoria line on the London economy. Islington would have been impossible without the Victoria line, and the prosperity of that bit of north London is very much because of it. The calculation was entirely about time saved in commuting. Here, the argument is that the time saved in commuting is not sufficient to justify the position but, as my noble friend Lord Adonis said, there are other benefits that we have to take on board. Those other benefits may also require some additional costs, but that kind of calculation does not seem to have been made or examined by anyone. It would be very important for the Government, when they give a better reply to the report than they have already given, to be able to make a much better case for the HS2 and HS3 lines based on the total benefit of constructing them, not merely on the time saved by businessmen because they will get to London x minutes faster.

What we need, not just now but for future big investment decisions, is a different slide rule—a different kind of calculation that considers the narrow costs and benefits of the particular project but then also

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calculates what I would call the other externalities that result from these sorts of investments. The character of large investments, most of whose good effects are larger than the narrow effects of the investment as such, is very often undercalculated. People should not forget that some of the extra business and revenue generated will come back as tax revenues for the Government, not just from the businessmen travelling but from the overall impact on property prices, businesses built, jobs created and so on. The Government need to examine this, perhaps within a new “Office of Animal Spirits”, as I will call it, which would do these sorts of calculations for large investments.

It is quite clear, when you travel in France or Germany, that since the 1970s we have not had the sufficiently large level of investment in our transport system that other countries have had. I do not know whether they went into detailed calculations and debates about cost-benefit analyses, but they made those decisions and have benefited from them. It is about time that we made some big investment decisions and implemented them as soon as possible. I hope that the Minister will tell the various Conservative MPs along the route that they should stop complaining about HS2 going through their constituencies and just enjoy the benefits that it will bring to those constituencies when it is done. The sooner that we get on with this, the better.

4.47 pm

Lord Truscott (Ind Lab): My Lords, I, too, congratulate the noble Lord, Lord Hollick, and the Economic Affairs Committee on an excellent and comprehensive report. The committee rightly says that the Government have yet to make a convincing case for proceeding with HS2, and that the argument that it will increase capacity is at best unclear. The Government’s response to the committee’s report raises more questions than it answers, and I fear that the Department for Transport is guilty of using smoke and mirrors in attempting to make its case. In my view, it has utterly failed to do so.

HS2 will turn out to be the most expensive white elephant in UK history. As the noble Lord, Lord Hollick, mentioned, the cost has already risen from some £29 billion initially to £50 billion in 2011 prices, but stands at a staggering £56 billion in today’s prices. Even this costing does not include the cost of connecting up to the existing infrastructure, as the noble Lord, Lord Shipley, pointed out, which has not been included in the £50-odd billion figure. Obviously further expenditure will be required to link local services to HS2, so it is disingenuous to exclude it.

As the committee reports, the expected cost of construction per mile for HS2 is up to nine times higher than the cost of constructing high-speed lines in France. That is an unacceptable waste of public money. The business case has not been updated since 2013 and continues to include £8.3 billion of cuts to existing rail services. Fears that HS2 would begin to take funds away from other rail projects already look prescient—witness the recent postponement of the trans-Pennine and Midland main line electrifications. The best way to improve connectivity and boost the northern powerhouse is exactly these sorts of projects and by improving regional and intercity routes. The Government are proposing to do the opposite.

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The idea that all this money for HS2 will benefit the north and rebalance the economy is a fallacy. The noble Lord, Lord Prescott, made a powerful case for direct investment in the north, but experience on the continent shows that the primary beneficiaries of this sort of line are capital cities which suck investment and jobs from the regions. The letter of the noble Lord, Lord Hollick, to the Secretary of State for Transport dated 21 July 2015 makes a number of valid points. The noble Lord rightly questions the dubious figures of the Department for Transport on overcapacity and demand on the west coast main line. As the committee report points out, such overcrowding as there is appears to be caused by commuter traffic, not by long-distance traffic. Even peak-period trains on the west coast main line, the only route to benefit from phase 1 of HS2, are half full.

The real overcrowding on the rail network, as any commuter knows, is on the lines into London from the Home Counties, the west and East Anglia. The lines into Waterloo, Victoria and Liverpool Street in particular are now full. None of HS2’s supporters today acknowledge this inconvenient fact, including the noble Lord, Lord Adonis, who has been a long-term supporter of the project. London’s stations are also creaking with Paddington, Moorgate, St Pancras and Blackfriars having the highest proportion of passengers in excess of capacity. As the Evening Standard recently reported, the Department for Transport admits that services from Reading, Heathrow, Brighton and Caterham in Surrey were among the most packed nationwide. In the morning peak, 139,000 passengers are now standing compared to 120,000 a year ago. HS2 will do nothing for these hard-pressed commuters, as conditions continue to deteriorate year by year.

The current HS2 plan for Euston, to which several noble Members have referred, looks like a dog’s breakfast. Reducing the existing 18 platforms to just 11 with an estimated completion date of 2033, it will bring chaos to the area. Nationally, only 2% of rail passengers will benefit from HS2, while the rest of us taxpayers pay for it. I do not know about other noble Lords, but I already want my money back.

This debate and report are not about the environmental impact of HS2, but I remain concerned that this vanity project—I share the idea of the right reverend Prelate the Bishop of Chester, who referred to the word “vanity”—will have a devastating effect on our irreplaceable environment, including unique habitats, ancient woodland and sites of special scientific interest, and on the people who live along the route. I cannot quite share the feeling of the noble Lord, Lord Desai, that this is only a matter of concern for MPs whose constituencies lie along the route. Many people will be affected by this and it will have an impact on many irreplaceable areas of outstanding natural beauty including that of the Chilterns, which appears greatly at risk. Will the Minister update the House on the environmental devastation that HS2 will inflict upon this small island nation?

Finally, I cannot fail to note that Jeremy Corbyn MP has been overwhelmingly elected leader of the Labour Party. He has my best wishes for a difficult job ahead. Mr Corbyn is on record as opposing HS2. I hope that he continues to resist the vested interests

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pushing this pointless and costly project, whether they be the construction companies, foreign contractors or northern councils that believe that HS2 will benefit them. The national interest and the interest of rail users and environmentalists dictate that it should be rejected once and for all.

