Economic Case for HS2 (Economic Affairs Committee Report) — Motion to Take Note

– in the House of Lords at 3:40 pm on 16th September 2015.

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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).

Photo of Lord Hollick Lord Hollick Chair, Economic Affairs Committee

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 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 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, 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.

Photo of Lord Vinson Lord Vinson Conservative

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.

Photo of Baroness Blackstone Baroness Blackstone Labour 3:55 pm, 16th September 2015

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 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 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.

Photo of Baroness Kramer Baroness Kramer Liberal Democrat Lords Spokesperson (Treasury and Economy) 4:02 pm, 16th September 2015

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.

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.

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.

Photo of The Bishop of Chester The Bishop of Chester Bishop 4:08 pm, 16th September 2015

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

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.

Photo of Lord Adonis Lord Adonis Shadow Spokesperson (Treasury) 4:14 pm, 16th September 2015

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, 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.

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.

Photo of The Earl of Caithness The Earl of Caithness Conservative 4:22 pm, 16th September 2015

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 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.

Photo of Lord Prescott Lord Prescott Labour 4:27 pm, 16th September 2015

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,

“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.

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.

Photo of Lord Shipley Lord Shipley Liberal Democrat Lords Spokesperson (Communities, Decentralisation and the Northern Powerhouse) 4:34 pm, 16th September 2015

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 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

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.

Photo of Lord Desai Lord Desai Labour 4:42 pm, 16th September 2015

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 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.

Photo of Lord Truscott Lord Truscott Non-affiliated 4:47 pm, 16th September 2015

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.

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 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.

Photo of Lord Carrington of Fulham Lord Carrington of Fulham Conservative 4:54 pm, 16th September 2015

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, 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.

Photo of Baroness Mallalieu Baroness Mallalieu Labour 4:58 pm, 16th September 2015

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.

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.

Photo of Lord Rodgers of Quarry Bank Lord Rodgers of Quarry Bank Liberal Democrat 5:04 pm, 16th September 2015

My Lords, I was unaware of the Government’s response to the Economic Affairs Committee report of 25 March 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 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.

Photo of Lord Snape Lord Snape Labour 5:12 pm, 16th September 2015

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 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 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”.

Photo of Lord Rowe-Beddoe Lord Rowe-Beddoe Crossbench 5:19 pm, 16th September 2015

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 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 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.

Photo of Lord Mitchell Lord Mitchell Labour 5:27 pm, 16th September 2015

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.

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?

Photo of Lord Framlingham Lord Framlingham Conservative 5:33 pm, 16th September 2015

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 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 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.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour 5:40 pm, 16th September 2015

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 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”.

Photo of The Earl of Glasgow The Earl of Glasgow Liberal Democrat 5:47 pm, 16th September 2015

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 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.

Photo of Lord Monks Lord Monks Labour 5:52 pm, 16th September 2015

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 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.

Photo of Lord Turnbull Lord Turnbull Crossbench 5:59 pm, 16th September 2015

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 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 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.

In paragraph 247, the committee cautioned that transport infrastructure did not always lead to development. The experience of London points strongly in the opposite direction, with the M25, the Limehouse link and the Jubilee Line extension, which opened up Docklands, and HS1, which opened up the Stratford area and was crucial in changing the perception of the IOC about access to the Olympic park. Without that line, our bid would not have succeeded. That process is still going on—for example, in the land around King’s Cross Crossrail, and Crossrail is revitalising the rundown fringe of central London from Shoreditch to Paddington and expanding the boundaries of what is perceived as central London. It is estimated that over £2,000 per head has been spent on London transport infrastructure, against less than £200 elsewhere in the country. I am confident that using transport to change the economic geography, which has worked so well in London, will work in our other major cities. I believe that the Government have a good story to tell but that they are failing to tell it.

Photo of Lord Berkeley Lord Berkeley Labour 6:04 pm, 16th September 2015

My Lords, I declare my interest as the chairman of the Rail Freight Group, and apologise to the House and to my noble friend Lord Hollick for being late and for missing the start of his speech. It was due to a 24 hour-plus failure of the Government’s queue-busting e-border system at Gatwick North. I expect that it will get mended one day; it may even work one day.

I am still not clear whether the HS2 people and the Government are really sure about what they are trying to build. We have heard many noble Lords speak this afternoon about the purpose of HS2. Is it a sort of vanity project to be the best in the world, going between lovely new stations at very high speeds— 360 kph to 400 kph—then making people walk 20 minutes to the nearest classic or existing station or bus station, so we can say how wonderful we are? I prefer to look at it as something that will provide more capacity as part of an integrated network so that most of the trains—certainly in phase 1, apart from those going to Birmingham—can go on to the existing network and give people more reliable and quicker through-services to wherever they want to go. As my noble friend Lord Monks said, that is what happens in France and Germany, where there are very few places where a special new station has been built some way from existing stations. Lille is one example, and I know quite a lot about that.

The other issue is whether we need to go that fast on a small island such as ours. France and Germany are very big, geographically, and they seem to think that 300 kph is enough, so why do we want to go 360 kph or 400 kph—especially when, certainly in phase 1, with all the lovely long tunnels being built under the Chilterns, you have to go slower because of the piston effect? But there we are.

I recall advising the then Secretary of State for Transport, my noble friend Lord Adonis, that we should start at the north end, partly for political reasons and partly because, as many noble Lords have said, the railways are a lot worse there than they are in the south. But there we are; we will be starting from scratch again—and we have all agreed that there is no actual route for HS3 across the Pennines. This at least has a route, and the project is going through the Commons Select Committee. So the best thing to do is to go ahead with it, get it right and make it cheaper.

There is a problem of capacity on this route corridor. My noble friend Lord Lea said that I should speak about rail freight, which is forecast to double in 20 years. That is not something plucked out of the air; that forecast has come from rail freight industry reports, from operators and everybody else in it. Passenger traffic on the railways in the past 20 years has doubled, and both of those are ahead of the Government’s forecasts at the time. So we can suddenly say that everything is going to change and there will be no more growth in future, but we would be unwise to do that. New lines and services have been started, with the Victoria Line in London, new services in Scotland, and even the new line to the Borders. The noble Earl, Lord Glasgow, said that HS2 would be the first new line for 100 years, but he ought to know that the Queen opened a new line in Scotland last week. I am told that the traffic on that is already exceeding expectations, although that may just be a blip.

