Will you each set out what you think will be the benefits that your cities, and perhaps the wider regions that they serve, will derive from the project? A couple of previous witnesses suggested that high-speed rail will benefit the capital city rather than those connected along the route. Do you accept that view? If so, what steps need to be taken to mitigate that risk? I am sorry that that question is quite broad.
Chris Tunstall: You have probably already heard from colleagues from the west midlands that Centro, on behalf of the west midlands authorities, undertook a study through KPMG that identified 22,000 jobs and £1.5 billion of gross added value as a result of HS2. The local enterprise partnership identified a requirement to grow the number of jobs within Birmingham and Solihull by 100,000 and sees that as a key aspect. In addition, Solihull has a proposal, as part of the LEP, around UK Central, which is the M42, the airport and the HS2 interchange station, and the west coast main line station is also there, of course. It has identified the potential for 100,000 jobs there and £15 billion of growth.
That is on the basis of connectivity, and that is what it all revolves around. I know you will have heard from previous witnesses, “It is high speed,” “It is capacity,” and, “It is economic growth”—it is all of those. As you have probably already heard, the west coast main line is ready to fall over. By the mid-2020s, it will be at full capacity, and that is before taking account of the freight issues mentioned earlier. The London Gateway is proposing to have some 16 750-metre trains running on the west coast each day when it is fully operational. There simply is not the capacity on the west coast to take that and passenger transport, so we see it as vital for growth and jobs that we get the improved connectivity.
Ben Still: From a Sheffield City Region LEP perspective, the capacity issues are there, but they are not as acute as they are on the west coast main line. The approach that the LEP has taken is very much to look at the benefits of high-speed rail stations in the round. There are three areas where there will be benefit. Clearly, links to London are seen as a positive factor in the little survey evidence that there is. Of the regional cities, Sheffield has some of the worst connectivity to London, and it stands to gain the most—a saving of an hour in travel time—from high speed. That is a big prize for the city.
Businesses that we deal with on the LEP will helicopter clients up to South Yorkshire, rather than put them on the Midland main line, just because that is crowded and slow. It is not the impression that you want to give to inward investment teams. You want to give the impression of a city region that is on the up, so it is important for inward investment. Those linkages to London are absolutely two-way, but the city region is probably under-represented in the kind of service sectors that might choose to move there following an improvement in accessibility.
Listening to some of the previous speakers, we would absolutely agree that high speed is necessary but not sufficient, and the regional linkages between cities in the north are absolutely critical. At the moment, the average speed of trains between Sheffield and Leeds is 35 mph. Again, high speed promises to reduce that journey time from 45 minutes at best down to about 20 minutes, so it offers regional connectivity benefits as well. In addition, we are very interested in the scope of the benefits from the freed-up capacity from the existing railway lines. Finally, making sure that that station is connected to the rest of the city region is absolutely critical.
I am directing this question at Mr Still. The proposed route has an out-of-town station for Sheffield. From a LEP or city region perspective, can you tell me whether that is the right location, or would you prefer a city-centre station? I know that that is the city council’s preferred position. If you think the city centre is the right location, what do you think the additional costs would be? If you do not, what would be the challenges of an out-of-town location?
Ben Still: Why did I think you might ask me that question? The local partners were involved in some of the early work with HS2 and we do not tend to dispute much of the analysis. The LEP itself has not taken a view on a city-centre location. Its view is that it wants the location that is most economically advantageous to the city region, and it wants to use the forthcoming consultation as the process to bottom out the arguments, examine the evidence and take a proper view. It is important that the city region comes forward with a single view, which seems very sensible.
Without doubt, a city-centre location is more expensive. I do not think we dispute HS2’s figures that it is about £1 billion more. I do not think that HS2 disputes in the round the economic analysis showing that you get stronger economic benefits from a city-centre location. Sheffield city council estimates those at about £4 billion to £5 billion on top of the benefits you would get from Meadowhall. I think those figures need to be looked at with a lot of caution, as per your previous discussions about the way figures are derived, which is based on broad-brush econometric relationships. Nevertheless, the city centre is likely to be to the economic advantage of the city, and hopefully of the city region, but the key will be how you then connect up that city to the rest of the city region to ensure that the benefits are spread across the whole city region.
May I direct a question to Mr Tunstall? The Birmingham Curzon Street site is close to three existing Birmingham stations. What are the challenges of connecting them, especially through a busy city centre, and how does Birmingham plan to integrate the new city station with its plans for the metro?
Chris Tunstall: The Curzon Street site was the original station coming into Euston. We have New Street about 500 metres away, and Moor Street is sat right next door to the new station. We are already looking at a one-station concept, which is more about connectivity between the stations and operating them as one station. We have a scheme that has been developed, and it has top ranking within our local transport funding for a major scheme in 2015. So we have already identified that as an issue but, in addition, we are working with HS2.