4.54 pm

Lord Carrington of Fulham (Con): My Lords, I congratulate the noble Lord, Lord Hollick, on his speech and on his exemplary chairing of the inquiry, on which I served. A fast train link is an exciting project. Better rail communications are vital to boost the UK’s economic growth. They are not perhaps the total solution. We also need better roads, faster IT connections and an ever-increasingly business-friendly tax and regulatory environment. However, the economic benefits of this project are very hard to pin down, and projects of the size and duration of HS2 are leaps of faith, rather than susceptible to cost-benefit analysis, as the noble Lord, Lord Desai, said. In fact, as the French would say, they are “grand projets”.

Our report highlights some of the issues with HS2 that need to be thought about. I do not intend to spend time talking about the route; others have dealt with that already and, in any case, it is probably too late to change the route now that so much planning has gone into it. One thing is sure, any alternative route would also have run into substantial opposition.

The first issue is: where is the best place to start building the track? Is the first priority the part of HS2 linking London to Birmingham? I should perhaps say that I am a Londoner born and bred, and therefore have a prejudice in favour of starting any project in London, but my grandparents came from Leeds—and from the slums of Leeds at that.

As the intention of HS2 is to boost the northern powerhouse, there is an argument, on which we took a lot of evidence, for starting the project with a link between the great northern cities—the so-called HS3—or even by starting by linking Scotland with England, which would have certain political benefits. During our evidence sessions, it became very clear that one of the imperatives for HS2 is to relieve the bottlenecks in the rail approaches to north London. We took a lot of evidence that suggested that one major benefit coming from HS2 will be that it will take long-distance trains from the existing rail tracks, thereby allowing many more commuter trains to be run from, say, Watford into London. I suspect that a project of this size may be an expensive way in which to provide more trains for London commuters.

That brings me to some of the most worrying evidence that we heard. The French experience with their TGV network is that the economic benefit of shorter travel times is far from clear. Where the station is in the city centre, as at Lyon, there is some boost to the economy. However, where the station is outside the city, as at Avignon, there is very little benefit. This should make us question whether the proposed stations on the HS2 line north of Birmingham are always in the right places. In practice, the TGV network seems to have benefited Paris more than the connected cities,

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and the planners for HS2 need to decide how to avoid this trap. If the journey time from Birmingham to London is significantly reduced, how do we avoid a large increase in the number of commuters travelling from Birmingham to London on a daily basis? At present, the only planning for that seems to be to delay the development of Euston station so that no commuter would want to use it. We will need some serious plans to avoid Birmingham becoming another dormitory town for London.

However, this vast infrastructure project is a good thing, even if it is perhaps in the wrong place, may have unforeseen consequences and may benefit London more than the rest of the country. But it will have major benefits if one other condition is met. All the experience of building fast rail networks lies in France, Spain and China. There needs to be a plan to ensure that British firms can develop, via HS2, that building expertise in high-speed rail construction to enable them to compete in the global market for global infrastructure projects. Then, perhaps, we will see major benefits from this vast expenditure.

4.58 pm

Baroness Mallalieu (Lab): My Lords, like others, I congratulate my noble friend Lord Hollick, his colleagues and officials who have produced a truly outstanding report. The 16 questions posed by them in chapter 9 are those that must receive satisfactory answers before this project goes ahead. I wish I could say that the Government’s written response either answers those questions or shows that the concerns raised have been carefully considered and addressed—but, sadly, I cannot do so. Indeed, I have to express considerable sympathy for the Minister, the noble Lord, Lord Ahmad, who has been provided with very threadbare defence against the valid criticisms of the committee in a slight, 30-page response from the Government. It is very long, not on information or answers, but with the usual clichés: “clear and robust”, “step change in capacity”, “convincing” and “compelling”. But it does not answer the questions that were raised about the problems.

That report is far from a lone voice; there have been many others. Most recently, I saw a letter, which may have been the one already referred to by the noble Lord, Lord Shipley, that was sent to the Prime Minister on 27 May by 15 of this country’s most senior engineers, transport planners and transport economists, led by emeritus professor James Croll. Those experts expressed support for this report and asked for an urgent review of the project. The signatories included the former chief economist of the Department for Transport, Sir Christopher Foster, and six of the United Kingdom’s leading professors in the fields of civil engineering, transport studies and transport economics. They, like the report, question the calculations that are still being relied on in relation to capacity. Despite the very considerable expertise of the noble Baroness, Lady Kramer, and my noble friend Lord Adonis, I doubt that those calculations can command the respect or confidence that they place in them. Those experts also expressed the view that, far from furthering northern regeneration, which all of us strongly support, HS2 is far more likely to favour the south, as others have said.

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Two things have happened this summer since this report was published that should prompt the Government to institute an independent review. The first has been referred to by my noble friend Lord Prescott: the cancellation of Network Rail’s upgrades, promised during the general election. The axing or delay of major projects that would have meant improvements to the Midland main line from London to Sheffield and the trans-Pennine route, especially from Manchester to Leeds, through lack of money shows that our rail network, especially in the north, is crying out for investment, which is not available and will not be forthcoming while this project proceeds. It could and should be provided.

Secondly, and of very great significance—again, others have already mentioned them—are the statistics published this week for rail overcrowding. From them, it is clear that the serious problems currently on our network are with commuter services, most particularly but not exclusively in London—and the problems are not on the London-to-Birmingham line. The figure has already been given: 139,000 passengers are standing on trains on arrival into London at morning peak time. A quarter of all those trains are overcapacity, with 59% having passengers standing. Those passengers are among the people who will have to pay for HS2 if it goes ahead, and most of them will receive absolutely no benefit.