There is a capacity problem, but the analysis that I have done with some expert colleagues shows that growth is going to be greater on the longer-distance commuter services into Euston than on HS2. So my argument is that we should look at Euston as a terminus for HS2 and the west coast main line as one project. That is why we sent to the Secretary of State last week a project that involves not demolishing half of Camden, coming down the west side of the west coast main line, but diverting the tunnels from Old Oak Common into Queen’s Park—if noble Lords can follow my geography—using the existing lines into Euston and the existing platforms, but extended south. Noble Lords said that there is a capacity problem at Euston. In fact, there is not. An analysis of train turnaround times will show that they are a lot more relaxed and slower at Euston than they are at Paddington or Liverpool Street, and Euston has space for HS2 and most of the existing west coast main line trains on a similar turnaround time, provided that you divert some of the shorter suburban trains on to Crossrail, which is another plan, through Old Oak Common.

This project we have developed would save about £1.5 billion to £2 billion. It would avoid all the demolition around Euston. I do not agree with the idea that Euston should become a massive development like King’s Cross Railway Lands. After all, the railway lands were government-owned property. There is no government-owned property around Euston, apart from the station and the railway boundary. If people want to build towers all over the line going out as far as Queen’s Park, that should be a separate planning application, but there is not the same potential as there was at King’s Cross, which is lovely. It would be very good if Ministers could accept a scheme such as the one I have developed and save at least £1.5 billion and probably £2 billion, plus reducing the speed of the trains from 360 kph or 400 kph to 300 kph, which I am told would save 50% of the cost of the train. These trains would then be built to the British gauge, like the old Eurostar, and could go anywhere in the country. This probably offers them the best of both worlds: cost saving, less hassle at Euston, shorter Select Committee time perhaps, and a project that would not involve 20 years of construction at Euston. The latest figure is 680 trucks a day out of Euston for several years, taking spoil away. Why they cannot use rail freight I have not yet discovered, but I shall try.

Photo of Lord Wolfson of Aspley Guise Lord Wolfson of Aspley Guise Conservative 6:11 pm, 16th September 2015

My Lords, HS2 from a business perspective is a conundrum: a great idea, an inspiring vision and yet, sadly, a very bad investment. Of course there are manifest benefits, but they simply do not justify the costs. In his committee’s excellent report, the noble Lord, Lord Hollick, rightly asked why businessmen like me should not pay for the supposed benefits we receive from faster journeys on this railway. The answer, I am afraid, is that it would bring into sharp focus the fact that we would not pay the extraordinary price required to justify this faster railway: a 30% to 100% premium on fares to travel a little bit faster for people who are making better and better use of their time on railways simply would not be worth it.

There is another and deeper reason why the failure to translate benefits into revenue streams is financially dangerous in this appraisal. It allows the benefit cost ratio to pull off an extraordinary accounting trick. The BCR is essentially designed to appraise government services that are provided for free—schools, hospitals et cetera—but it begins to fall down and is not fit for purpose when it assesses revenue-generating projects because the BCR assesses only non-financial benefits. It conveniently assumes that much of the capital cost can be eliminated from the appraisal by offsetting it against discounted future revenue streams. In doing so, it effectively eliminates £30 billion of costs from the returns calculation, vastly overstating the BCR and the returns on sunk capital.

I gather that some may not be hugely interested in this, so let me give an example. Be wary when the Government claim that HS2 will deliver £2 of benefit for every £1 invested. It is simply not true because it does not include the dead weight of capital that has been offset against future revenues. It is like a business promising you a return of 100% on a £1,000 investment and only in the small print mentioning that you have to invest a further £10,000 at 2.5% to order to get this special return.

This problem relates directly to a second and more fundamental problem of the BCR. In business terms, it assesses only the net present value of an investment and ignores the equally, often more, important measure: the internal rate of return. In doing so, it conceals the fact that this project delivers pitifully low returns. It is like being asked to choose between two options: Option A, which doubles your money, and Option B, which gives a 20% increase. Everyone would choose Option A until they were told that Option A would take 100 years to give you your return and Option B would do it in 18 months. Then you would change your mind. That is the difference between looking at internal rate of return and net present value alone.

This might sound like an accountants’ tragedy that will not affect real people, but it will. If we have learnt anything since the credit crunch in 2007, it is that the Government’s capacity for debt is finite, and by flittering away the nation’s balance sheet on this project we will miss the opportunity to invest much more wisely in other infrastructure. This project will decimate our transport capital budget for years to come.

The alternative to HS2 is not another grand project, it is myriad small, high-return projects that would deliver benefits in the near future: bypasses, flyovers, underpasses, junction improvements, filter lanes, bridges, commuter line upgrades, carriage improvements, platform improvements and more. Such projects would serve people every day of their working life rather than just for the odd long-distance journey. They would be projects that would serve the many rather than the few. Transformative projects in every town and city of our nation could improve the quality of life and productivity of millions of people who will instead be stuck in slow, crowded commuter trains and unnecessary daily traffic jams—all so that a relatively small number of the people can whizz past on a very fast train while they are sitting there. If they are lucky, they will see them.

Listening to this debate, my worry is that the proponents of HS2 have made the terrible business mistake of falling in love with their investment, and that that love in its ardour has blinded them to the costs, risks, debt, downsides, potential redundancy and, most importantly, lost opportunities. I hope that this excellent report brings a little sense to this debate because it seems that for the proponents of this project there is literally no cost too great for HS2. So I finish with a simple question for the Minister: at what price would we not build HS2?

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport) 6:17 pm, 16th September 2015

My Lords, I thank the Select Committee for its excellent report. Over time, I have come to accept, if not to love, the need for additional capacity on the railway network, but it is always important to test public policy proposals and I think that it is generally accepted around your Lordships’ House that HS2 has not been properly examined. This is an exemplary report. It must have been great fun watching economics in action. It was a joy to read the forensic demolition of the Government’s economic case, as it was to hear it distilled in my noble friend Lord Hollick’s excellent speech. As many people have said, the Government’s response was tokenistic and not appropriate in the circumstances.