The route from Moor Street to New Street goes underneath the Bullring. It is a covered area with the Bullring on top and not a very nice environment. We want footfall within Birmingham. We do not want people to come through a tunnel and straight out of Birmingham again. We want to show them the delights of what they could get if they came into Birmingham, so we are looking at the possibility of linking the station with the shopping complex, a bit like Westfield has done with Stratford, which we understand is now the desire line for pedestrians—they want to walk through the shopping complex. We have done a lot of work on the connection between the two, but we are also working with HS2 to try to ensure that we get a better connection from the station directly into New street and then down to the station.
Chris Tunstall: Two routes are being proposed for the metro. That will link through from Snow Hill, which will be the fourth station in Birmingham, to Curzon Street station itself. Although there is quite a bit of land there, it is a very tight area to fit all this in, but we have two routes for metro that we will consult on shortly.
Mr Tunstall, you might have been in the room for the previous evidence session. You mentioned the KPMG report and the 22,000 estimated jobs in the west midlands, but the witness representing Stop HS2 disputed those figures, saying that that was really a case of jobs being relocated from elsewhere in the west midlands to nearer Birmingham if HS2 is built. Do you have any comments on that?
Chris Tunstall: Not without going into the full detailed report and how KPMG worked on it. I think the truth probably lies somewhere in between. If you have a better connected city, that obviously has an effect on jobs. With the international connectivity that we are moving into and the global economy, people want to be better connected. Birmingham airport has just put out some adverts asking why colleagues from China, who have a massive interest in Jaguar Land Rover and other firms in the area, have to fly into Heathrow and then catch the train up to Birmingham, because they would prefer to fly direct. That is the point. People prefer to get directly into the area where they want to do business. It may be a relocation purely and simply on the basis that they will build factories there rather than considering building them elsewhere, but we see that as a spin-off.
The whole of the west midlands, with the probable exception of the Coventry and Warwickshire LEP—that is more about Warwickshire than anything else—is fully supportive: the Black Country LEP and certainly the Greater Birmingham and Solihull LEP. They see the benefits of the spin-offs of jobs. To give you an idea, we are just shy of about 500,000 jobs in Birmingham, and 180,000 of those jobs are inward commutes from other areas. It sometimes does not tell the whole truth when you say that jobs are not grown in other areas because of placing a lot of infrastructure in a particular area. We know that if you get a powerhouse, it attracts jobs and people living in other areas transport themselves in.
Chris Tunstall: The situation with Washwood Heath is that it is owned by a number of developers. The site has been vacant for a number of years, including several before the current recession, and nothing happened on the site. Those 7,000 jobs are purely on the basis of the use that could be obtained there and the number of jobs per square metre of building that you could put in. As far as I am aware, there is no interest from any firm with those developers at the moment. There is a potential, but no interest. We are working closely with HS2 to release as much of that land as possible after the development of the station and the proposed tunnel— that is where all the spoil will come out—to redevelop that site. We want to redevelop it as a high-skills sector that supports HS2. There are no actual firms expressing an interest in that site.
I would like to ask the same question I asked the previous panel—Mr Tunstall, you referred to this in your opening comments—about rail freight capacity. I think it is fairly widely accepted that doing nothing would mean there would not be enough rail freight paths on the west coast main line. Have you had the opportunity to assess the alternative 51m package and what that would mean for the number of rail freight paths on the west coast line?
Chris Tunstall: No, I am sorry; I have not. I can tell you that rail freight grew by about 56% over the past eight years, but I do not know the impact of what is proposed. The only experience I have is on the west coast main line upgrade. Of course, that was predicated on costing £2 billion, but it eventually ended up at £9 billion. It gave us 125 mph trains and one extra train path an hour, which was not quite what was being proposed. We have squeezed as much as we possibly can into the west coast at present.
You heard the submissions earlier. Have you missed a trick? They believe that you are being led up the garden path in terms of predictions and the economic case, and because these jobs will not be there and will only be moving from one part of the region to another, so there is no real need and we go back to the 51m case, which will give you better passenger capacity and you do not really need the speed.
I will direct my question to Mr Still as a starter. To some extent, it is asking you to develop the arguments that you have already put forward in response to previous questions, particularly with regard to what the previous panel of witnesses argued, that the HS2 project would actually suck jobs into those cities and deprive the wider region of those jobs. Could you develop the argument if you disagree with that? Yes, we need better links, as has been pointed out, between our core cities, but would you acknowledge that in terms of attracting investment, particularly foreign, it is vital that our regions and major cities have good connections with London?
