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Examination of Witnesses

High Speed Rail (Preparation) Bill – in a Public Bill Committee at 11:32 am on 11th July 2013.

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Dr Adam Marshall and Peter Lloyd gave evidence.

Photo of Annette Brooke Annette Brooke Chair of the Liberal Democrat Parliamentary Party 11:33 am, 11th July 2013

We will now hear oral evidence from the British Chambers of Commerce and Transport Scotland. Before calling the first Member to ask a question, I remind all hon. Members that questions should be limited to matters within the scope of the Bill, and that we must stick to the timings in the programme order that the Committee has agreed although, as has been pointed out, we are allowed to finish earlier.

For the record, would our new witnesses please introduce themselves to the Committee with their name and position?

Peter Lloyd: I am Peter Lloyd. I am policy manager at Transport Scotland, which is an executive agency of the Scottish Government.

Photo of Annette Brooke Annette Brooke Chair of the Liberal Democrat Parliamentary Party

I am sorry; I am having difficulty hearing.

Dr Marshall: I am Adam Marshall. I am director of policy and external affairs at the British Chambers of Commerce, representing about 100,000 businesses across the UK.

Photo of Lilian Greenwood Lilian Greenwood Shadow Minister (Transport)

May I begin with a question specifically to Dr Marshall? Would you like to comment on the controversies over the project’s cost-benefit ratio? Do you think the modelling looks at the right areas, especially with regard to the productivity of passengers travelling on trains?

Dr Marshall: The first thing I would say is that the business community supports the passage of the preparation Bill because we are supporters of a high-speed rail network. One of the reasons why we are supporters of a national network is that we believe that there will be significant economic benefits to the country.

I do not believe that the current methodology captures all those benefits, and I, along with many others who have been students of infrastructure for a long period of time, feel the Green Book in its present form and some of the ways in which we calculate the cost-benefit analysis are ready for revision. We would like to see more of a focus on the potential benefits, which we think will be significant.

Q 138138

Photo of Lilian Greenwood Lilian Greenwood Shadow Minister (Transport)

Do you want to spell out a bit more what you think the benefits are and why you think high-speed rail is needed, from a business perspective?

Dr Marshall: From first principles, it is about capacity, capacity and capacity for us. Unless we get greater rail capacity, we know that the west coast main line will be exhausted in the early part of the next decade. We also know that will start to have economic disbenefits to many cities in the UK, because of greater journey time uncertainty, greater delivery uncertainty, etc. Capacity is our first point.

The cost-benefit analysis is a bit narrow in terms of what jobs and forms of development its methodology can capture; some of its definitions are limiting. We support the project because we believe there will be benefits to employment, and we think the economic benefits to the areas geographically along the route will be significant.

Q 139

Photo of Lilian Greenwood Lilian Greenwood Shadow Minister (Transport)

How important is the full Y network for business? We heard a lot, particularly on Tuesday, about improving connections between Birmingham and London, and obviously quite a lot of the focus is on the west coast main line. But what about the links between the core cities, in particular between the core cities in the midlands and the north? Would you comment on that?

Dr Marshall: As members of the Committee will know, we represent businesses in every nation and region of the United Kingdom. What has interested me most is that the further north you go, the better and stronger the support for the Y network gets, as do the calls for it to be extended further—to the north-east of England, for example, and into Scotland, which Peter is more qualified to comment on than I am. We are supportive of the full network, and many of our business constituents in the northern regions ask us why we cannot simply have a single hybrid Bill to do the whole network, and get started on the entire project. We understand the Department’s argument that it is an incredibly complex proposition, and you have to start somewhere. We accept that, but we would love to see the entire network safeguarded and built.

Q 140

Photo of Alan Reid Alan Reid Liberal Democrat, Argyll and Bute

Mr Lloyd, can you tell us what the Scottish Government’s policy is regarding High Speed 2?

Peter Lloyd: Regarding high-speed rail more broadly, we are entirely supportive of the Department for Transport and the UK Government’s position. As Adam said, the argument is principally about capacity and safeguarding the network for future demand—future passengers and future freight use, which is an issue that has not received much attention in this debate.

Q 141

Photo of Alan Reid Alan Reid Liberal Democrat, Argyll and Bute

Some witnesses have suggested that high-speed rail would simply suck jobs into London. I presume, from what you have said, that you disagree with that? Can you tell us why you believe it will be good for Scotland?

Peter Lloyd: First, on the capacity benefits, as Adam has discussed, our position is that the Y network represents a starting point for a Great Britain-wide high-speed rail system. Increasingly, our economic connectivity is constrained by the capacity constraints on both the east and the west coast main lines. We also see a number of economic advantages, which have been modelled for us, in terms of the agglomerative benefits of bringing the central belt of Scotland closer to the regions of England. Again, the arguments are not just about London. It will connect Birmingham to Scotland, and Birmingham to Newcastle.