Worse still, HS2 would worsen their problems. I hear what others say, but I read the debate that took place yesterday in another place. I refer those who say that the commuter position will be improved to yesterday’s Hansard,col. 997. TheParliamentary Under-Secretary of State for Transport, Mr Robert Goodwill, accepted that at Euston there would be a reduction in platforms for existing trains from 18 to 11, together with a reduction in the approach tracks for the existing trains. How can it be right to tell passengers currently struggling on what is in places an inadequate and failing rail network that, at a very minimum—we have heard very much higher figures mentioned—£31 billion of their money is to be spent to provide a small number of business travellers with a slightly quicker way to Birmingham and in the hope that, contrary to experience in some other places, there will be development away from the capital and not more commuters coming in?

I am sure that this House will take note of this excellent report. I hope that the Government will too.

On an earlier occasion when we debated this subject, we were told by my noble friend Lord Mandelson the history of how this proposal came to be adopted. It appeared to be, as he himself put it frankly and “with regret”, partly for electoral reasons and to leave a legacy. It has become a runaway train, but there is still time to put some brakes on and have a proper look what we are proposing to do. That was the recommendation of the experts. It need not delay the parliamentary process. It might be better if it did, but it could take place at the same time. We must have an independent look at what is going on and we must have the answers to the questions posed in this report.

5.04 pm

Lord Rodgers of Quarry Bank (LD): My Lords, I was unaware of the Government’s response to the Economic Affairs Committee report of 25 March

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until this debate appeared on the Lords’ daily business paper. As an outsider and not a member of the committee, I find the response disappointing and dismissive. I have said on a previous occasion in the House that I am agnostic about the merits of HS2, as currently planned, and many agnostics want to believe. Alas, the response does not help towards the necessary faith in what seemed a glamorous but—as it has turned out to be—an inadequately considered project.

The report and the response should be seen in the context of the wider discussion about the railways. I am confused by the Government’s intentions. On 7 June, they initiated a debate in the House called, “North of England: Transport”. Many noble Lords spoke with enthusiasm of Hull, Newcastle, Derby, Leeds, Merseyside, Cumbria and elsewhere and about the prospect of better connectivity and improving the infrastructure. As we know, one of the important matters was the trans-Pennine electrification. In the report, the noble Lord, Lord Ahmad, struck an optimistic note saying,

“before you bring any strategy together, you need to have the vision”.

Later he said that electrification was a priority and,

“we will seek to move forward on that at the earliest opportunity”.

The noble Lord, Lord Ahmad, wound up by quoting the noble Lord, Lord Prescott, that it was,

“all right to talk but it is time to get on with it”.—[

Official Report

, 17/6/15; col. 1210-15.]

The noble Lord, Lord Ahmad, made a positive and upbeat speech. That was on 17 June in this House.

But eight days later, on 25June in the House of Commons, the Secretary of State for Transport, Patrick McLoughlin, made a Statement on the publication of the annual report of Network Rail. Some things were working well, but he did not pretend that everything was perfect because it was not. Then followed a damning critique of Network Rail in which the chairman was sacked and which ensured that some of the executive directors would receive no bonus. The Secretary of State set out a review of priorities. On the Midland main line there could be “speed improvement”, but electrification would be “paused”, as was mentioned earlier by the noble Lord, Lord Hollick. There would also be a pause in the current work on the trans-Pennine route. It was a deeply worrying Statement about the railways, and very different in mood and style from the buoyant speech of the noble Lord, Lord Ahmad, a few days earlier.

I have a concern and a question. The annual report that the Secretary of State referred to was the first annual report of Network Rail since it was reclassified as a public body in September 2014. But the unsatisfactory output of the organisation was not a sudden event. Since then, the Secretary of State tells us that the present chief executive Mark Carne has had to review the organisation’s structure, performance and accountability and has made changes. However, the chief executive of Network Rail from February 2011 to April 2014 was Sir David Higgins, who is now the chair of HS2. My question is this: do the Government still have unqualified confidence in Sir David’s ability to handle the current problems, including the economics of HS2, and

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successfully carry forward the project on time and within price? I would be grateful for a ministerial answer today.

I have a further anxiety about the railways. A letter dated 6 August from the Office of Rail Regulation was copied to the Secretary of State for Transport covering a period of six months to 31 March. It identifies and lists areas of weakness, including inadequate governance of projects, inconsistent consideration of safety issues and low productivity. It also states that in some areas, the quality of data that Network Rail relies on to plan and manage its works on Britain’s railways is not acceptable. In summary, the letter states, “We consider that the wide range of identified weaknesses indicate that NR’s project development and delivery weaknesses are systematic rather than the result of individual projects failing or adverse circumstances”. While this letter refers to Network Rail, how can we be confident about the prospect of it handling HS2?

The introduction for the government response to the Economic Affairs Committee report is unyielding. There is the usual hyperbole that is familiar in the growing literature of HS2, while in contrast there is the hard-headed Statement made by the Secretary of State on 25 June. I would welcome the authors of further HS2 documents showing some openness and fair-mindedness rather than rejecting the views of those who remain unhappily sceptical about a huge and complex project.

5.12 pm

Lord Snape (Lab): My Lords, this is to some extent a pretty depressing debate. I did not find the Economic Affairs Committee report to be particularly enlightening, and indeed having listened to the contributions of my noble friends Lord Hollick and Lady Blackstone, I find myself even less enlightened as to why they have come to their conclusions.

Capacity on our railways is not the simplistic concept that the committee appears to believe. The Institution of Railway Operators defines network capacity as:

“The number of trains that can be incorporated into a timetable that is conflict-free, commercially attractive, compliant with regulatory requirements, and can be operated within the laid-down performance targets in the face of prevailing levels of Primary Delay”.

In his opening speech, my noble friend Lord Hollick talked about improving the existing railway as though that would be a solution to the overcrowding that, bizarrely, he appears to think happens only on a Friday afternoon—presumably during the summer. Yet all the evidence shows that, with an increase in traffic of 59% on the west coast main line over the past decade, the existing problems of overcrowding are only going to get worse.

