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We will now hear evidence from John Tomaney, professor of urban and regional planning at University College. Welcome. Please introduce yourself to the Committee and then we will start questions.
Thank you. I call Lilian Greenwood to start the questioning. Then it would be good if other Members could indicate their wish to ask a question.
Professor Tomaney: They all have their differences, so in making these comparisons, we have to be very careful of the different contexts within which these lines are introduced. For instance, comparing the British High Speed 2 proposals with the German high-speed rail system is not a good comparison, because that system accelerates the existing rail network and connects networks of cities.
A much better set of comparisons would be to look at Japan, South Korea and Spain—places where the high-speed rail system has focused on developing links between capital cities and provincial cities. That is a good place to look for lessons, if you like, as to what might happen in the British context.
Your evidence has concentrated on the question of regional benefits—or not. We have heard this morning about the importance of capacity; Sir Richard Leese in particular said that without extra capacity, the northern economies would not just fail to thrive, but could go backwards. What is your opinion on the capacity arguments that have been put forward for the HS2 project in this country?
Professor Tomaney: We have not looked directly at the capacity issues. We have looked specifically at the claims that building a high-speed rail line will have a positive economic impact on northern cities, accelerating their development. The phrase the Deputy Prime Minister used, I think, was that it “will heal the north-south divide.” We are particularly interested in that.
We have not directly dealt with the question of capacity and whether there are capacity constraints on the west coast main line, largely because the issues have, I think, been addressed by others. I know that there is a dispute about the extent to which that is the case and whether High Speed 2 is the best solution for it.
What we sought to do was to concentrate specifically on the question of what the likely economic impacts would be on northern cities and regions, largely because we felt that that had not been addressed in the debate, although certainly 18 months to two years ago the claim seemed to be becoming more and more central to the case for HS2. It has certainly risen in importance in the panoply of arguments that are made. That was the question we were interested in, and we were interested in looking at what evidence the Government had presented and what evidence there was from elsewhere. We stuck very consciously to that one topic. In a sense, this is not an argument against HS2 as such, because there might be many good arguments for HS2; it is looking specifically at the claims.
You gave evidence to the Transport Committee when we considered high-speed rail, and your view, and that of other economists who gave evidence, was that just putting a high-speed line in would not in itself generate economic growth away from the main city; but that where there was, alongside the high-speed line, a development of good connectivity from the regional network, that could generate economic growth. Given that, with the plans to develop the northern hub and other regional networks, and the west midlands plans, do you think there is sufficient to see economic growth in those areas?
Professor Tomaney: Having looked at the evidence from elsewhere in the world, my view is that connectivity to regional hubs is absolutely vital—regional stations are extremely important—if we are to have a chance of generating wider benefits. I still think that the probability is that when we look at the benefits that accrue from High Speed 2—the net benefits—the majority will flow to London and the south rather than to the northern cities, if past examples are anything to go by.
There is a strong argument for investing in intra-regional transport improvements, including rail improvements, in the northern cities, and there is evidence that starting with those will produce more benefits for northern cities and regions than will investing the money in High Speed 2. The weight of evidence is strong that improving intra-regional transport networks will have some positive impact. It is much more difficult to find strong, convincing evidence that investing in high-speed rail lines of the type that is proposed for the UK will have positive net benefits in the northern cities and regions.
Thank you. There is, however, significant investment going on in intra-regional networks, including the electrification between Leeds and Manchester and of the midland main line, and the whole northern hub proposals and those being developed in the west midlands. May I put the question to you again? Do you believe that those developments, plus HS2, will deliver the economic growth that the local authorities we have just heard from talked about?
Professor Tomaney: I think it remains unlikely, because the factors that promote regional development are complex and varied. Infrastructure alone, particularly in relatively infrastructure-rich societies such as the UK, is not a good predictor of regional development. Far more important for regional development in the long run are improvements in skills and education, and investment in the innovative capacity of firms. Those are the factors that drive regional development. From the point of view of many northern cities and regions, many of the gains that are hoped to arise from HS2, rather than demonstrated to arise, could be achieved by smaller scale investments in existing infrastructures, rather than the building of an entirely new infrastructure. [Interruption.]
Professor Tomaney: I live in Gateshead, which is another place that is not part of this network, and I use high-speed rail every week from Newcastle to London to come to work, so I think about these questions more than the average person. My arguments are the same. There will be a real problem for cities like Newcastle which will not be directly connected to the network. That will probably also be true of Edinburgh and Glasgow and places like Aberdeen, which in time terms will become even more remote from London and the south-east. Yet we have in Edinburgh and Aberdeen two of the fastest growing economies in the UK outside London and the south-east. Nevertheless, my argument remains the same. The future of the economies of Edinburgh and Glasgow will be less dependent on this infrastructure than we are asked to assume in the case for HS2. It will be much more determined by the growth of new industries, accumulation of human capital and innovative capacity in the local economy. The relationship between those and these new high-speed rail infrastructures is difficult to determine.