A key benefit that we see from the Scottish end is that over the distance, and with the achievement of a three-hour journey time between Scotland and London, we get a substantial subtraction from domestic aviation, which has a clear environmental benefit. That is perhaps a unique benefit for Scotland, because aviation from London to Birmingham and London to Manchester has diminished over recent years.

Q 142

Photo of Graeme Morrice Graeme Morrice Labour, Livingston

Mr Lloyd, I want to follow up some of the questions that Mr Reid has just asked. You will be aware that the Bill contains no reference to extending the line north of Manchester and Leeds towards Edinburgh and/or Glasgow. Do you think that such an extension should be included in clause 1?

Peter Lloyd: Our position is that we are content that the Bill indicates that the network will extend at least to the specified cities and regions. We have promoted a legislative consent motion in the Scottish Parliament to extend the legislative competence of the Scottish Government for the consideration of the UK Parliament. We support the HS2 plans in the Command Paper that the Secretary of State for Transport introduced in January. There was discussion of establishing a joint study of options beyond Manchester and Leeds. We are taking that forward with the Department for Transport at the moment, and we hope to be in a position to issue a remit for the study shortly. That will enable us to explore options for high-speed services and infrastructure beyond Manchester and Leeds. The Secretary of State has requested that it be delivered by May 2015.

Q 143

Photo of Graeme Morrice Graeme Morrice Labour, Livingston

Are you satisfied with the working relationship that you, as an executive agency of the Scottish Government, have with the Department for Transport of the UK Government? Are you working well together on this project?

Peter Lloyd: We are working closely together on this project. We have certain misgivings about the scope of the Y as it stands—essentially, we draw Birmingham, Manchester and Leeds closer together and closer to London, but if we look at journey times over that distance, Scotland becomes comparatively further away from the economic core. We have those concerns, and our position is very much that the Y is a starting point for high-speed rail in the UK but we wish that to continue and we wish high-speed rail to be rolled out across Great Britain further and faster. Perhaps the phasing could be altered in some way to deliver pieces of high-speed rail infrastructure that deliver earlier benefit. Those are discussions that we will have with the DFT.

Q 144

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

As you have alluded to, both the first phase and the second phase will help deliver faster inter-city journey times to Glasgow and Edinburgh, but there is an issue with the type of rolling stock that would be used. At the moment, the tilting Pendolino trains allow quite fast journey times to Glasgow. If the high-speed trains do not tilt, the time gain on the high-speed part might be offset by slower journey times.

Peter Lloyd: That is correct, yes.

Q 145

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

Is that something that you are focused on?

Peter Lloyd: It is something that we have a rather keen interest in. The information that we have from Virgin Trains, which operates the Pendolino rolling stock, is that north of Lichfield—the interface point with the network at phase 1—the tilt mechanism allows a reduction in journey time of 15 to 17 minutes on services to Glasgow. You are correct inasmuch as although Birmingham is drawn closer in journey time terms, the journey from Birmingham to Scotland takes longer, so there is quite a small time saving.

I have the figures here: at 2026, Birmingham sees a 42% journey time saving, but when that is extended to Glasgow, it becomes only a 6.4% journey time saving. As we move to Manchester and the west coast mainline, we see more journey time benefits from the operation of a dedicated high-speed line. Again, the tilt has a value, and it is particularly important over the curved sections of the west coast mainline in the north through Cumbria and the Scottish borders.

Q 146

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

Do you think that problem could be solved by designing a particular type of rolling stock? I am not an engineer, so I do not know whether it is feasible to have a high-speed train that tilts. Or is it something that would have to be addressed by extra line infrastructure north of Manchester?

Peter Lloyd: If it is purely on non-tilt operation in infrastructure, alignments are the key to it. If there is the introduction of tilting technology—I am not an engineer either, but I understand that it is being developed, perhaps by Alstom, which manufactures the Pendolinos—there will be advantages for services to Scotland, but again, it would depend on the performance of the trains, the angle of the tilt, and so on, over those lines. These lines were pretty much hand-carved, so they wind considerably.

Q 147

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

This is addressed to Dr Marshall. If the British Chambers of Commerce think that High Speed 2 is a cracking good thing, on the basis of what he regards as a faulty cost-benefit analysis, assuming that the benefits are greater and the costs are less, why, as a private sector organisation, does he think that the Chambers Of Commerce think the taxpayer should take the risk, and not the private sector offering to do this cracking good scheme?

Dr Marshall: That is an interestingly worded question, which I will attempt to parse and answer. We have a long history in this country of obsessing over cost-benefit analyses. For example, the Jubilee line extension cost-benefit analysis is one I remember that significantly underestimated the benefits of that particular infrastructure project, as have many others over time. I am sure that Peter, as a transport specialist, can probably name quite a few others where we have grossly underestimated the benefits of particular projects. I think we are seeing that in this case.