I am very grateful to the noble Lord, Lord Framlingham, for raising the question of the Chilterns AONB. I declare an interest in that I and my family live in Little Missenden, which lies very close to the line of HS2 phase 1. I want today to raise the concern that, for reasons which are still not clear, the HS2 Bill Committee has effectively ruled out extending the deep tunnel which at the moment goes part of the way through the Chilterns AONB—a decision which might seem to be rather discourteous, to say the least, as it was taken at the very start of the petitioning process for this area, effectively denying some 800 applicants in person the chance to give their evidence to be considered by the committee.

It is obvious that at the heart of a decision to allow a long Chiltern tunnel is a cost versus value decision, which is familiar territory for economists. There has to be a trade-off. There are additional costs that a longer tunnel would bear, but there are significant savings from reduced compensation payments and reduced land take. However, such a trade-off cannot ignore the benefits which accrue to the nation from preserving a special part of our countryside. After all, the whole business case for HS2 is based on a much disputed calculation of the benefit that business men and women get from saving time by faster travel. If that can be done, why can we not value the countryside? There are ways of quantifying these benefits, and a methodology is available that is already used by government. So far, though, the department and the Bill Select Committee have been highly resistant to engaging in this debate. Why is this?

Large infrastructure projects going through relatively unspoiled countryside effectively urbanise it. It is proposed to have 18 trains an hour each way, which cause noise and vibration. Maintenance activity will take place all night. The trains cause light pollution, and parts of the route have to have fixed lighting. There will be vent shafts where there are tunnels; access points; security fencing and sound proofing baffles; maintenance roads; balancing ponds; power lines and gantries; earthworks, planting and huge earthwork bunds to mitigate what is built; and soil from cuttings deposited right across the Chilterns. The materials are not natural, the scale is grotesque and the impact is to introduce alien cityscape elements into a predominantly rural environment.

The attempt by the promoter and the department to minimise the impact of these intrusions into the AONB—for example, by arguing, as they did recently to the Bill Committee, that:

“It’s really only a very, very small percentage impact, less than 1% impact, that we’re having on some particular feature of the AONB, whether it’s ancient woodland or woodland area”, is as demeaning as it is misleading. The clue is in the title: it is an area of outstanding natural beauty, and the value placed on it has to be on the whole area, not by extracting fractions or percentages. It is an irreplaceable resource. You can put the earth back on a cut-and-cover tunnel, you can grass it and you can grow some new trees, but you do not have what age and interaction with people and their dwellings over centuries have produced in the rich patina of a landscape that is largely unchanged since pre-Saxon times, which is the key reason why it has merited an AONB designation.

As the Bill Committee has heard in evidence, designation as an AONB brings with it a requirement on Ministers and statutory bodies to do what they can to conserve and enhance our higher-quality English landscapes and protect their scenic beauty. What evidence is there that Ministers have taken this responsibility seriously? The National Planning Policy Framework says that major development should not take place in

AONBs except in exceptional circumstances after appropriate tests have been made. What evidence is there that these tests were done properly?

The statutory framework also lays down that a relevant authority shall have regard to the purpose of conserving and enhancing the natural beauty of the AONB. A relevant person is any Minister of the Crown, public body or statutory undertaker. Given that requirement, why would a rational promoter—or a rational Secretary of State, for that matter, if that is not a tautology—not wish to see the AONB protected, first by considering routes other than through the AONB but, failing that, by considering a deep tunnel through the Chilterns?

HS2 itself has recently accepted that there is no rational basis for rejecting a tunnel. In its recent report, applying its criteria and using its consultants and its judgment, it says:

“It is clear that a Chiltern Long Tunnel would provide overall environmental benefits compared to the HS2 Proposed Scheme during operation and construction”.

It also confirms that such a tunnel would not adversely affect the programme.

Faced with over 800 petitions from individual organisations and local councils calling for a long tunnel through the Chilterns, recommendations from the statutory bodies concerned with the Chilterns that a deep, long tunnel is the only possible mitigation, and the requirement under the statutory framework and the national planning framework to conserve and enhance the natural beauty of the AONB, the HS2 Bill Select Committee takes the view that the tunnel is too expensive. We do not know what persuaded the committee to take this view, and it has not published any evidence in the form of a calculation that demonstrates that the benefits from preserving the Chiltern AONB do not outweigh the additional costs of a long tunnel.

The missing ingredient at the moment is a sense of what we will lose if the scheme goes ahead in its current form. People might be much more willing to support HS2 if they knew that the only AONB on the line had been preserved by a Government who knew not only the cost of the project but the value of what was affected.

Photo of Lord Greaves Lord Greaves Liberal Democrat 6:23 pm, 16th September 2015

My Lords, I believe that I am one of the majority of people in the north of England who are in favour of HS2, if not necessarily of all its details. I thought that the report was a little disappointing because it cannot seem to make up its mind whether it is against the whole project or is simply making some specific—in some cases, quite positive and constructive—suggestions. I suspect that this was the compromise that the committee came to in order to produce an agreed report.

A lot of the detail in the report is useful. I shall read out one of the main conclusions and recommendations:

“An investment decision on the scale of HS2 should have been made with reference to a co-ordinated transport plan for passenger and freight traffic across all modes of transport”.

That might be a little ambitious, but the decision should certainly have been made with reference to a co-ordinated plan for passenger and freight traffic on the railways and perhaps beyond that. This criticism, which I think is right, is not of HS2 but of the infrastructure planning system in this country, which does not do this; it puts projects forward in a piecemeal way, not as part of a co-ordinated national planning system. Noble Lords who have attended debates on planning and planning Bills will know that I consider that the whole planning system in this country is fairly bust; this is an example of that at national level. However, we have the system that we have and we are not going to get a super-modernised, streamlined planning system that works in the short term or indeed beyond that, so we have to deal with HS2 as we have it.

One of the little things in the report that niggled me was its continued references to “taxpayers’ money” and “taxpayer subsidies” and quotes such as,

“many taxpayers would derive no benefit from the project”.

The use of the word “taxpayer” in this context is sloppy, ideological right-wing language of the sort that has taken over in this country. I find that disappointing coming from a committee of your Lordships’ House, from which I expect better.

As far as the money is concerned, everyone is talking about £50 billion, although, as we know, the figure is £28 billion plus contingencies plus the rolling stock. Some people think that the existing network can be fettled in such a way as to cater for the required extra capacity, but that would need the extra rolling stock anyway, so at least some of that rolling stock is to be discounted, and we do not know how much of the contingencies might be required.

