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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 4:54 pm on 16th September 2015.

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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.