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

Part of the debate – in the House of Lords at 4:14 pm on 16th September 2015.

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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.