With regard to the point about public and private funding, I would submit respectfully to this Committee that the reason why we require public sector funding for transport infrastructure projects in this country is because of political risk and short-termism. Quite frankly, in the business community, we have seen too many infrastructure projects repeatedly delayed in what I call “stop-start Britain”. We stop them, we start them, and then we wonder why they cost so much, when ultimately, we find that we have to deliver them because we are really stuck and are in an emergency position. I believe that the Bill under consideration by the Committee today, which simply allows us to avoid stopping for the first time on this incredibly important project, is absolutely critical. It also gives us time to refine further that cost-benefit analysis, and it gives us confidence, in the private sector, that what we will not be doing is still sitting in Committee Rooms like this in 10 to 15 years time, talking about it, rather than actually doing it.

Q 148

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

May I come back to cost-benefit analyses? I was in favour of the channel tunnel link, and I was the first person, I think, to suggest that it came into St Pancras. The cost-benefit analysis did not look too bad, but you would agree that the number of passengers—the current level of passengers—is roughly half what was included in the original cost-benefit analysis.

Dr Marshall: Cost-benefit analysis is an art, rather than a science, and it is a constantly evolving art. What I do know is that we have a business community in cities and towns up and down the country who are saying to us, “We really consider that the capacity issue must be addressed. We do not believe that patching up the existing network is an appropriate solution. Therefore, despite potential misgivings over certain elements of the project, or certain bits of the route, and so on, we think it is in the national interest to do this.” I am here representing that community rather than myself, and I would simply submit to you that they are in favour. They believe that the benefits will be significant and will probably reach the wider economic benefits numbers in the current benefit-cost ratio.

Photo of Caroline Spelman Caroline Spelman Conservative, Meriden

The British Chambers of Commerce has said that it supports High Speed 2 in principle, but that it must meet certain conditions. What are they?

Dr Marshall: The first and most important is that we do not see simply a blank cheque. We recognise, as the previous question very ably alluded to, the limits of what the public sector and the public purse should contribute to the project. We believe, however, that the current financing—the current cost package—for the system is robust. When you have to include massive contingencies on projects in order to deal with the stop-start nature of infrastructure projects in Britain, it is no wonder that we have had to add that number to the existing cost estimate. We do not want to see a blank cheque. We do not want to see that number simply spiral higher and higher. We need to see the same kinds of discipline we have in the private sector, with procurement for a project of this size and scale.

The other thing that we do want to see is no over-claims in terms of political rhetoric, in terms of the transformational nature of an infrastructure project, in terms of any particular local economy. Let us call a spade a spade. This is about the capacity of our railway network to support our economy in the future. It is about capacity, fundamentally.

Q 149

Photo of Caroline Spelman Caroline Spelman Conservative, Meriden

The chambers of commerce are strong proponents of small and medium-sized enterprises.

Dr Marshall: That is correct.

Q 150

Photo of Caroline Spelman Caroline Spelman Conservative, Meriden

But as the compensation stands at the moment, businesses would not be covered by the compensation scheme. Why is not that one of your conditions?

Dr Marshall: It is certainly a concern to me that compensation has been focused on householders, and householders alone. Unfortunately, once again, I would say to this august body, and to Members of Parliament in general, that often they focus on the individual voter, rather than the business, across a range of different issues. It will be within our task and our duty, in terms of working with you over the coming months and years, to ensure that businesses affected are ably compensated, or, in many cases, also to see those businesses actually relieved in some way.

In Sheffield, for example, the chamber of commerce is working carefully, right now, with High Speed 2 Ltd and with a number of businesses that might see themselves severely affected, to try to avoid that impact happening in the first place. That is the best way to try to avoid trouble. And, of course, we will be looking at the compensation arrangements.

Q 151

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

You talked about the need to control costs. Do you think Government have everything in place to control costs satisfactorily, or is there something else you would like to see being put in place now, when we are thinking about the principle of taking this forward?

Dr Marshall: We as a business community have always argued that we need to see more private sector-style discipline and skills in the infrastructure procurement capacity within Whitehall. Focus on Whitehall capacity is important. We have welcomed the creation of Infrastructure  UK, and we have welcomed the fact that there are more people coming in now from the private sector to work on projects like this. I think we need more of that—although sometimes that will be at significant cost, because of course those individuals will have been earning significant salaries in the private sector—to help them work on projects like this.

Making sure that capacity is there over the lifetime of the project, at the heart of Whitehall, is going to be hugely important to controlling costs and controlling delivery. I am confident that a good team is being built by HS2 Ltd at the moment, and that the Department is working hard to respond to businesses’ concerns about controlling costs, because although we want this project, we do not want to see it with a blank cheque.