Of course, we are not talking about just passenger-train overcrowding. If we accept the definition of line capacity as laid down by the Institution of Railway Operators, we have to take into account more than just the number of commuter trains. According to the report, commuters are simply dismissed—we should just put up the fares, as we do on aircraft, when things are particularly busy. My noble friend Lord Hollick has the security of sitting, as I do, in the upper House, but I would have thought that knocking on doors with

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that solution, particularly in commuter areas, would not be too sensible. However, neither he nor I have to do that—in his case, I do not think he ever has—but let me assure him that it is no easy task to convince people that what you are doing is for the public good.

There have been a number of irrelevancies introduced into the debate, not least by the noble Lord, Lord Truscott, who appeared to read every word of what he had to say. He talked about the Midland main line and the trans-Pennine route to a certain extent, as did my noble friend Lord Prescott. They appear to believe that the Economic Affairs Committee report on HS2, indeed the whole construction of HS2, is menacing other parts of the railway system. There was a simple reason, of course, for the electrification teams being switched from the Midland main line and trans-Pennine routes, and from the Manchester to Scotland route, to the Great Western. It was that the Government have been unwise enough to sign a deal with Hitachi for a number of IEP trains, which have to be paid for from the moment of delivery. Of course, electric trains without electric wires are a bit of a drain on the taxpayer, which is why these electrification schemes have been paused. That pause has nothing at all to do with HS2.

Indeed, although the electrification of those schemes has been “paused”, to use the Government’s word, we should not make the mistake of thinking that electrification —the stringing up of wires—is the be-all and end-all of modernising the railway. The fact is the infrastructure on the Midland main line and elsewhere is still being improved prior to electrification, as it should be. Wiring up the existing route is no way to speed up trains, whether or not we have electrification.

Returning to what seems to me the central premise of the committee’s report, I think that my noble friend Lady Blackstone suggested that we need to improve the existing infrastructure and use alternative routes. We were unwise enough as a nation—let us take London to Manchester, for example—to close the alternative routes some years ago under successive Governments, so there is no alternative Midland main line: it finishes at Matlock instead of heading into Manchester. There is no alternative route on the former Great Central, the last main line to be opened in the United Kingdom. That was closed in the 1960s. I would be grateful if my noble friend could tell me what these alternatives are.

The fallacy that it is possible to reduce overcrowding by removing a few first-class coaches is just that. Indeed, Virgin Trains is doing that now on its Pendolinos. What contribution will that make in the long term? It might help reduce overcrowding in the next couple of years, but at the rate of increase of passenger carrying on the west coast main line. It is very much a stop-gap solution.

My noble friend Lady Mallalieu talked about commuters. If they are in the south of England, our hearts bleed for commuters, but if they are on the west coast main line, they are to be dismissed and should pay more, according to the IEA report. Network Rail, however, is already doing a great deal to combat the overcrowding in the south of England. The central core of what was Network Southeast is being improved

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and resignalled at the present time. London Bridge is being completely redesigned—you cannot do that without causing a few raised eyebrows and some complaints, but that is what is happening.

None of these irrelevancies has anything to with HS2. The fact is that the west coast main line is overcrowded with trains. I was bemused that the committee prays in aid Professor Glaister—he is a man who likes building roads, incidentally, although that is not necessarily to his detriment. On the Department for Transport’s own figures, only 1.2 passengers are found in each motor car, yet we do not build motorways on the basis of the number of passengers. We build motorways on the basis of congestion caused by those 1.2 drivers and occupants, which the department says is the average occupancy of a motor car. I think, therefore, you can put Professor Glaister’s views to one side. He is no friend of the railway system. I have no doubt that he will come up with the conclusion that he wanted in the first place.

There is a problem, of course, about HS3. My noble friend Lord Prescott wants to see it go ahead; I want to know where it is going. So far it is a sentiment expressed during the election campaign. Is it between Manchester and Leeds? Is it between Liverpool and Manchester? Is it between Liverpool, Manchester and Leeds? If it is all those—and Hull as well, as I had better put that in for my noble friend’s sake—which of the existing routes is going to form part of it, or is it going to be a completely new route? Are we to reopen the Woodhead Tunnel, which was closed in 1970? We do not know. All we have is a slogan from the Government on HS3 and the northern powerhouse. At the moment it is a powerhouse where the power has been switched off.

I shall conclude because of the time factor. However, my advice to my noble friend Lord Hollick and his colleagues is, “Back to the abacus”.

5.19 pm

Lord Rowe-Beddoe (CB): My Lords, I also had the pleasure of serving on this committee under the able chairmanship of the noble Lord, Lord Hollick. This inquiry started before the Summer Recess last year. Our report and recommendations were published in March and the Government’s response was received in July. I remind noble Lords of this timeline, for, despite a general election, it seems somewhat unsatisfactory to deal with a subject costing multiple billions of pounds in such a way. I misquote deliberately the bard of Stratford-upon-Avon: it moveth with all undue haste. My concern is that the Government’s response, which has been alluded to by some noble Lords, is very much, “Here is your answer; what is your question?”.

Remember what the press release accompanying our report said. The headline was:

“The Government has yet to make a convincing case for a £50 billion investment in HS2”.

Have they made a convincing case in their response, or have they adjusted the facts to support the political commitment? To progress such a project, forensic examination must take place and be given priority in identifying areas of substantial cost reductions, which I assume that Sir David Higgins and his team are

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undertaking. We are all only too familiar with that well-known phrase “cost overruns”. It covers so much in everything that we seem to do. An article written by Daniel Albalate and Germà Bel, two professors at the University of Barcelona, who were also two of our witnesses, analysed high-speed rail in five countries. In that article they gave us a meaningful warning. The fixed costs of high-speed rail investment are huge. Cost overruns are notoriously high.

In the context of cost, I also bring to your Lordships’ attention some evidence given to us in March this year by a former Permanent Secretary, Sir Tim Lankester, who found it surprising that the department’s accounting officer had,

“so far not insisted on a formal direction from his minister before authorising … expenditure on the project, as he is required to do under Treasury rules if the value for money test fails to be met”.

Will the Minister inform the House of the current situation in that regard?