You said a moment ago that skills and the like were an important driver of regional economies. That is undoubtedly true, but the demand for those skills is dependent on investment in those areas. That investment to some extent, surely, is reliant on good connectivity.
Professor Tomaney: Connectivity is important. What I question is whether the kinds of connectivity gains that arise from HS2 are of the scale which we are asked to believe when we look at the prospectus for HS2. In terms of connectivity and tackling unemployment problems in a place like the north-east, the real issues might be more to do with connecting remote former mining communities to areas of job growth in the centre of Newcastle. These are the kinds of opportunity costs which are at stake in this debate. It echoes in a sense the question that Frank Dobson asked in the previous session: if you had £50 billion, he provocatively said, to spend on regional development and you could spend it on anything you wanted, would you spend it on HS2 or would there be other ways of spending that money that could have bigger regional development impacts? That is the question we are drawing attention to and which has not been satisfactorily answered in the debate to date.
We heard this morning from Manchester, Birmingham and Nottingham, who were all confident about the potential economic benefits that would flow to their cities from HS2. When the Transport Committee looked at high-speed rail, it concluded that it seemed to have succeeded in bringing benefits to cities in Europe, particularly Lyon and Lille. Why do you think they are all wrong?
Professor Tomaney: They are not wrong. If you go to Lyon and Lille you can see the benefits of having a high-speed rail station. If you go to Lille there is a lot of development around the railway station in the Euralille development. Likewise if you go to Lyon you see developments in the Part-Dieu district around the railway station. It is the same around Atocha in Madrid and around the station in Seville. Those stations become a magnet for investment within those regions. What the best econometric studies carried out in France suggest is that much of the gains made in Lyon have been at the expense of other parts of south-east France, rather than Paris.
These are the issues that we need to separate out; if you build a high-speed rail line and spend £30, £40, or £50 billion on it and build a large railway station in Manchester, there will of course be some benefits, particularly to central Manchester; that is common sense. What we are interested in is the net distribution of total benefits. The evidence from studies that have been done elsewhere is that most of the benefits will accrue in London and the south, not the north. There will be some benefits to the latter, but the evidence for whether those benefits will be enough to close regional disparities—which is the claim that we are interested in testing—is not very convincing.
Does it not need to be seen in the context of the investment that is also going into regional transport networks? It is not happening on its own; as we heard earlier, in relation to High Speed 2 to Manchester, it sits within the northern hub developments.
Professor Tomaney: Sure; I am not suggesting for one moment that these investments are not good and significant—the northern hub is definitely an improvement to the infrastructure of the northern regions. At the same time, however, if I want to take a train from Newcastle to Middlesbrough, it takes an hour and 20 minutes. In terms of creating an integrated labour market in the north-east of England that would improve the scale of labour resources available to investors, the question is whether it would be more useful to the north-east of England to build a railway line to Leeds—which then stops there—or to invest in a proper integrated regional transport scheme.
My argument is simply that we have not weighed all the options; there is an opportunity cost involved in spending this money in one area and not in others. The New Economics Foundation produced a nice piece recently that took up this argument and asked, if that money were available to spend, what else could it be spent on? A number of things were listed, some of which I agreed with, some of which I probably would not agree with. Nevertheless, it made the point rather well that there are choices to be made; it is not just a question of HS2 and whether to make it work for Manchester. There are much wider issues that have not been sufficiently scrutinised in this process. That is the simple point that I am making.
When the impact of high-speed rail on the continent was studied, one of the consequences was a reduction in short-haul air travel, where people have taken trains rather than flying shorter distances. What do you think would happen to air travel as a result of the construction of High Speed 2?
Professor Tomaney: The really honest answer is that I have no idea—I do not think that there has been a serious study of that. It is very difficult to apply what has happened in France and Spain in this respect to the UK. They are very different sized countries, with different distributions of airports and relationships between travel by air and by train. It is a very good question, and one of many where we could do with more useful research and analysis.
Given that this is a paving Bill for something that is going ahead, and that you rightly raise concerns about the net distribution of total benefits, what needs to happen to ensure we get better net distribution of total benefits as this moves forward?
Professor Tomaney: I suppose that, in a sense, I am sceptical that it is possible to achieve a better net distribution of benefits. I am sort of persuaded by the argument that Lord Mandelson made earlier this week, I think, in the Financial Times: by all means enact the paving legislation, but let us take a moment to pause and think more deeply about some of these questions than we have managed to do so far. He made a revealing point that very little attention was given to these questions when the issue was discussed in Government. That is one reason why we thought it was worthy to explore them in the most rigorous way that we could and with the time and resources that we had available. So basically there is an opportunity to pause and think. That is what I would suggest would be worthwhile, given that we are spending a very large amount of public money in an environment of austerity.