Q 152

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

Could I just pick up on HS2 Ltd? You spoke about confidence. Both you and Mr Lloyd, perhaps, could comment on your experience of HS2 Ltd. We have had a rather mixed bag of feedback and it would be useful to know whether you think there is anything they could do better, or things that you think they are doing particularly well, that you could share with us, in terms of our having the confidence that it is they are the right instrument to take this project forward.

Peter Lloyd: I think the immediate answer is that we do not have a particularly close relationship with HS2 as matters rest now. The remit that the Secretary of State has issued to HS2 is specifically to determine the planning for phase 1 and to progress that scheme, and progress with phase 2 and go into the consultation on that. We hope to have a much closer involvement with HS2 in the near future, as we embark on the study referred to earlier, but I do not think we really are in a position to comment on the competence of HS2, because of the level of engagement we have had.

Dr Marshall: I have had extremely positive engagement and can report extremely positive engagement with HS2 Ltd thus far. It is early days, of course. What they have said that they would like to do with us is talk directly with business communities that are directly affected, those that are indirectly affected and those that get no benefits at all from the project. I intend to take them up on that offer of in-depth consultation with the business community.

In terms of the consultation process in general, it is the nature of consultations that any opponent of a particular scheme, project or law will say that the consultation is inadequate and the links are inadequate. So far, the experience that we have had had been a positive one.

Q 153

Photo of Karen Lumley Karen Lumley Conservative, Redditch

Dr Marshall, how important is it for your members that there is a direct link between HS1 and HS2?

Dr Marshall: It is something of extreme importance to us. We are concerned about a couple of things that are of great importance in terms of business connectivity: that link being one, the other being a link into our hub airport as well. I do not know if all of the Members who are here know this, but the British Chambers of Commerce is the premier private sector provider of support to businesses trading internationally and exporting overseas. So making sure that we have both direct rail linkages into some of those key markets and to our  premier hub aviation facility is critically important to those businesses. They would like seamlessness and the ability to go on to more destinations. Considering the investment that was sunk into HS1, connecting up our high-speed network is an incredibly important thing.

Q 154

Photo of Khalid Mahmood Khalid Mahmood Labour, Birmingham, Perry Barr

Dr Marshall, we have had witnesses here, particularly from Euston and the local authority concerned, talking about the businesses there that are being hugely adversely affected by this development. Have you had any discussions with them?

Dr Marshall: My colleagues in the London chamber of commerce may well have done.

Q 155

Dr Marshall: I am happy that there are discussions going on. We are at a very early stage of a project that will inevitably affect both businesses and householders in a number of places around the country. I would like to see intensive business consultation, which is why I want to make sure that that engagement with HS2 Ltd and others continues.

Q 156

Photo of Nicky Morgan Nicky Morgan Assistant Whip (HM Treasury)

We have heard varying evidence about job creation. Dr Marshall, I notice that in your submission you talked about this being transformative infrastructure project and about it creating jobs, but I also note your comments about capacity. We heard evidence earlier this week about the number of jobs that could be created around a railway station, in particular thousands of jobs near Manchester Piccadilly, but we have also heard evidence that those jobs will be created by moving jobs from elsewhere, so that they congregate around a station. We all want to create lots of jobs; I just wondered what the British Chambers of Commerce view on job creation and this scheme is. Mr Lloyd, I am putting this question to Dr Marshall, but you may have a view as well from the Scottish perspective.

Dr Marshall: Displacement versus additionality is one of those things that economists spend huge amounts of time arguing about and never actually arrive at an answer. I am inclined, having read the excellent Greengauge 21 report on jobs impacts, to look at full-time equivalent employment. That report talked about 89,000 full-time equivalent jobs, not including the wider economic benefits around agglomeration and things such as that. I thought that the methodology in that report was quite robust. The report talked about construction jobs and the phasing of those construction jobs over the course of the project, and the related services jobs over the course of the project. That was impressive to me, because often that is how private sector organisations would forecast job demand or employment demand over the course of a very large investment. That is an important thing to consider.

I am not skilled enough to tell you whether Manchester Piccadilly and the surrounding area will emerge as the business hub of the north once the Y network is completed. There are many other factors besides the high-speed railway alone, including a really permissive and positive planning policy around the nodes that we have, so that we can get as many jobs as possible around those nodes, and also in terms of the attitude of local councils and  local authorities to that scale of development. One of the reasons why we have pushed so strongly for planning reform is that we believe it goes hand in hand with developments in infrastructure such as this.

I think that in this country we are sleepwalking toward a crisis in employment land, as a lot of employment land goes over to residential use in many areas, or is taken out of industrial or commercial use. If what this project does is put back in play new sites for the creation of employment, it is hugely important to us.