Even if the cost is £50 billion, I wonder why people are upset about it. Perhaps it is because it is a railway line to the north of England—to Manchester, Leeds and strange foreign places like that where people talk a bit odd. Let us look at the London schemes that are around. There is Crossrail, costing £15 billion—a super scheme with some fantastic engineering, but expensive. We have Crossrail 2, which is forecast to cost £25 billion, although I do not know whether that includes contingencies. Thameslink has cost at least £6 billion. The proposed extensions to the Bakerloo line could cost £3 billion or £4 billion, depending on how far they go.

So we are talking of investment in London that is of the same order as HS2, but no one says that these projects are too expensive, cannot be afforded, are going to bankrupt the country and all the technical stuff that the noble Lord, Lord Wolfson, came out with, which I am afraid I did not understand, although I am sure that it was all very good. Why? Because it is in London. Not very long ago, the Mayor of London, bless him, was calling for a scheme for a great ring rail around the outside of London—a sort of M25 railway, as I understood it—and he was happily saying, “Oh, it’ll only cost £40 billion, that’s all right”. That seems to have been put on one side for the moment, but who knows? If you are talking about things in London, money does not matter; when it comes to the rest of the country, people say that it cannot be afforded.

I associate myself with everything that my noble friend Lady Kramer said in her excellent, passionate speech. I also associate myself with what was said by the noble Lord, Lord Snape, who talked about line capacity with more expertise than I could, so I shall not try to say some of the things that I might have. However, the meaning of capacity seems to have been misunderstood both in this report and in a lot of what is said. People look at capacity as being the proportion of the seats that are occupied on the trains that are running. If one is running a transport service, be it bus, rail or some other service, capacity is about the whole service provided. One cannot expect to run late-night trains and to have them as full as at peak times, such as teatime. Without the late-night service, there is no overall service and some of the daytime trade that would go back at night will be lost. Therefore, a proper, comprehensive and regular service is bound to have lots of trains that are not full. That does not mean to say that they are under capacity.

My time is up. Some of the points in this report should be taken forward. We should get a better response from the Government, because the Government’s response was pretty pathetic. However, for goodness’ sake, let there be no more delay. Once people start putting their feet on the brakes, this scheme will never happen. For the economic good of the north of England and the Midlands, of all the cities, the towns and the whole area, we need this railway line built as soon as possible.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport) 6:31 pm, 16th September 2015

My Lords, on these Benches, as my noble friend Lord Greaves indicated, our instincts are in support of HS2. Our allies include the leaders of our great northern cities, because they know what is good for their area. From the start, as my noble friend Lady Kramer indicated, we have supported the concept of HS2. Far too few major long-term infrastructure projects were planned by the Governments of the latter part of the 20th century and the early 21st century, so the Labour Government’s 2010 Command Paper setting out the strategic case for HS2 was welcome.

We are convinced of the need for additional capacity. It is important to recognise that the term “capacity” means two things here: it means seats on trains and it means train slots. Although various remedial actions can increase the number of seats on the train—having an extra carriage and so on—we are getting to the point where there are simply no more train slots. One issue that has not been aired much in this debate is that of freight. As the noble Lord, Lord Berkeley, indicated, freight transport is going to double in the next 20 years and there is simply not space for it on the existing railway.

Therefore, if we are to build at all, we need to be ambitious. We also need to learn the lessons of the past. Rarely in this country have Governments overestimated future demand for any infrastructure improvements. Reference has already been made to the Borders Railway, which opened only last week in Scotland and already appears to have a problem of capacity. The operators are already looking at putting on longer trains, given that only a single-track railway was built, making it impossible, or possible only at the margin, to increase the number of trains.

The travelling population of this country is bound to grow. We know that. The population is increasing and despite the predictions over many years that we shall all work increasingly from home—as indeed we do—in practice business use of trains has increased dramatically. We are social animals. We need to go and see our customers and so on. Also, leisure travel is for ever on the increase. Since 1997 train usage has doubled, as we recently heard in a report.

For economic reasons, on these Benches we support HS2. We do so for environmental reasons, too. Recent levels of air pollution near our roads have surprised the Government and local councils and they have led to EU penalties. That has to be addressed. Levels of congestion in our towns and cities and on our motorways make trains an attractive alternative. As a party that puts the environment at the top of its agenda, we particularly welcome HS2 because its speed and long-distance nature make it a real alternative to domestic air travel.

We are not deterred in principle by a high price tag, since the investment is very long term. We certainly do not believe that the capacity issues can be solved by improving existing lines. That cannot produce the capacity that we already require without immense disruption over decades for the travelling public; the impact on businesses would also be massive. There can, of course, still be incremental increases while HS2 is being built, but that does not take away from the need for HS2. We are, therefore, HS2 supporters, but we are critical friends.

I thank the Economic Affairs Committee for its report because, although I do not regard some of its criticisms as valid or necessarily relevant, there are a number of good questions that the Government need to answer. The first relates to the need for an overall transport master plan. We have the plan for a northern powerhouse, but the Government need to persuade us that HS2 will be part of that co-ordinated approach and will fit in properly with that plan. It is also important that account be taken of the impact of HS2 on north Wales and Scotland as well as on the north of England.

On cost estimates, with electrification plans on hold the Government are not in a very happy place. I have three observations. First, the cost of HS2 must not be allowed to swallow up investment, driving out other investment. This has to be used to enhance our network overall. Secondly, much of the cost is associated with the plans for Euston station. The alternatives to which the noble Lord, Lord Berkeley, referred, which were circulated to many of us, would allow significantly less costly investment there. The changes would also be much less disruptive and much quicker to build. We need to build this line as quickly as possible. As my noble friend Lady Kramer said, we are already late to the game in comparison with other countries.

Thirdly, speed costs money. HS2 is planned to achieve 360 kilometres per hour. It is estimated that if it were to be built to achieve 300 kilometres per hour, which compares well internationally, that would save 50% of the cost on trains. Given that in practice 360 kilometres per hour cannot be reached over quite a lot of the journey because of tunnels and stations, is the significant extra cost worth while?

