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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 5:40 pm on 16th September 2015.

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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”.