Despite much expert advice from many quarters supporting our argument for a more convincing case to be made, the juggernaut moves on. In a letter written to the Prime Minister at the end of May this year, which has been mentioned by the noble Lord, Lord Hollick, and by the noble Baroness, Lady Mallalieu, 34 prominent UK experts—to correct the noble Baroness—including senior engineers, transport planners and economists, under the lead of Professor James Kroll of University College London, called for a pause. It has been suggested that that could happen at the time of the hybrid Bill. It would be a pause to look again at the role of HS2.

The issues are confusing. Do we want to get to Birmingham quicker? Do we want to have a northern powerhouse and a connection at the top end, which seems to me the obvious choice? As the noble Lord, Lord Prescott, said, we could start on that now. Or is it a question of extra rail network capacity, as has recently been mentioned? Then there are the environmental and economic justifications. However, there certainly does not appear to have been a pause. If there is, it is a very silent one.

As regards the Government’s response to our report, the noble Lord, Lord Hollick, wrote to the Secretary of State on 21 July and drew to the latter’s attention 10 clear unanswered questions. The answers from the department and the Secretary of State arrived at the beginning of September. The department’s answers to the 10 questions were contained in one paragraph, which states, “considering that the Government’s position on these matters is well established”. Basically, that is how those 10 questions were answered. It smacks again of the adage: “Here is your answer. What is your question?”.

Among those 10 questions was a request to estimate the overall reduction of cost to HS2 of terminating the line at Old Oak Common. I am sure that other noble Lords will talk about that as I note the time, but it must be done. We asked about the necessary station redesign, how much it would cost and what would be the effect on the cost-benefit analysis. We also asked whether the Government could reduce the cost through design change to accommodate a lower maximum speed. Why do we have to travel as fast as this thing is

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supposed to travel when high-speed trains travel at a lower speed everywhere else in Europe? Such a change would clearly save money.

In conclusion, we need greatly improved transport infrastructure. I believe that we can satisfy the northern powerhouse objectives but we must look at lesser speeds and longer trains. Pricing for passengers is also very important. Rail freight has not as yet been mentioned. It is the poor relation of the whole exercise.

5.27 pm

Lord Mitchell (Lab): My Lords, I, too, thank my noble friend Lord Hollick for introducing this debate and for chairing the committee which produced the report. Its conclusions are very brave and stand in opposition to the stated policies of most political parties. Having said that, I am not sure where my own party stands on this issue, but no doubt that will emerge in the mists of time.

I take a slightly different view on this. I want to look at some of the assumptions that have been made about the revenues on this project: not just where they will be in 10, 15 or 20 years but where they will be over the next 80 years, because that is the length of the analysis that has been done on this project.

When Eurostar opened in 1994, I was on my way to Paris within weeks. When HS1 opened in 2007, I hotfooted it to the stunning new St Pancras station, happy at last not to endure the embarrassment of trundling through south-east London and Kent prior to whizzing through France. I marvelled at the French TGVs and am totally in awe of the high-speed train from Madrid to Seville. I love high-speed trains. Therefore, noble Lords would have thought that I would be full of anticipation and jumping up and down waiting for HS2 to arrive. Well, 20 years from now I will be 92. God willing, I shall be on that train and, God willing, I shall be able to find Euston station.

But I am not. I am against the project not for the reasons set out in the report before us, but because no account has been taken of what the world may look like in 2035, 2065, or indeed 2095. I look at HS2 and all I see is a £50 billion project—at least, I thought it was £50 billion until this afternoon. I now hear that it is £56 billion, and a noble Lord on the other Benches talked in terms of £80 billion. Some £10 billion here and £10 billion there is serious money. Anyhow, I see this project as a potential white elephant.

I see 20th-century technology for a 21st-century world. I see a project that is based on the assumption that the world will stand still, when the only thing that we know for certain is that disruptive technologies will continue to change the way we work, socialise and play. I live in the world of technology. I see constant miniaturisation, processing speeds that double every two years, industries being destroyed and new ones being created. The music industry, movies, taxis, books, manufacturing processes, medicine and television have all been subject to massive disruption. So why not rail travel?

Look at where the research and development is going. Companies such as Google and Apple are committing billions to the design of driverless cars.

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These boys and girls do not mess about: they will get there. What will be the implications of driverless cars for all forms of rail travel? I do not know, but maybe we should factor it in.

If it were my decision I would instead commit to another form of communication that is much more appropriate to the 21st century: blisteringly fast broadband connection throughout the country, in both rural and urban areas, offices and homes. It would be just like electricity: everyone connected, and connected fast. If we had that, we would be able to communicate with each other in an entirely different way: not over railway lines, but over fibre-optic lines, not at 250 miles per hour but at 180,000 miles per second.

We already communicate with each other using Skype and FaceTime. These are still hesitant, but good enough. Video conferencing is used by large organisations. It is very expensive and you have to go into a dedicated room, but it is improving quickly and universal fast broadband will hasten it along. I have been criticised for this before, but I am a big advocate of holograms. I believe that with fast broadband we would be able to see people materialise in front of us on devices yet to be invented. This is not science fiction. It will happen. When it does, who would want to get up early in the morning, get to a station, get on any train—fast or slow—struggle for taxis, buses and tube trains at the other end, and repeat the exercise to get home late at night? Who would do that when the option is to have the same meeting at home or in one’s own office?

When the HS2 debate started it was all about speed. When that failed to convince, it was all about capacity: passenger numbers that will continue to increase. But will they? For a time they will, but as the internet gets more powerful I am certain that rail travel will fall out of fashion and the digital alternatives will be chosen. If this happens, the Excel spreadsheets so beloved of those who support this project will begin to look pretty thin.

I make one final point. HS2’s supporters portray it as a magical solution that will bring London and the north together: an accelerator of the northern powerhouse. As my noble friend Lord Prescott said, let us get on with HS3: that is where fast rail speeds really could count. Manchester to London in half the time? I will avoid cheap shots about waiting for taxis at Euston or Piccadilly, or traffic jams on the Euston Road. But I will say this: instead of selling the virtues of Manchester being better connected with London, how about getting Manchester better connected digitally with Shanghai or Rio—or indeed even Blackburn?