Q 157

Peter Lloyd: The Greengauge 21 report has been very instructive. The Committee may not be aware that the Scottish Government are separately planning for high-speed rail between Edinburgh and Glasgow, linking to the existing network and the west coast main line. That has been a very instructive report from Greengauge 21 in terms of working to put together the business case for that project, which incidentally will report to Scottish Ministers in spring next year.

We are certainly aware of the regenerative effects of high-speed rail and the impact that it has on cities. Our approach to high-speed rail is to work very closely with our business community: the CBI, the Scottish Chambers of Commerce, other business groups, and our seven cities group in Scotland. There is also a wider partnership group, which has published some material in support of high-speed rail. So we are aware of the regenerative impact of high-speed rail and how it has contributed across Europe. We are not at the stage yet where we have a definitive view on job creation and high-speed rail.

Q 158

Photo of Graeme Morrice Graeme Morrice Labour, Livingston

Mr Lloyd, can you quantify in financial terms the economic benefit to the central belt of Scotland and the rest of Scotland if high-speed rail is extended north to Edinburgh and/or Glasgow?

Peter Lloyd: Again, that is being developed as an outline business case with Ministers at the moment, but referring back to the work that Greengauge 21 did in 2009 or so with the new lines study for Network Rail, I think Greengauge 21 saw a positive business case for the extension north. I believe the report quoted a benefit-cost ratio in the region of 7:1. We reviewed that with a sensitivity test on likely demand, which is contained within the policy document I have with me today, and we saw £24 billion of economic benefits over the economic appraisal period, against a construction cost that has yet to be determined.

On cost, we take a fairly open view of what high-speed rail is. We do not necessarily see it as a template; we see it as a set of outcomes, which includes capacity for both future passenger demand and future network demand, including freight, as well as reduced journey times, to distract from domestic aviation, and delivery of those agglomerative benefits.

Q 159

Photo of Graeme Morrice Graeme Morrice Labour, Livingston

Obviously you will be aware that a certain referendum is to take place in Scotland next year. If there was a positive vote—let me rephrase that, because it would certainly not be positive if there was a yes vote. If there was a yes vote, what impact would Scotland becoming independent have on the project extending high-speed rail to the central belt of Scotland?

Peter Lloyd: There are rail services to link cities and areas of economic activity across Europe—I am thinking particularly of the Thalys operation, which links Belgium, the Netherlands, Germany and France. It is a successful operation, which operates with three different signalling system and three different languages. We have the same signalling system and the same language across the UK.

Going back to my earlier point, it is about serving the economies and serving the links between cities. Within Scotland, we have seen a 33% increase in rail patronage in the past 10 years. In the last five years, there has been 144% growth in London to Glasgow; between Birmingham and Scotland over the same period, there has been 261% growth; and there has been 191% growth between Manchester and Scotland. That is all during a recessionary period. We see that rail can follow the market and that there will be a market for high-speed rail.

Q 160

Photo of Graeme Morrice Graeme Morrice Labour, Livingston

So we are indeed better together. A final question, if I may. We touched earlier on the potential of a high-speed link between Glasgow and Edinburgh, and I think you mentioned that a business case for that was being drawn up by the Scottish Government and that there will be a report on that in due course. Do you have any more definitive timelines on that in terms of potential construction start dates and finishes? How would it be funded?

Peter Lloyd: On the timelines, we would like to align the delivery of that line with the introduction of high-speed rail between Birmingham and London, for the reasons I gave earlier. We will lose a certain amount of journey time with a non-tilt operation. Perhaps a new bypass or piece of high-speed infrastructure—from Carstairs would be the obvious comparison—into Glasgow could reclaim some of that lost journey time. That is quite important, and our view is that we want to extend the network further and faster. That could contribute to the overall case for the line.

The funding is yet to be determined. It is a distance away, but we have a record of investment in rail and in infrastructure in Scotland. We are currently constructing the Forth replacement crossing, which is quite sizeable in terms of the budget that Scotland has for capital investment. It will be a matter for Ministers to determine later on, and clearly if there is any proposal to go ahead with that, the benefits and the costs will be scrutinised through our own hybrid Bill processes.

Q 161

Photo of Alan Reid Alan Reid Liberal Democrat, Argyll and Bute

Mr Lloyd, could you explain to the Committee why it is necessary for the Scottish Parliament to pass the legislative consent motion?

Peter Lloyd: We want to work with the UK Government on this joint study of extending from the north of England to Scotland. In so far as that requires the Secretary of State to fund some of the preparatory work, it is included in the legislative consent motion. I am satisfied that it is for the general good, if you like, that this work is carried forward, and we see legislative consent as a step towards that.