I urge the Government to reconsider the issue of rolling-stock gauge. The plan to use continental-gauge rolling stock is expensive and restrictive because that can only be used from Euston to Birmingham. Classic, compatible rolling stock is much more flexible. It makes the whole scheme much cheaper and it would bring the benefits more quickly to a wider part of the country.

On the issues relating to Euston station, if one looks at the overall rail network, one can see that Old Oak Common will be very well connected as a hub because of Crossrail and so on. Many passengers will want to get on and alight there; one therefore wants to consider whether the impact on Euston in terms of passenger numbers has been accurately assessed. Are the Government satisfied that they have fully considered the alternative plans for Euston? If they have not had a chance yet, will they provide an assurance that they will do so?

In conclusion, I fully accept that any big project will always have objectors—those opposed in principle and those opposed to the detail. Sometimes those opposed in principle dress up their arguments as opposition to the detail. Two weeks ago, I visited the railway museum in Swindon, where I saw records on display of the vociferous opposition to the Great Western Railway, including its route. By the way, it took Brunel only two weeks to survey and choose the route—in your dreams, nowadays. There was also opposition in principle from those who thought that the railway was new-fangled and unnecessary. That struck a strong chord. Nowadays, we look back and admire the vision and ambition of Brunel and his backers. I say to the Government that we are pleased that they continue to adhere to the ambitious aims for HS2 espoused by the coalition but ask them to reassure us that the public purse will be spending its money wisely.

Photo of Lord Rosser Lord Rosser Shadow Spokesperson (Defence), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Transport) 6:41 pm, 16th September 2015

My Lords, I welcome today’s debate and the powerful speeches that we have heard, including from my noble friends Lord Adonis and Lord Prescott, and from my noble friend Lord Mitchell, who told us that reports of the impending death of the railway industry were not premature. I also thank my noble friend Lord Hollick and the Economic Affairs Committee for their report, which, as my noble friend Lord Monks pointed out, looked at HS2 from one particular, albeit important, angle.

The report displays a certain lack of enthusiasm for the project, though not for investment in rail infrastructure. It says that:

“The Government has yet to make a convincing case for proceeding … it is not at all clear that HS2 represents the best, most cost-effective solution to the problems it is intended to solve”, and that the Government “must answer” the list of questions set out in chapter 9 of the report before the high-speed rail Bill completes its passage through Parliament.

The Government published their response in July and presumably its content will form part of the Minister’s response—though not, I hope, the whole response, in the light of the views that some noble Lords have expressed about the adequacy of the Government’s replies to the questions posed in chapter 9. The July response, however, includes a statement in paragraph 1.13:

“Together with the Government’s Northern Transport Strategy, HS2 will bring the Northern cities closer together”.

We had a debate before the Recess on the Government’s northern transport strategy, followed by an announcement shortly afterwards that made it clear that everything was not quite as rosy with that strategy as a reasonable person might have concluded. Any lack of openness and transparency about HS2 will not assist in bringing a successful conclusion to this project, which was an important commitment of the last Labour Government and my noble friend Lord Adonis, and one to which we continue to give our support—including, despite what I am about to say, myself personally.

I have an interest to declare, in that I have a home close to the intended line of route. I live in an area where there is considerable opposition to HS2, as the HS2 Select Committee is by now aware. There will be no direct benefit to the residents of the area in question from HS2 since there will be no HS2 station nearby, but only the inevitable disruption to many residents over a lengthy period which arises from the construction of any major new piece of infrastructure in a semi-urban area, and the still-unresolved loss—despite visits by more than one Minister making sympathetic noises—of an important and substantial outdoor activity centre used by a great many young people.

My noble friend Lord Stevenson of Balmacara has also raised concerns felt by residents in the Chilterns about the impact of the present HS2 plans. The London Borough of Camden, while opposed to HS2, has said that if it to proceed there needs to be a commitment from the Government to a properly funded and timetabled programme to develop the whole of Euston station to facilitate the building of affordable homes, create new jobs and give a significant economic boost—a point to which my noble friend Lord Adonis referred.

On the line of route for phase 2, the Government simply say that they will outline the way forward before the end of this year, which is not same as saying that they are anywhere near confirming their intentions on the line of route. Thus the uncertainty continues, and with it the associated concerns.

Some concerns to which I have referred can never be fully addressed, short of abandoning HS2, but a number of concerns can be addressed in whole or in part. The Government ought to be taking that point seriously and addressing outstanding concerns and unresolved issues as soon as possible. They should also recognise that most of those who will feel the greatest impact of the inevitable upheaval from the construction of HS2 will gain no direct benefit. In that regard, a bit more care and thought might also at least avoid own goals, which call into question competence. I understand that at the Select Committee, HS2 Ltd had to make an apology for having told concerned residents in one location for more than two years that the tunnel would be 30 metres beneath them, when the reality was that it would be only about half that depth.

I have already indicated our continuing support for the HS2 project. We are of course far from alone in taking that stance. The House of Commons Transport Committee, at the end of 2013, expressed its support for the strategic case for HS2 and said that it stood by the conclusion that HS2 is needed,

“to provide a long-term increase in the capacity of the railway and that alternative proposals to increase capacity are not sufficient to accommodate long-term forecast demand”.

The General Secretary of the TUC has welcomed the decision to invest in high-speed rail, stating that it will,

“prove vital in getting more passengers and freight onto rail, narrowing the north-south divide and speeding our economic recovery”.

There have also been responses to the report we are considering today. The CBI shares the view that a modern railway is needed to deal with lack of capacity on the west coast main line. The CBI said that HS2,

“will better connect eight of our ten biggest cities, boosting … economies along and beyond the route … It’s vital we avoid any further delays to the project”.

The British Chambers of Commerce agreed that the Economic Affairs Committee,

“is right to investigate the cost of the project and its ability to rebalance the economy”.

However, the BCC went on to say that,

“if businesses have to wait several years for the details to be fleshed out, the UK’s competitiveness will be further compromised. There is a convincing case for HS2, as it is the only solution that can deliver the step-change in capacity that Britain’s north-south railways require”.

The Birmingham Chamber of Commerce said it believes that the Lords committee has largely ignored evidence given to it about the impact outside London and has focused on the capital, and that HS2 will provide massive opportunities to redevelop greater Birmingham and reskill parts of the workforce in the West Midlands.