Professor Tomaney: Yes, that is a very strong possibility. You will certainly see development in Birmingham, Leeds and Manchester where you have these stations. I guess that is one of the reasons why the property industry is so interested in this proposal. You can certainly see evidence of this in Lyon and Lille. Studies have shown that there has been a reorganisation of jobs around those stations. If you take the example of Lille and the Nord Pas-de-Calais region and look at cities such as Roubaix, Tourcoing and Villeneuve d’Ascq, it is difficult to say that they have benefited from the arrival of the TGV.
Then there is the question of measuring the net benefits for the region. These are difficult tasks to undertake, because the data that you need are not always available in a straightforward and usable form. It requires complex econometric techniques to work out what is really the cause and effect of all this. I think that there is a real possibility that you will see a concentration of economic activity around these stations in certain sectors of the economy, but not all sectors. Professional services would be a good example.
My question relates to that last point about smaller towns tending to lose some economic activity and it going to the centre. That effect has gone on right since the beginning of the industrial revolution when people moved out of the fields, went into towns and there was the growth of the core cities. I am a former leader of Bradford council. The demise of the mills there saw a huge acceleration, because of connectivity, to the core city of Leeds and the wider economy has gained from that. That activity has not just happened because of HS2. It has gone on for the last couple of hundred years. Do you agree?
Professor Tomaney: That was an interesting thesis. I just wondered what the question was. I agree. What is happening in the economy at the moment are processes of concentrating economic activity in certain places. The reasons are complex and multifaceted. In the case of London, they deal with the accumulation of skills and knowledge, and of wealth and assets. In that sense, high-speed rail is quite a minor factor in shaping the economic geography of the UK. All we are raising as a question for discussion is: given the historical weight of these tendencies which have produced these regional inequalities between city and country and different regions of the UK, is it not a little naive to expect that building a high-speed rail line will produce a sort of counter-tendency to this?
On the contrary, if we look at Tokyo since the building of the shinkansen, Tokyo’s economic weight within the Japanese economy has grown dramatically. There is a very high level of economic concentration. Likewise in South Korea. The line there was built in part to achieve national economic balance, as they call it, but the gap between Busan in the south and Seoul in the north has actually widened during this period. The factors producing these disparities are wide-ranging, and the notion that a railway line is the answer to them is what we seek to raise questions about. If that is part of the argument, that, at least, should be a much firmer and more rigorous base than is the case in the existing documentation, as far as we can find it, that has come out of HS2 Ltd, DFT and so on where the claims are strong, but the evidence is often difficult to find.
Professor Tomaney: Where it is right is on the importance of intra-regional transport investments; those can make a big difference. If we take a wider view of development and try to begin to factor in questions such as well-being, rather than just economic growth, the observation that it makes that investing in cycle lanes might have a more positive impact than HS2 should be weighed up in this debate.
I am more sceptical in relation to the faith that it places in broadband as an alternative to all of this. To me, broadband is just another type of communications infrastructure like the high-speed rail line, and those infrastructures themselves do not produce economic growth because in order to use that broadband effectively, you need high levels of skills, innovative companies and a strong knowledge base in your universities and so on. If those things are lacking, rather like with high-speed rail, broadband will not be the panacea that people imagine. Some things in that report are really good, but there are others that I would raise a sceptical eye about.
How important do you think the improved connections between the cities of the midlands and the north could be, rather than with London? I say that in the context that, first, passenger numbers are growing faster between Birmingham and Manchester than between Birmingham and London and also, from my own perspective, I note that travelling from Nottingham to Birmingham or Leeds is currently very slow, but potentially it would be substantially better through HS2. How important could that be?
Professor Tomaney: It could be very important. Again, it would be useful to see some evidence on this: measuring HS2 against something real, rather than just the existing rail network. Those things could be very important because one of the principal advantages of London and the south compared with the peripheral regions, as you called them earlier, is the size and integrated nature of the labour market, particularly for professional jobs. More integrated transport systems in the north, or in the midlands, which facilitate the movement of professional workers, could potentially create the conditions for the agglomeration economies that might, in the longer run, help to do some of this rebalancing, if that is the policy objective.
That goes back to my point about how long it takes to travel by train from Newcastle to Middlesbrough. When I was working in Newcastle, we had visitors who wanted to travel by public transport from Newcastle to Middlesbrough. If they come from the Netherlands or any of those places that have proper transport infrastructure, they are staggered to learn that you cannot get to Middlesbrough in much less than an hour and a half. It is unbelievable, but that is where we are. Those seem to me to be equally important problems in this debate.
If Members have no further questions for this witness, I will thank the professor very much on behalf of the Committee. The Committee will sit again to take further evidence on the Bill at 2 pm today.