Q 162

Photo of Alan Reid Alan Reid Liberal Democrat, Argyll and Bute

I am trying to get to why it is necessary under the devolved settlement. Would the cost of the stretch between the Scottish border and  Glasgow and Edinburgh fall on the Scottish Government if the legislative consent motion were not passed? Is that the reason?

Peter Lloyd: The reasoning behind the introduction of the motion is to allow the preparatory works. Ministers will have separate discussions at a later stage about the apportionment of funding to construct the line, but this is preparatory stage work and will allow the Secretary of State to commit funding to any planning works that may impact on Scottish territory. Rail powers are obviously devolved, but at this stage it is just a preparatory statement.

Q 163

Photo of Alan Reid Alan Reid Liberal Democrat, Argyll and Bute

Has any thought been given to where in Scotland the route would go or where any new stations might be required?

Peter Lloyd: At the moment, with the proposals that stand with HS2 Ltd, there will be two types of rolling stock: one is the captive fleet for operation purely on new high-speed lines, and the other is a new fleet of classic-compatible trains that operate with the existing UK gauge. For the period in which they operate, we do not necessarily see a requirement for new stations, because they will fit into existing stations. The European gauge is wider and lower, and the tracks are aligned differently. There are capacity problems at stations, but we do not see a need for new stations immediately. Obviously, if at a later point we are at a stage where there are European gauge trains on a full high-speed line, Scotland would have to think about new station locations. You may be aware that there are calls from Glasgow city council to build a new station to accommodate such trains. Our position at the moment is that that is not immediately necessary.

Q 164

Photo of Alan Reid Alan Reid Liberal Democrat, Argyll and Bute

Do you see the track following the same route as the existing tracks from Carlisle to Glasgow and Edinburgh?

Peter Lloyd: Not necessarily. Obviously, the connection point would be either Manchester or Leeds. At the moment, we are keeping on open view on whether a high-speed line to Scotland follows a west coat or an east coast alignment, both of which are viable options.

Q 165

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

Dr Marshall, I have been trying to represent the interests of the small businesses at Euston for the past three years, and I have to say that they do not think this is early days. Their businesses have been blighted for the past three years. Some of the restaurants have had to postpone decisions about whether to renew their kitchens and such like. Particularly on Drummond street, there is a large number of small shops and small restaurants, and surveys have shown that they are between 40% and 70% dependent on passing trade from Euston. They have had no satisfaction whatever from High Speed 2, and I think it would be quite useful—I understand the same applies to businesses all along the designated route—if you undertook to ensure that the chambers of commerce start making representations on their behalf. Perhaps HS2 Ltd will take some notice of you, because it certainly does not take any notice of the businesses.

Dr Marshall: I have the greatest sympathy for businesses that are affected, whether they are at Euston or anywhere else along the route. In my career, I have yet to see an  infrastructure project proceed without disruption to businesses in some way, shape or form. That is unfortunately inevitable. Mrs Spelman’s comment on the compensation scheme is particularly important because of that. I will of course work with my colleagues at the London chamber of commerce to look at the Euston issue and to try to ensure that community engagement with affected businesses does occur. I have not had anything but positive indications from those I have worked with so far that they want that engagement to take place, so I will follow that up.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

Can I also make the point that, as currently intended, these business people who will be put out of business will be entitled to no compensation whatever? Their premises are not going to be demolished; it is just that there will be a sort of Berlin wall between them and their principal source of customers.

Photo of Annette Brooke Annette Brooke Chair of the Liberal Democrat Parliamentary Party

I remind Members that we should be asking questions, rather than making comments.

Q 166

Photo of Simon Burns Simon Burns The Minister of State, Department for Transport

May I ask Dr Marshall whether he is aware that, on the question of business compensation, particularly for small and medium-sized businesses within the safeguarded area, they will be eligible for compensation under the national compensation code? Is he aware that there will also be other areas where they may be able to seek compensation for reasonable costs and expenses with regard to relocating and so on? For Drummond street, HS2 Ltd very much wants to work with Camden council to seek a solution to the problems.

Photo of Annette Brooke Annette Brooke Chair of the Liberal Democrat Parliamentary Party

I am sure the Minister would like a response to that question.

Dr Marshall: I am aware, Minister, of the national compensation code and the fact that it does impact on businesses within the safeguarded route. My interest is in ensuring that business communities affected in this grey area just outside of the safeguarded route get a fair hearing from the Government, but I would persist in making the point that, to date, I have never heard anything but a positive engagement on that particular point and a desire to speak with those who are affected.

Q 167

Photo of Simon Burns Simon Burns The Minister of State, Department for Transport

Could Dr Marshall confirm that in my original question he heard me say that HS2 Ltd is most anxious to discuss with Camden a solution to the problems of Drummond street?

Dr Marshall: I shall let the Minister’s question stand, perhaps in response to another member of this Committee.