Ben Still: Yes is the short answer. Certainly, from the evidence we have, the connections to London are seen as important by business. I absolutely accept that there is a two-way road argument. I think that the analysis that Sheffield city council did when it looked at the station location options was quite refined. In addition to the work that was done by looking at the econometrics, they looked much more at the impact on floor space rents for office space and the kind of firms that would attract. What that implies, particularly for Sheffield, is that it will begin to grow in the professional and business service sector, where it is under-represented at the moment, because it will become a much more attractive location. That is in addition to the broader inward investment argument.
The issue of how those benefits trickle down in the city region is a live one in our city region. I do not think that there are any easy answers. The fundamental tenets of improving productivity and widening markets, both labour markets and supply and business markets, are grounded in fairly firm economic theory. That does not mean that the job predictions are going to be exactly right, but they will be broadly within that range. You have to have the whole package if you are to make high-speed rail work, and planning high-speed rail in isolation of those onward connections and indeed of master-planning around the city centre—the station location itself—will not lead to the desired economic benefits. As you discussed earlier, those wider economic benefits are what make high-speed rail a strong value-for-money case.
Apart from the obvious economic benefits of having high-speed rail from London to Birmingham and then to Leeds and Manchester, do you think there would be greater benefits to your respective city regions if that rail line extended even further north into Scotland and the central belt connecting to Edinburgh and/or Glasgow?
Ben Still: I think yes is the short answer. Before the current route proposals were adopted, several cities on the eastern side of the country, including Newcastle, and the east midlands and south and west Yorkshire, were looking at the fact that you need the whole network to generate the maximum benefit. As you would expect, the logic is that if you have a high-speed train, you will get more savings the further it goes, in terms of connecting those places.
Chris Tunstall: From a Birmingham LEP point of view, when phase 2 was announced, we were very supportive of it. Obviously, the further north you go, the fewer benefits are perceived. From opening up the north, the time savings, which I think were mentioned earlier by Ben, are far greater the further north you get, than they are going from Birmingham to London. The train between Birmingham and Leeds, for example, is exceptionally slow, because it follows local commuter trains. Nothing you can do in upgrading will do anything about that, unless you four-track, which is a major investment anyway and effectively like building a new railway, except that it is on the line of the existing one. You need the extra tracks.
You said that the local enterprise partnerships have the business community very much at their hearts. In fact, they have a business person in the chair. I want to ask about business and compensation. In the Bill under, I think, clause 1, it states that the money can be used to acquire property. In your view, what should the Government look at in terms of compensation for affected businesses? At the moment, they are not covered by existing schemes. That is a question for both of you.
Ben Still: It is a fair question. I would probably start from a slightly different place. One of the big issues we face in terms of phase 2 city regions is certainty and the blight that has been caused by the publication of the routes without anything in the current legislative programme that would provide certainty. The one thing that I think businesses and local enterprise partnerships will constantly say is that business wants as much certainty as possible. I would like to see HS2 Ltd and the Government begin to do more active work on phase 2—land assembly around the potential northern stations, for example, or bringing forward the second hybrid Bill—to ensure that you are getting as much certainty in the north as you are in phase 1. That is critical, because there will be some fundamental master-planning for all the northern cities involved in high-speed. For Sheffield, particularly if the outcome is Meadowhall, a radical change will be required to some of their master-planning practices, and that will take time to work through. That is the first point.
The second point is that HS2 has adopted a bespoke model for dealing with affected businesses. The more HS2 can work with those businesses, the better. It has blighted several sites, including, in the Sheffield city region, some of the key enterprise zone sites. Eight of our 12 enhanced capital allowance sites are currently blighted by the route, and we are very keen for Government to help us resolve that as quickly as possible.
Chris Tunstall: I reiterate that in terms of the early acquisition and the ability for HS2, supported by the Government, to start helping firms to relocate; it is the safeguarding lines—particularly around the stations and, as we heard earlier, Washwood Heath—that are creating a lot of concern in terms of uncertainty. The safeguarding line itself does not necessarily mean that a business will be affected; it simply gives protection to HS2 in taking the scheme forward. It does leave a lot of firms in limbo, particularly if they were looking to invest. The city council has been working closely with HS2, and we have suggested opportunities to enter joint venture arrangements, particularly around Washwood Heath. HS2 is looking at Washwood Heath as well as the potential relocation of some businesses that are affected elsewhere on the line.
Would a property bond be of interest to business? As you say, with blight it is not certain whether your property will be affected, but you can hold a piece of paper that basically covers the difference between the unblighted price and the blighted one, which could be transferable to a subsequent business owner. Would that be attractive to business?