5.33 pm

Lord Framlingham (Con): My Lords, I am delighted to follow the noble Lord, Lord Mitchell, in the remarks he has just made. We cannot possibly know what the world will look like in the years ahead.

I am not in favour of HS2. It has been called a vanity project. I am not sure that those who thought up the scheme are vain, but they are misguided, and in terms of our national transport network they have got their priorities very wrong. Some of our greatest engineering achievements were, at their inception, seen as overambitious and dauntingly difficult but turned out when completed to have been far-sighted and

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invaluable. Thomas Telford’s famous suspension bridge over the Menai Straits meant that the people of the island of Anglesey no longer had to row against the turbulent tides to reach the mainland and wait for a very low tide to urge their cattle to swim across to market.

Bazalgette’s sewers saved Londoners not just from a terrible stench in high summer but from the spreading of disease. London’s Tube system fulfilled the need for its citizens to move around the city and has been copied all over the world. Our motorway system, the Channel Tunnel and even Crossrail can be seen as necessary projects and our ports, airports and canals, with their breath-taking aqueducts, were all built to satisfy a need and, in their own way, have stood the test of time.

Where all those mighty projects differ from HS2 is that they were conceived, designed and built to satisfy an obvious and acknowledged need—a serious problem demanding a solution. HS2 has been dreamt up simply on the assumption that there is a pressing need for passengers to travel at speeds of up to 250 miles per hour, and a need to improve capacity, which is seriously disputed, at a cost of £50 billion. History has acknowledged and acclaimed the foresight and ingenuity of the men and women who pioneered the projects I mentioned, as well as recognising their intrinsic value. History will not be kind to those who, if it is pursued, push through this silly scheme. Who really wants to travel at 250 miles per hour over such relatively short distances? It is unnecessary and ridiculously expensive. The time saved is not worth all the cost and upheaval. The money would be much better spent on improving communications in the north, as has been mentioned repeatedly, or on improving stations and infrastructure generally.

Your Lordships may gather from these remarks that HS2 does not have my wholehearted approval, but my main reason for speaking today is to highlight the damage the scheme may do to our environment and to the countryside through which it will be driven. The countryside—trees, ancient woodland and areas of outstanding natural beauty—gets no mention in this report, yet it is hugely implicated in the economics of HS2. If HS2 does not proceed, our countryside is safe. If it goes ahead, it is in serious danger and, if we care, the cost of protecting it will be well worth while.

Perhaps I may deal, albeit briefly, with just one section of the proposed line: that through the Chilterns. The proposed route of HS2 bisects the county of Buckinghamshire diagonally across its length for 60 kilometres, from south-east to north-west, which is about one-third of the total route between London and Birmingham. Buckinghamshire is the county most adversely affected by HS2 and the route crosses under and over the Chilterns area of outstanding natural beauty. It severs irreplaceable ancient woodland, dissects a nationally important historic landscape, detaches heritage assets from their rural setting and disrupts intact medieval landscapes and areas of great biodiversity and value. HS2 has no tangible benefits for the people of Buckinghamshire.

A feasibility study by Peter Brett Associates of an alternative tunnelling option under the Chilterns has been commissioned by a number of the local authorities

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affected. Its findings were presented to the House of Commons Select Committee on 13 July this year by a team led by Mr Ray Payne. The main conclusion of the study is that a long tunnel for the transit of the Chilterns by HS2 is technically feasible and would protect the designated landscape of the Chilterns area of outstanding natural beauty and the green belt, where appropriate. It would mean that no houses would have to be demolished and that there would be no landfilling of surplus soil, minimal disturbance of the area of outstanding natural beauty and minimal impact on communities, businesses and residents. The extra cost of construction is estimated at £480 million, which in a budget of £50 billion—and given the huge advantages it brings—must be acceptable. In fact I understand that an alternative long-tunnel proposal, similar to the Chilterns long tunnel, has been proposed more recently. It is referred to by HS2 Ltd as T3i, follows the same route as the Government’s scheme and has been priced by HS2 Ltd at an extra £350 million. For the reasons that I have set out, if we must have HS2 then the solution to the Chilterns problem is a long tunnel.

At all levels of government, we constantly proclaim our affection for the environment, our appreciation of all it does and our determination to protect it. Here, on the grandest platform of development possible, we have the chance to prove that we really care, or to admit that those are just so many hollow words. If this scheme deserves to be carried out, it deserves to be carried out as sympathetically as possible to the countryside through which it will run and to the people whose lives will be affected by it.

5.40 pm

Lord Lea of Crondall (Lab): My Lords, having heard my noble friend Lord Hollick criticise the Department for Transport for not listening carefully to some of the committee’s views, I am sorry that he is not here to listen to some of the analysis of his own report from Members of this House.

We seem to be moving into a world of what is now called spatial economics when it comes to infrastructure investment. Those who say that this will definitely favour centralisation in London must think that everybody born in Manchester, like me, is stupid. The people in the north are overwhelmingly in favour of this project, and they are not all stupid. If we are to have two clusters—the new spatial economics is called cluster economics—there is the vision of a big cluster in the north and a big cluster in the south. I remind noble Lords that although London is a big place and you can take the wider number of 10 million or 15 million people, it is no bigger than the cluster in the north. You can play around with geography, but south and north are capable of forming a sort of dumbbell of two great clusters. That makes sense.

It also makes sense to accept the disappointment of the noble Lord, Lord Prescott. There was indeed a strange sequence of events whereby, having established that the northern powerhouse was the great idea, suddenly, trans-Pennine electrification was delayed. Perhaps the Minister can explain. There might be a proper argument about the link-up with the north of HS2 and the electrification of which trans-Pennine

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route—it may be a new project—is necessary as part of HS3, but I should like to hear the rationale set out side by side.