Q 168

Photo of Lilian Greenwood Lilian Greenwood Shadow Minister (Transport)

I have questions for both the witnesses. Dr Marshall, you were very clear in your earlier answers that dealing with limited rail capacity is vital to businesses. In my own discussions with businesses,  they often mention road congestion. Do you feel that that poses similar problems for businesses, and to what extent will HS2 help in addressing such challenges?

Dr Marshall: I believe there are about four questions within that one question, but I will do my very best. We are extraordinarily concerned as a business community about road congestion, because road remains the principal means by which both business labour market traffic and business freight traffic is transported. We believe that High Speed 2 will have a positive effect on several things. One is business travel between our major cities, which is of particular benefit to the services industries; another is relieving space on the classic or conventional rail lines for freight and commuter services, which benefits businesses of all types in those cities; also, manufacturing businesses, particularly logistics businesses, need to transport more freight on rail if we are to see a reduction in emissions from, for example, road transport.

The concern that we see in the business community is simply this. This is a large and substantial infrastructure project. We would not want to see attention diverted from the roads network into a single large infrastructure project in the form of HS2. We want to see a transport strategy that focuses on all of our modes, ensuring that we have a competitive and enterprise-friendly environment across the piece to attract inward investment; more importantly, we want indigenous companies here in the UK actually investing in their own premises and their own growth capacity.

The number of companies that have taken the decision simply not to expand because of infrastructure links is significant. HS2 is a part of that solution. It has to go along with a good strategy for the roads network. We were encouraged by some of the recent spending review in terms of the roads network, but we believe that even more needs to be done.

Q 169

Photo of Lilian Greenwood Lilian Greenwood Shadow Minister (Transport)

To follow that up: do you think it would be helpful if the Government were to publish an overarching transport strategy?

Dr Marshall: We welcomed the introduction of the national infrastructure plan, which we think it is hugely important. The transport element of that plan is effectively the infrastructure strategy for transport in this country, but we want to see it move from being a very good read to something that is deliverable and delivered. The Government’s attention should not be on developing yet another strategy. We have had lots of transport strategies: the previous Government had a monumental one in 2003, but nothing really happened; the current Government have had several; and various incarnations of Governments have had them in the past. We do not need any more strategies. What we need is a delivery plan for the national infrastructure plan’s transport element.

Q 170

Photo of Kris Hopkins Kris Hopkins Conservative, Keighley

In a previous sitting, we heard from Sir Richard Leese and others about the positive, enthusiastic voices in the north-west—Greater Manchester, Yorkshire and Humberside—with the exception of Wakefield and Bradford councils, whose political leaders have come out and said they do not support it. Have you engaged with the local chambers of commerce in those cities, and do you know what their position is?

Some of the people opposing the route have put out the argument that employment and business opportunities would be sucked away from cities around the main hubs and stations. Have you received any feedback from local chambers on that? Although it was said the other day that 70% of the jobs will be created in London, the evidence suggests that 70% of the jobs will be created outside London. Do your colleagues across the country, even if they do not have a station nearby, believe there will be a benefit to them and the broader communities around the main station hubs?

Dr Marshall: That is an extraordinarily important question. Although the chamber of commerce network as a whole is supportive of the project, some businesses, particularly in places that do not have a station on the new network, have concerns. I can report that the Bradford chamber and the Mid-Yorkshire chamber have concerns about the project and its potential economic impacts.

What is interesting about projects such as this—we have seen it with other infrastructure projects in the past—is that in node locations, office rents and commercial premises rents can become very high, and there can be opportunities for nearby areas that can offer lower rents to businesses. We have seen that operate dynamically. In west Yorkshire, places such as Bradford and Barnsley are able to offer lower office rents compared with the centres of Leeds or Sheffield. That has been a competitive advantage—a selling point—for those places.

I believe the question is really about how we get everyone geared up to benefit from the scheme. There will be benefits to places such as Bradford and Wakefield in terms of the supply chain for this project. I can see quite a lot of the gear that is needed being manufactured in those cities. I am sure that colleagues who are working on the project in detail probably publish supply chain maps and things such as that that show exactly where that will occur. Equally, there will be opportunities afterwards. The chambers of commerce in both places would want to work constructively on the project. There is obvious disappointment that they are not at the heart of the network or on the network, as business communities, directly, but they want to see what the indirect benefits will be and how they can maximise them.

Q 171

Photo of Kris Hopkins Kris Hopkins Conservative, Keighley

As a quick follow-up to that, Coventry city council, I understand, was originally opposed to it, but after some engagement has changed its mind and has come on board. Bear in mind that those two councils are in locations that have made significant contributions to the economy of west Yorkshire. Do you see a role for yourself in trying to influence their behaviour and their lack of support in a more positive way?