Network Rail has said that, with over 4,000 trains running every day on the west coast main line, our busiest and most economically important line is all but full, and that HS2 will fundamentally reshape the UK’s rail network in a way that incremental improvements simply cannot deliver.

Elected leaders in our northern city regions, including Manchester, Leeds and Liverpool, have also reiterated their support for HS2 and the benefits that it will bring. The chair of Transport for the North has said that we should not undermine one of the most significant measures, which alongside—not instead of—east-west transport improvements is necessary to help rebalance the nation’s economy. In his words:

“We need to stop the British habit of finding every way to delay major infrastructure investment and get on with delivering and maximising the very real economic benefits it will bring as it creates the long term capacity to bring our great cities within easy reach of each other and international markets”.

I appreciate that the Economic Affairs Committee has not actually said that HS2 should be delayed or put on hold, but rather has raised a number of questions about the case for HS2 and the need for the Government to provide convincing answers before the enabling legislation for the first phase of the construction completes its passage through Parliament. It is up to the Government to provide those convincing answers.

There is certainly some opposition to HS2, but there is also widespread support for the project related primarily to capacity, connectivity and regeneration, including the support reiterated by the shadow Transport Secretary in the Commons yesterday.

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Parliamentary Under-Secretary (Department for Transport), Parliamentary Under-Secretary 6:52 pm, 16th September 2015

My Lords, I take this opportunity to thank the Economic Affairs Committee, and particularly the noble Lord, Lord Hollick, for its work, which is the basis of today’s debate. I also thank all noble Lords for their contributions this afternoon.

It has been a stimulating and interesting debate, and one that has made us cast our memories back through history. I must admit that, when I heard my noble friend Lord Wolfson talk about NPVs and IRRs, I did cast my mind back to the many seminars I attended on investment analysis during my degree. Nevertheless, he raised some points that I will come on to.

We also heard views, and rightly so, from a scientific, economic and, with the right reverend Prelate’s comments, biblical basis. We can agree on one thing above all else: it has been a very absorbing debate, for over three hours now, and important issues have been raised. I will seek to address most, if not all, the questions with the caveat that, if there are certain questions that I do not cover, we will review those and write to noble Lords in that respect.

The noble Baroness, Lady Blackstone, put it aptly when she said we can all agree that high-quality transport infrastructure is essential for our future prosperity.

I previously quoted the noble Lord, Lord Prescott, as saying that we should, “Get on with it”—which the noble Lord, Lord Rosser, just paraphrased—but I was a bit perturbed when he said that people in Yorkshire hate members of the Government. I am a member of the Government who has many family members in Yorkshire and have visited there, both before my membership of the House of Lords—and pre my ministerial experience and responsibility—and also during it. I have always found the people of Yorkshire to be particularly warm towards me. Maybe there are exceptions to every rule.

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Parliamentary Under-Secretary (Department for Transport), Parliamentary Under-Secretary

The Prime Minister has great regard for people from Yorkshire. Great cricketers come from that area as well. I am sure we can have a debate on cricket in due course, but I will move on to transport.

It was almost 200 years ago that the early canals and railways helped make Britain the most powerful economy in the world. The fundamentals are the same. Good freight transport, as was mentioned by the noble Lord, Lord Berkeley, and the noble Baroness, Lady Randerson, gives manufacturers a competitive edge by cutting the cost of deliveries and distribution. Good passenger transport links businesses with customers and links people with jobs, friends and family—from London to Yorkshire, indeed. Rail remains an essential part of the solution to the country’s transport needs today, but not to the detriment of other elements of transport.

The noble Lords, Lord Berkeley, Lord Greaves and Lord Monks, made particular mention of a national transport plan. I assure all noble Lords that the

Government have set out how HS2 fits within the wider transport policy.

The Strategic Case for HS2

, published in 2013, explained in detail how HS2 fits with investment in the existing rail network and the wider government strategic aims of supporting growth and addressing the productivity gap between the north and south of the country. Several noble Lords mentioned the northern transport strategy, which was published earlier this year. It sets out the transport role in creating that northern powerhouse, of which HS2 is key. In July this year, the Government published

Fixing the Foundations, setting out our plans to address the UK’s long-term productivity problem. All parts of the Government will contribute to that, including HS2. Let me assure noble Lords, including my noble friend Lord Wolfson, that investment in rail is just one part of it. For example, we have committed through our roads strategy to invest £15 billion in our roads network over this Parliament.

Investing in rail is every bit as important today as it was in the pioneering Victorian era. For the last half century, we have allowed our infrastructure to fall well behind that of our competitors. Instead of building new capacity and modernising the network, and despite soaring passenger numbers, we have tried to patch and mend our ageing railway.

Central to the case for HS2 is data that reveal the true extent of the capacity crunch facing the UK rail network. Even with over £50 billion of planned transport investment over the next six years, the railways will be overwhelmed. As several noble Lords said, we are not just planning for today; this is about planning for the future. Overall, demand for rail travel has more than doubled since privatisation to 1.7 billion journeys a year. Intercity lines have experienced even faster growth, with journeys between London, Birmingham and Manchester trebling in the last 20 years. This is putting acute pressure on the infrastructure. The west coast line, for example, is now the busiest mixed-use rail line in Europe. Despite an extensive £9 billion upgrade programme completed in 2008, as the noble Lord, Lord Adonis, pointed out, train paths on this line are effectively full.

Today we have the power to deliver the transformation in rail capacity that we so desperately need. HS2 is a once-in-a-generation opportunity to put the years of underinvestment and neglect behind us. Therefore, I welcome the support from the noble Lord, Lord Rosser, and the noble Baroness, Lady Randerson—support from both parties—on how we move forward with HS2. HS2 will bind Britain together and provide the space that we need to grow. As the noble Lord, Lord Adonis, articulated, without HS2 we would end up spending more money.

The project was always going to attract critics. Anything this ambitious will be controversial, particularly in a country that has seen no major new national transport infrastructure built since the coming of the motorways. The original railway was controversial; the Channel Tunnel was controversial, and some would argue that it still is; and the M25 remains, at times, a source of controversy and debate—anyone who has travelled on it will understand why. However, nobody questions the case for these schemes today. Frankly, the easy option for any Government would be to do nothing and leave the problem for some future generation to tackle. But the fact is that, if we do not take action now, major routes are going to be overwhelmed, as was so eloquently summarised by the noble Baroness, Lady Kramer.