Many of us who were keen on the northern powerhouse when no one else was thinking about it are a bit suspicious of those who suddenly want to damn HS2 on the basis that they prefer HS3. I do not find that very convincing. There is within what I call the northern cluster, broadly defined, a huge improvement across what one might call the clusteral reality—including from Birmingham, Nottingham, Derby and Sheffield—which takes a very long time at the moment, well over halving the time into Yorkshire, Lancashire and across the top.

Apropos of what my noble friend Lord Desai said about cost-benefit analysis, there are different ways of looking at it. I did a bit of that in my first job after university. I was doing postgraduate work on transport economics at the same time as jobs for the World Bank on it. Cost-benefit analysis is very difficult. One reason is a point that the noble Baroness, Lady Blackstone, did not acknowledge when she said that the expenditure should be compared with current expenditure on education or whatever. No self-respecting economist would see it that way.

Let me put myself in the position of a Victorian engineer or public servant in 1850. Did we realise that we were building a railway for 200 years—not just for 1950 but for 2050 the way it is going? The west coast main line will be there for 200 years. We all know that discounted cash flow and rates of return over those periods of time are very hard to combine with what one spends on the current year’s public expenditure. However, the Victorians did not delay and leave to the next generation all those great expenditures on sewers and the rest of it. We should take a broader view when we look ahead over these vast periods. We should also take a broader view, in that connection, on how fast the trains would go. Somebody said, “Why should we go faster than everybody else?”. Well, why not? Why should we say that in 20 or 50 years we should be locked into a route that will determine the possibilities for speed, for a start, and save some money now with 300 kph instead of 400? I do not see why we should always be the back-marker.

My other major point is that the committee has not been very fair in its analysis of the train paths issue. You have to compare apples with apples here. It is not just a question of whether at some times of the day there is spare capacity. You are freeing up train paths for a number of reasons, one of which—freight—I am sure my noble friend Lord Berkeley will comment on in a second. We need more freight paths. This leads to the environmental question. I am sure that the Amersham Action Group would criticise a motorway going through Amersham even more vociferously. It should recommend that more freight be allowed paths up the country, rather than going by road. We should say that, although there is no total proof of these things, this is a project in which many of us who have a little bit of experience in these matters will put our faith—to use the words of the right reverend Prelate—and that we have crossed the Rubicon now. We should really say, “Full steam ahead”.

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5.47 pm

The Earl of Glasgow (LD): My Lords, I find the report of the Economic Affairs Committee on High Speed 2 a rather negative and depressing one. It certainly does not express much enthusiasm for this very exciting project. It seems to be endlessly demanding more hard proof that the enterprise really will bring more prosperity to the north of England; that it really will free up more capacity for the overcrowded existing network; that the business world will really benefit from faster communications between London, the Midlands and the North; and that ordinary people will be able to afford it. There is the implication that the £50 billion that HS2 is expected to cost might well be better spent on other things. It seems to me a very short-sighted report by a committee that cannot imagine what our railway system needs to be like in 2030 or beyond.

Of course it is expensive: it is the first new railway line to be built in Britain for more than 100 years, if you do not count HS1. Initially, anyway, there will be more than 300 miles of track. The Economic Affairs Committee seems to be engaged in some sort of cost-cutting exercise, an assessment of value for money. It seems to me that in this case, the cost is really of secondary consideration. The main consideration is: do we need High Speed 2? If, as I believe, we do, the Government are necessarily going to have to find the money to pay for it.

Most of us now accept that an improved railway network is the most effective and sensible answer to our future transport challenges. In order to improve the working capacity of our existing network, we need a brand new north-south railway line. If we are going to invest in a new railway line, it is only sensible to build a modern high-speed one. Too much emphasis has been put on the high-speed element, although taking half an hour or more off a 200-mile journey is a considerable benefit to all classes of passengers. No, of course we need High Speed 2. It is far from a vanity project, as some of our opponents try to make out. It is an absolute necessity if we want to create an effective and efficient railway service in Britain in future. Besides, the train is—potentially anyway—by far the most civilised way to travel.

As your Lordships’ will have gathered by now, I am tremendously excited by this prospect of HS2, though I will probably be dead by the time it is completed. We should also be planning HS3, the proposed east-west railway through the Pennines that will join up the major northern towns and help to create this much-vaunted northern powerhouse. I go along very much with the hopes of the noble Lord, Lord Prescott, for the north. I would like to see plans for HS2 continue north to Scotland, as my noble friend Lord Shipley said. Obviously, I have to declare an interest there. Then there needs to be this direct link joining HS2 with HS1—apparently a very expensive mile of track in London that the Government are keeping on hold for the moment. Why should not the Manchester businessman or Yorkshire holidaymaker travel directly to Paris without changing trains, as Londoners can do now?

As again my noble friend Lord Shipley touched on, one concern of the Economic Affairs Committee concerns me, too. It has always been my understanding that

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while money is spent building HS2, money is also being spent on upgrading and improving the existing network and connecting some of the existing track with HS2 at appropriate places. The report questions whether the £50 billion budgeted for HS2 would not be better spent upgrading our existing lines. I always assumed that this was not an either/or situation; that the Government had budgeted for both and that HS2 was an integral part of the plan to improve the whole railway network in Britain, making the railways the top priority for future transport policy. If HS2 is just a standalone one-off, then maybe it could be classed as a vanity project. I need the Minister’s assurance that that is not the case and that the existing network will be properly financed at the same time, and in particular that the connection between the existing network and HS2 will be made.

As long as I have that assurance, I am 100% behind HS2. However, I am a bit apprehensive of the Economic Affairs Committee’s recommended delays and the powerful pressure groups bent on stopping HS2 in its tracks—if that is the right word. I would also like assurance that the Government will keep their nerve and go ahead with HS2 as soon as they possibly can.

5.52 pm

Lord Monks (Lab): My Lords, I start by adding my thanks to our chairman on the committee, my noble friend Lord Hollick, for his excellent presentation of the report. Just to remind everybody, we are the Economic Affairs Committee and focused on the economics of HS2, asking searching questions to which we still await some convincing answers and perhaps feeling that, so far, the replies we have had are rather perfunctory and verging on the impatient with what seems to be regarded as nit-picking by the Department for Transport. I hope that the noble Lord, Lord Ahmad, will be able to correct that impression of the Government’s approach a bit later on.