May I return to the question of Washwood Heath? I was interested in your response, in which I think you said that HS2 Ltd had been able to convince you that there was no alternative site for the marshalling yard. In your dealings with HS2 so far, have you been fully consulted on the initial route proposal and has the company been able to provide you with sufficient information?
Chris Tunstall: I believe that HS2 Ltd looked at more than 80 potential sites and honed that down to half a dozen, of which two—both within the Greater Birmingham and Solihull LEP area—were the preferred choices. Washwood Heath was the preferred site as far as the company was concerned. The other site was green belt, out towards the airport. We were convinced that Washwood Heath was the best site for the marshalling yard, notwithstanding the fact that it was prime development land for us.
Chris Tunstall: Exceptionally. You will not get the maximum out of it otherwise. On a personal note, I perceive this as being the new railway, and perhaps HS2 was the wrong acronym, because everybody fixated on high speed. Then everybody fixated on capacity, which is exceptionally important. It is a mix of high speed, capacity, growth and jobs. Without putting the rest of the network in, you do nothing for the journey time to the north or the capacity on the lines to the north. As I said, they are a function of each other. They just have not got the line capacity to get trains through at any speed, and we do not have the capacity to put extra trains through. It is vitally important, and I see it as the spine of the new railway system.
Ben Still: I guess mine is a slightly more sceptical answer. I think Chris is absolutely right to say that we must have the connections, but what is critical is what you do with the connection. I do not think that having the connection necessarily implies that the vision that many people have in the Sheffield city region of a train that departs Sheffield and ends up in Paris or beyond will necessarily become a reality. There is the hard-edged question of how many people you can get on a train to make it viable, and what that looks like. There is a bit more of the devil in the detail around the connection.
Chris Tunstall: We have found them absolutely fine. Our biggest problem was us signing the memorandum of agreement and the confidentiality agreement—we had not got round to signing it—and getting hold of the plans on a timely basis. We found HS2 very good to work with. I am not wanting to make life too easy for them, but it is exceptionally difficult. The line is varying slightly. At the last moment, the tunnelling option went into Birmingham; because of the difficulty of getting through by the motorway, the existing rail line and the river, it was decided to tunnel. We are constantly in discussion. As I said, we have a design for the station at Curzon street—that will be the design or footprint in the hybrid Bill—but we are still working with HS2 to come up with the best possible design that will maximise the benefits for Birmingham and the railway. So, very good.
Ben Still: I think I would echo that. Within the parameters that HS2 was set, we certainly found them positive to work with, but those parameters are quite tightly drawn. One key issue that we have had is around onward connectivity to make stations work, which quickly got beyond HS2’s remit. We found that a challenge. I think the same probably goes for routes as well. We were dealing with them on station locations, but they were not involved with local partners on route information for fear of blight, which is eminently sensible but made some of the work challenging.
Mr Tunstall, you said that the 51m proposals could not be done without substantial works in various places. My understanding is that works are proposed by 51m only for a Stafford bypass and works at Ledburn junction near Milton Keynes. It is certainly the case that Network Rail proposed firmly to go ahead with Stafford, and I have been advised this morning that it is also going ahead with Ledburn junction, so there would not be any major work involved in the 51m proposals.
Chris Tunstall: As I said, I did not know their full proposals. The information I have is that it is being accommodated by reducing services at certain locations. I am told—I have not read it myself—that Camberley, Tile Hill and Berkswell will lose their services to accommodate it, and we will also lose a train an hour between Northampton, Milton Keynes and London Euston. I was asked earlier about freight. Again, I have not read it, but I have been told that this is what is in there: it does nothing for freight. I am not sure what it will do, apart from not building a new railway.
Ben Still: There has not been a great deal of work on this topic, as far as we are aware. The assumption within HS2’s work is that the service patterns would continue for midland main line, but it is important to bear in mind as well that the Sheffield city region also has the east coast main line to Doncaster. One key concern that we have had is to ensure that east coast main line long-distance paths are preserved. Obviously, there will be some abstraction of east coast main line demand for the trains serving Leeds. We have had that in mind as well.
We see both opportunity and threat. The threat is that the midland and east coast main line services become long-distance commuter services into London, and we lose too many of those paths. The fact that both those services, particularly the midland main line, serve intermediate stations on the way through means that we would like them to carry on. The demand predictions and the capacity that we will need 20 or 30 years into the future implies that both services will be viable, but I think that more work is required in that area.
Ben Still: Whenever we can, we put that proposal to them. The response that we had early on was initially that the hybrid Bill would be too complicated to do the whole route in one go. The response that we have had more recently is a bit more pragmatic—there is some sense in increasing certainty—but they have been informal conversations. We will keep pressing the case.
There do not appear to be any more questions. Thank you for coming along. If you think that there is any more information you can provide the Committee, please send it to the Clerk.