The benefits of HS2 are something that the Government, the Opposition and all major contributors have talked about before. It is about improving connectivity. HS2 will deliver the step change in capacity that we need to keep our vital arteries flowing. Compared with today, HS2 could triple the number of seats out of Euston. It will also unlock the capacity for freight on the west coast main line, as the noble Lord, Lord Berkeley, mentioned. It will link eight of Britain’s 10 largest cities, directly serving one in five of the UK population, a point well made by the noble Baroness, Lady Kramer, and the noble Lord, Lord Adonis. It will benefit places not directly on the HS2 route by freeing up much-needed capacity on the existing railway.

The noble Baroness, Lady Blackstone, and the noble Lord, Lord Truscott, suggested that HS2 would suck investment into London and away from other cities. HS2 is designed to improve the connectivity of the north more than London, which has good transport links. More than 70% of the jobs supported by HS2 are expected to be outside London. A study by Network Rail has shown that over 100 towns and cities across the country could benefit from extra commuter and intercity services on existing lines, with capacity being liberated by the development of HS2. It will be particularly beneficial in the north and the Midlands, helping to rebalance the economy.

The legacy of HS2 will be felt well beyond those who use our transport networks. It will inspire a generation, providing new skills and jobs across a wide range of disciplines. The noble Baroness, Lady Blackstone, talked passionately about the need to invest in skills beyond just looking at infrastructure. This provides just that initiative. Recently, 11 September was the opening day of a programme of visits that I am making as the skills Minister in the Department for Transport, one of which will be HS2 themed. Currently, only 5% of our children aspire to a career in transport and only 8% of Britain’s engineering workforce is female—the lowest rate in Europe. That is something we need to change, and the National College for High Speed Rail will be an integral part of the Government’s strategy for delivering a national high-speed rail network for Britain as well as designing and delivering the high-level technical skills needed for the industry more generally. HS2 is part of the Government’s growth strategy.

Of course, HS2 is a key strand of the Government’s commitment to support economic prosperity across the UK, but it is not the only one. In July 2015, the Chancellor of the Exchequer launched Fixing the Foundations, setting out our plan to address the UK’s long-term productivity problem—every part of government will contribute. For example, the HS2 growth strategies set out ambitious goals for regeneration and development on the back of HS2.

Our economic case is robust and shows HS2 represents good value for money. If anything our methodology is quite conservative. The benefit-to-cost ratio, which was mentioned by several noble Lords, is valued at 2.3

—or providing £2-worth of benefits for every £1 spent. The BCR could be even higher, reaching 4.5 if rail demand continues to rise until 2049.

We are committed to maximising benefits while keeping a firm grip on costs. We have established a robust framework of delegations and approvals. There is a joint HM Treasury, DfT and HS2 Ltd cost and risk group to ensure that there is a shared and continued drive down on costs. The spending round in 2013 set a clear funding envelope of £50.1 billion for HS2.

The noble Baroness, Lady Blackstone, raised the issue of fares and why the Government do not increase fares for business passengers to cover costs. The actual decision on fare structures will be taken by future Governments. However, our underlying assumption is that it is more important to maximise usage for the wider benefit of citizens and the economy than charge premium fares. The Government have also committed to keeping fares down, which is clearly illustrated by our commitment to cap fares at RPI for the term of the Parliament.

The right reverend Prelate the Bishop of Chester, the noble Lord, Lord Desai, and my noble friend Lord Caithness, among others, raised the issue of the economic case, and clearly the committee was looking at HS2 on that basis. Our appraisal techniques are regarded by the DFT as being world class, and a number of experts provided evidence to the Lords committee that showed that the economic case was robust. Some have been mentioned already but, for example, Professor Venables noted that our quantification of user benefits and wider economic impacts was,

“done very well and very professionally”, and Professor Graham, who is a transport economist, also commended our use of sensitivity testing.

The issue of transparency was raised about assessments of the HS2 case. In March 2010, we established the case for the high-speed rail network serving London and the West Midlands. In February 2011, we announced the consultation into the Government’s high-speed rail strategy and the preferred route for phase 1 of the scheme. In January 2012, there was the Government’s decision to proceed with phase 1 of HS2. There has been full transparency in that regard.

The right reverend Prelate raised the issue of the impact of HS2 on Chester. Phase 1 of HS2 generates significant journey-time savings to the north-west of the country and Network Rail estimates that up to 100 cities could benefit. I assure the right reverend Prelate that no decisions have yet been taken on rail services that will run when HS2 is complete, but the Government aim to ensure that those currently served by direct services will continue to be so.

Suggestions have also been made over the overall spending package, but as the Chancellor of the Exchequer explained to noble Lord, Lord Hollick, last week, in the context of an annual government budget of £750 billion, the cost of £50 billion for HS2 over 20 years to improve the nation’s infrastructure, I can assure my noble friend Lord Wolfson, is something that the Chancellor believes we can afford.

The Government have also considered a range of alternatives to HS2 and published a series of substantial reports that weighed up the options, including upgrades to the existing rail network, the use of alternative modes and a conventional speed line. The truth is that none of these alternatives would provide the big increase in capacity that several noble Lords referred to, and, more importantly, the connectivity that we need to meet future demand. Nor do they address the issue of reliability.

I shall seek to answer some of the other questions raised by noble Lords. The right reverend prelate the Bishop of Chester raised the issue of wanting the fastest railway in the world. Sir David Higgins has been clear that we must build a railway that stands the test of time. We have undertaken extensive assessment of alternatives including slower speeds, but none of them offers the same scale of benefits as HS2.

The noble Lord, Lord Shipley, the noble Baroness, Lady Randerson, and the noble Earl, Lord Glasgow, also raised the issue of extending HS2 to Scotland. HS2 delivers significant connectivity improvements to Scotland. The full Y network reduces rail journey times to Glasgow by 30 minutes and Edinburgh by 45 minutes. I assure noble Lords that the UK Government are considering with the Scottish Government opportunities to improve links further between HS2 and Scotland.