Dr Marshall: I am in the privileged position of sitting before you today representing 53 accredited chambers of commerce across the UK, who are my owners. I do not interfere in their local lobbying work with their local councils. I know that Bradford chamber, Mid-Yorkshire chamber and Coventry and Warwickshire chamber are working very closely with their councils to try to understand and maximise the indirect benefits. That is what they want to do if this is the project that goes ahead.

Q 172

Photo of Lilian Greenwood Lilian Greenwood Shadow Minister (Transport)

Mr Lloyd, given what you said in response to an earlier question about your concerns that the Y network might bring Manchester and Leeds closer to London and potentially make Scotland seem further away, I was surprised that you did not seem to support the idea that Scotland should be named in clause 1. Is that right?

Peter Lloyd: We are content with the Bill as it stands. In the absence of the Secretary of State’s commitment to work with us on the development of high-speed rail, it might be a different matter. That said, clause 1 says that the network will extend “at least” to the listed cities. It extends to Scotland. The explanatory notes refer to the development of high-speed lines beyond the current network and state that the Bill

“also allows expenditure in preparation for potential future extensions to this network.”

I think we are content with the Bill as it stands. It represents progress and it represents an opportunity to work more closely with the DFT and ultimately, hopefully, HS2 Ltd in developing those lines and developing those studies.

Q 173

Photo of Lilian Greenwood Lilian Greenwood Shadow Minister (Transport)

Can you say a little more about what benefits you think will accrue to Scotland if Glasgow and Edinburgh are connected to the high-speed links via Manchester and Leeds, even if they have not got new direct high-speed lines through?

Peter Lloyd: Sorry?

Photo of Lilian Greenwood Lilian Greenwood Shadow Minister (Transport)

What benefits do you think there will be from the connections, even if there are not further high-speed lines linking Manchester and Leeds directly to Glasgow and Edinburgh?

Peter Lloyd: The problem we have with linking from, say, Manchester to the central belt of Scotland is that we struggle at the moment to fit three passenger trains on an hourly cycle up the west coast main line because of the demands of freight and mixed operation. It is mixed traffic, which involves trains of different performance types. I have already explained that there are speed restrictions on much of the track, and there are significant gradients on much of the track.

It is only during the past year—the last timetable change was in December 2012—that we have achieved a full hourly timetable between Glasgow and London. We did that by introducing three additional services per day. Some people who questioned the need for high-speed rail characterised that as demonstrating that there is additional capacity on the west coast line. However, these trains run on existing London to Lancaster paths, and north of Lancaster, even extending up to Glasgow, they are very much sub-optimal pathings. In addition, the journey times from Lancaster to Glasgow are in the region of 15 to 20 minutes slower than normal. All the infrastructure is creaking; we cannot fit any more freight or passenger services up the line. From next year, longer trains will be introduced between Manchester and Glasgow. Virgin Trains is currently running 11-car sets between London and Glasgow; when they were introduced, the view across the industry was that there would never be the demand to bring 11-car sets to Glasgow, but it happens very frequently. The benefits are purely of meeting the future passenger and freight demands.

Q 174

Photo of Graeme Morrice Graeme Morrice Labour, Livingston

May I press you further on the point that my Front-Bench colleague raised in relation to your view—I raised this as a question earlier—that it was not particularly necessary to include Edinburgh and Glasgow in the Bill? Is that the view of the Scottish Government?

Peter Lloyd: That it is not necessary to include them in the Bill? The view of the Scottish Government is that we are content with the Bill as it stands.

Q 175

Photo of Graeme Morrice Graeme Morrice Labour, Livingston

So you are saying that the Scottish Government are perfectly content that mention of Edinburgh and Glasgow is not made in the Bill?

Peter Lloyd: As it stands, yes. We are content with the provisions in the Bill that will allow further development of the network.

Photo of Annette Brooke Annette Brooke Chair of the Liberal Democrat Parliamentary Party

Thank you. We are now approaching the end of time, Minister.

Q 176

Photo of Simon Burns Simon Burns The Minister of State, Department for Transport

Presumably, Mr Lloyd and the Scottish Government are content with the Bill because clause 1(2)(a) simply lists all those areas where the train is actually going to, as a fact, in existing proposed legislation. The critical words, “at least”, are there, enabling the addition at future dates, if necessary, Edinburgh, Glasgow, or anywhere else in mainland United Kingdom.

Peter Lloyd: As I said before, we are content with the phrasing of “at least”; we are content with the note in the explanatory notes; and we are content that we will be working with DFT on a joint study to progress the network further.

Photo of Annette Brooke Annette Brooke Chair of the Liberal Democrat Parliamentary Party

If Members have no further questions for these witnesses, we shall move on. I thank the witnesses from whom we have just heard.