I support HS2, but not because I am convinced particularly by the economics of the moment or the different studies that have been done. HS2 is not just an economic matter. The noble Lord, Lord Shipley, put that very well earlier. It is as much about politics as economics. If you go to France and on the TGV system, as many noble Lords will have, you would not call that a vanity project or just for the glory of having a high-speed train. It is well used. It was expensive in what it cost the country but it is a huge national asset. You can go to Germany and use the ICE network developed there. What was the reason for that? It was after the fall of the Wall and the need to reunify the country. As much as anything else, Germany needed new sinews of transport to pull the country together and give it some sense of unity. Spain has problems as severe as ours and perhaps worse in maintaining its integrity, yet the high-speed train system there is as much about holding the country together and bringing parts closer together as about economics.

Although economics are important, they are not the only thing. In this country, some of the arguments could have been avoided if this had been put in a national context: a national network of high-speed trains, extending to Scotland and including the north-east of England, and perhaps with an emphasis put on

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those parts of the country that we want to develop more quickly than has been the case so far. That certainly includes the north of England. At the moment, our plan for HS2 ends half way up Britain and seems to exclude significant parts of the north and west, and Scotland and Wales. I am one of those who thinks we should put HS2 in a broader context than it is at the moment.

Also, it is important that we make a start somewhere. HS2 has going for it the fact that it has private money behind it, not least because of the opportunities for property development in the areas of Euston and Old Oak Common. These seem to be the rich plums that will attract private money, rather than what happens anywhere else. To some extent, that will help fund the rest of the railway.

As my noble friend Lord Prescott said, it is important to bear in mind all the time the differential spend on infrastructure in London compared to elsewhere in the country. That differential is growing and certainly needs correction. A high-speed line across the Pennines would be one way to help redress that and bring together cities that are geographically close together but culturally rather far apart. In a debate on productivity last week, we heard from the other side somebody explaining this. They have a business with premises in Warrington and Irlam, which is sort of west Salford—all of 12 miles apart. Yet they said how difficult it was to get people to move across, compared to the south-east of England where people think very little of commuting 30, 40 or more miles to their workplace. The value of better communications in the north of England—no doubt people can quote me other parts of the country that they know best—is very important.

My noble friend Lord Berkeley can see further ahead than me. My horizons do not get much further than two-hour traffic jams on the M6 trying to get round Stoke and other places. The idea that on a crowded island such as ours we have not invested in any major new railway since before 1900 seems crazy. The environmental argument that has been made is surely in favour of the train over the plane or new motorway, much as though they will probably be necessary unless my noble friend Lord Berkeley is right and we find alternative means of transportation and communication.

No one doubts that HS1 is a national asset. It has not lived up to all the dire forecasts, let us be clear about that. HS2 can be the same, especially if on the back of it we can rebuild a British railway engineering industry that has become very small compared to what is necessary. Invest in engineering, invest in Britain and invest in high-speed rail. That seems to be the way forward.

5.59 pm

Lord Turnbull (CB): My Lords, I joined the Economic Affairs Committee only in this Session, so I can claim no credit for its report, although I applaud the very searching questions that it has put to the Government.

My starting point is that, in principle, I support the construction of dedicated high-speed lines between our major cities. I do not believe that we can achieve a satisfactory rail infrastructure by the existing policy of

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patch and mend and incremental improvements. The historical context is that 60 years ago we recognised in the UK that there were different kinds of road traffic. Our existing trunk roads mixed up people wanting to travel long distances at high speeds with local journeys and commuters. So we started to build a motorway network which separated the two. Sixty years later, we need to do the same for the rail network. This will never function efficiently while intercity, commuter, cross-country and freight traffic are all mixed up.

Although I start from a positive presumption, I recognise that the design and cost of what we build has to be carefully examined and justified. Here the committee has raised some valid doubts. I certainly endorse the doubts about the speed of 400 kph, but let me concentrate on a different one. The current plan is to rebuild Euston to be both the London terminus of HS2 and of the existing west coast main line services. We have seen in the last few days that that is going to be much more expensive than previously thought, will take many years, and cause great disruption. One submission to the committee estimated that the cost of the final tunnel and the rebuilding of Euston could be about one-quarter of the total construction cost. The committee has asked, but received no satisfactory answer, how much would be saved by making Old Oak Common the terminus.

The argument that we got from the Transport Secretary last week was that the terminus must be right in the centre of London, but that is based on a simple misconception. Most journeys do not start or end at the terminus; transport planning must work from door to door, not just station to station. So the key requirement is not where the terminus is located but how well it connects to the rest of the London network. In this respect, Old Oak Common will be much better placed than Euston as, unlike Euston, it will be served by Crossrail. It will be a matter of minutes beyond Paddington. It will also, unlike Euston, be connected to Heathrow. I believe, therefore, that we should look seriously at Old Oak Common, which will reduce the cost of rebuilding Euston and save massive expenditure on about 7.5 kilometres of tunnel, which, ironically, will serve only about 60% of the arrivals in London, the rest having got off at Old Oak Common.

Much of the argument of the benefits of HS2 has been around benefits of time saved. The Government’s own analysis puts such benefits at two-thirds of the total. I find this implausible and, like the noble Lord, Lord Desai, I believe that the methodology that produced this result is seriously flawed. Professor Venables, in his evidence, argued that user benefits in time saving, and improvement of productivity were adequately captured, but what he called land-use change or investment and employment effects were not. The result is that current methodology gives too much weight to time saving and not enough to the power of railways to reshape economic geography by opening up opportunities for development, housing and employment. Favouring time over development potential is also skewing the location of stations, as with Sheffield. How much time people save is only part of the story. For example, the impact of the Metropolitan Line, which fundamentally reshaped the geography of London, was not just due

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to speeding up the journey of the residents of Amersham to London; it was the opportunity to do things that were not being done before, paving the way for the 1930s housing boom which was opened up in north-west London.