The noble Lords, Lord Shipley and Lord Lea, raised the issue of HS3 linked to HS2. The Government are moving forward with plans for the east-west high-speed rail links and will invest £13 billion in this Parliament for better connecting the region, so that northern towns and cities can pool their strengths to create a single economy. The DfT is working jointly with Transport for the North to develop and prioritise the rail options for the first tranches ready for consideration and construction in the next rail investment period.

The noble Lords, Lord Prescott, Lord Snape and Lord Greaves, and the noble Earl, Lord Glasgow, raised the issue of spending on transport beyond HS2. I assure all noble Lords that this is in addition to the other £38 billion that the Government have already confirmed as spending in this Parliament. This is broken down with various schemes and I will seek to write to noble Lords listing some of the schemes and expenditure included in that £38 billion.

The noble Earl, Lord Glasgow, and my noble friend Lord Wolfson also wanted an assurance that HS2 is not at the expense of other investment. I assure them that HS2 will not be at the expense of other transport investment. Overall, there is £73 billion of transport spending between 2015-16 and 2020-21.

The noble Baroness, Lady Mallalieu, talked about platforms at Euston. I assure noble Lords that HS2 will not reduce the number of platforms at Euston. The noble Lord, Lord Truscott, said that it would. It will not; it will deliver 11 new high-speed platforms and 11 for the existing network. That is a total of 22 platforms, which is four higher than the current 18 platforms.

Photo of Lord Berkeley Lord Berkeley Labour

Will the noble Lord clarify that? There are 18 platforms at Euston at the moment and if they will be reduced to 11 or 12 for the west coast main line, surely that is a reduction.

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Parliamentary Under-Secretary (Department for Transport), Parliamentary Under-Secretary

That is also part of what will be the structure serving the intercity network, and some of that burden will be eased by the opening of the HS2 platforms. The overall capacity will rise to 22 platforms, but the noble Lord is quite right to point out that the current 18 platforms serve both the commuter network and the existing intercity network.

The noble Lord, Lord Rowe-Beddoe, talked about ministerial direction and the value-for-money case for HS2. I have already alluded to the benefit-cost ratio and I have also talked about the number of experts who provided evidence to the committee in this respect. The noble Lord, Lord Rodgers, asked about the pause mentioned in relation to Network Rail on the appointment of Sir Peter Hendy. Sir Peter has a proven track record in delivering on major transport challenges. He will develop proposals for the rail upgrade programme and, as I have said before from this Dispatch Box, he will report to the Secretary of State in the autumn and we will come back to that. The noble Lord also asked about confidence in Sir David Higgins. The short answer to that is, yes, we have full confidence in his ability.

The noble Lord, Lord Turnbull, the noble Baroness, Lady Randerson, and other Peers asked about terminating at Old Oak Common. The vast majority of passengers coming into London want to travel on to other parts of the capital, so by having a stop at Old Oak Common, the links that will be provided by Crossrail will be available to all those using HS2. The noble Lord, Lord Mitchell, talked about ignoring the impact of technology. I believe he said that he will be 92 by the time HS2 comes live. I hope to join him in that carriage. I will be a tad younger, but nevertheless we will hook up at that time. But let me assure him that the Government are committed to the extension of broadband, as I am sure he is aware. The previous Government invested heavily in it and broadband remains a priority. But technology should not be used to the detriment of other investments. We can see that passenger rail journeys have increased at an incredible rate up to the current figures that I quoted earlier, and there is no evidence to suggest that technology such as videoconferencing will significantly reduce future rail demand or the spread of the internet. Time will tell, but thus far the evidence is not in support of that.

The environmental impact of HS2 was mentioned by the noble Lord, Lord Truscott, my noble friend Lord Framlingham, and among others I believe that the noble Lord, Lord Stevenson, also touched on it in terms of the Chilterns. Let me assure noble Lords by giving examples of the steps being taken to avoid or significantly reduce the effects in the phase 1 environmental mitigation. These include some 127 kilometres of tunnels and cuttings to reduce noise and visual effects, as well as providing 102 kilometres of noise barriers along the surface sections to reduce the effect on communities.

I am coming to the end of my comments because I can see that the clock has run down on me. However, I will certainly respond to other questions which I have not had a chance to cover. Perhaps I may turn briefly to the question put by my noble friend Lord Framlingham about the Chilterns. Since the scheme was announced, we have introduced major changes to the proposed route through the areas of outstanding natural beauty. As recommended by the Select Committee, we are promoting a further extension to the Chilterns tunnel, which will offer broadly the same environmental benefits as the longer tunnel proposed by the residents’ environmental group. I will come back specifically on where we are with the Select Committee, which I believe has taken evidence from most of the witnesses. However, we are still awaiting the final comments of the committee in this respect. As I have said, if I have missed any points, I will return to them.

We believe, and the Government are clear, that there is a case for HS2. We have a 19th-century rail infrastructure that is trying to support a 21st-century economy, as the noble Lord, Lord Lea, put it so eloquently. Many of our main intercity routes are reaching capacity at busy times. As the passenger crowding statistics released last week clearly show, demand is growing rapidly and will continue to do so as our economy recovers. HS2 will have a transformational effect. It will improve connectivity, transform capacity, and free up space on our crowded rail network. It is important that the Government of the day should invest, and that is what we are seeking to do. We welcome the support of many noble Lords. This is our chance to do what the Victorian rail pioneers did all those years ago. We want to leave an infrastructure legacy that is fit for generations to come.

Photo of Lord Hollick Lord Hollick Chair, Economic Affairs Committee 7:13 pm, 16th September 2015

My Lords, I thank all the speakers in today’s debate. My noble friend Lord Desai wanted us to conjure up some animal spirits. I think that we have certainly had some very spirited contributions, and I am grateful for that. The Minister will have noted that many speakers, including those who are very much in favour of HS2, are concerned that many of the questions we have raised have not been answered, and time has not permitted him to respond to them in detail today. So for the third time of asking, because I have already written twice to the Secretary of State, I urge the Minister to seek to get us detailed answers to these questions. He has a good case to make, so why are the Government failing to make it in a persuasive way? I hope that the appointment of my noble friend Lord Adonis to the board of HS2 will encourage them to enter into the spirit of debate and answer the questions. None of the speakers in the debate is reluctant to see us invest in the future of this country, but we want to know that this is the best investment and that it has been prioritised and handled in the best way.

Motion agreed.