High Speed 2

David Mowat Excerpts

Tuesday 23rd November 2010 Westminster Hall

[Steve Baker]

I am grateful to the hon. Lady for her intervention and I will return to some of those points, in particular how we make a judgment between road, rail and air travel.

If it is not true that high-speed rail is in the national interest, and if such a project will offer only marginal and uncertain benefits at vast expense, it would be in no one’s interest. I am delighted that the Government wish to ensure the prosperity of the whole nation, but it has not been demonstrated that HS 2 will deliver that. To justify such a grievous impact on the people and landscape of Buckinghamshire—and indeed along the entire length of the route, wherever it is located—the Government must place the economic and environmental case for the programme beyond all doubt. I do not believe they have yet done so.

High-speed rail is not commercially viable, so the expense is justified with a wider cost-benefit analysis. That analysis relies on assumptions, including excessive demand, generous benefits and a flawed analysis of the alternatives. I shall only touch on each point today, but I am sure that campaigners will furnish us with full details during the course of the inquiry.

The projected increase in demand is open to challenges that include demand saturation, a broken relationship with GDP, out-of-date data, neglect of new technology, and inadequate anticipation of competition from classic rail—a problem that blighted HS 1. The case for benefits neglects the fact that many of us work on the train, and it depends on implausible levels of crowding. The Department for Transport’s alternative, Rail Package 2, is paid too little attention, despite meeting demand with less crowding than would occur should the HS 2 programme go ahead. At £2 billion, the package is much less expensive. It is better value for money and capable of incremental delivery, setting it free from the risks associated with long-range economic forecasting. Rail companies could lengthen trains to nine, 10 or 11 cars. That would increase capacity from 294 to 444 seats—an increase of 51%. Unused first-class capacity could also be swapped for standard seats, thereby further increasing total capacity.

It is a myth that the UK lacks a fast national railway network; we have had one for a long time. We have routes capable of 125 mph, with quicker rail journey times between the capital and the five largest cities than in other major western European countries. For instance, the average journey time in the UK is 145 minutes. It is 151 minutes in Spain, 184 in Italy, 221 in France and 244 in Germany. In short, it appears that for £2 billion, the Government could have a complete, low-risk but unglamorous solution to the problem of rail capacity, and rather sooner than HS 2 could be delivered. Therefore, I am not convinced that £30 billion—or more—of taxpayers’ money would be wisely risked on HS 2.

[David Mowat (Warrington South) (Con)]

Does my hon. Friend accept that every infrastructure investment and transport initiative imaginable could, in the short term, be done more cost-effectively with the sort of incremental approach he has just mentioned? That does not take away the need to think strategically, and occasionally to do things that are more than just incremental.

[Steve Baker]

My hon. Friend makes an interesting point that we should explore at some length. In the final part of my speech I shall set out why I think we have been taking the wrong approach to infrastructure in this country.

Targeted investment in existing infrastructure would ultimately offer greater benefits to the whole country not served by HS 2, including the south-west, south Wales, East Anglia and the north-east. Such an approach would provide a visible demonstration of productive investment during a time of austerity. I am aware that the environmental case for HS 2 can be similarly attacked, but given the time, I shall simply quote Mr Steve Rodrick, chief officer of the Chilterns Conservation Board:

“The case for HS 2 is largely built on capturing the internal aviation market, but 80% of all journeys between Manchester and London already involve the train…These trains will use double, possibly triple, the energy of normal trains. Where’s that energy going to come from? You either have to bank on nuclear coming on stream or, more likely, power stations running on fossil fuels, which will involve significant carbon emissions.”

I also recommend Christian Wolmar’s 15 September article for RAIL magazine, which states that the arguments against HS 2 are mounting. His tour de force concludes by explaining that HS 2 would absorb money that would otherwise be spent on classic rail in an environment of reduced funding. He writes:

“We cannot have it all. Let’s work to protect what is essential, rather than trying to reach for the moon.”

Finally, I will turn to rail policy and transport strategy in the round. If transport resources and the necessary land and capital are scarce, what is the best approach to ensure optimal resource allocation? It has long been argued by the Conservative party, as it was once argued by Liberals, that unhampered social co-operation in the free market is the most efficient and effective way to allocate resources and relieve scarcity. With that in mind, I asked the House of Commons Library to prepare a summary entitled “Price controls and state intervention in the rail market.” It is not, of course, a simple statement that there are no price controls or state interventions in the rail market; it is six pages long and covers passenger franchise specification, the control of fares and rolling stock procurement. It also sketches the process of almost continuous organisational change that has dogged rail since nationalisation in 1948. Contemporary rail is not characterised by property rights, freedom to contract, open competition and unhampered prices.

My task today is not that of setting out a new free market transport strategy, and I will not pretend I am able to do so. However, I wish to emphasise that rail, and road transport in particular, are not capitalist systems in the conventional sense but hybrid systems of heavily regulated and subsidised public and private companies. We have inherited a rail system whose franchise agreements descend into such detail as specifying a “biennial talent management programme” and even “time with your manager sessions.” That is not freedom to contract, and clearly rail operators are not free to set market fares.

Of course, I do not want fares to rise any more than my colleagues do, but we should admit that the rail system does not operate in a free market and that therefore economic calculation is likely to be hampered, if not irrational. We simply cannot know whether today’s rail economics are optimal, but it seems likely that they are not.

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[David Mowat (Warrington South) (Con)]

I will describe the context as I see it for such infrastructure improvements. The right hon. Member for Holborn and St Pancras (Frank Dobson) spoke of economic forecasts. I start with the economic figure that the average gross value added per head in London is about £30,000, whereas in the English regions, it is about £17,000. Such a huge difference does not exist in any other country in Europe. One way in which that can be fixed is through infrastructure investment. Even now, there is massively more infrastructure investment in London, with 60% more infrastructure capital spend per head in London than in the regions. The high-speed rail project is fundamental to the regeneration of large parts of the north of England and the midlands.

We have discussed the business case so I will not spend much time on it, although we could argue more about it. The Department for Transport will have to publish the business case. The net benefit ratio in the preliminary publications was 2.7, which is pretty high. However, that figure includes assumptions about factors such as idle time and optimistic passenger projections—I think that the figure was 278%. That must all be worked through. The business case does not include anything about the economic regeneration of the north, the carbon savings from the modal shift from road and air to rail, or the freeing-up of airport capacity. It is not possible not to go ahead with the third runway without a project of this kind.

[Greg Mulholland (Leeds North West) (LD)]

I agree with the hon. Gentleman that the project will benefit Yorkshire and the north-east, as it will the north-west. Does he agree that when the Y-shaped line is built—as I hope it will be—both legs should be built at the same time to ensure that the benefits that he rightly identifies are brought to the north-west and the north-east simultaneously so that one region does not suffer at the expense of the other?

[David Mowat]

I agree that the Y-shaped solution is the most sensible one, but I do not want to get into which part should be built first. I would like to quote a few numbers on the transformational impact of the potential scheme. We are generating, potentially, many tens of thousands of jobs. In January 2010 KPMG published a report which estimated an incremental increase in employment of between 29,000 and 42,000—not directly from constructing or operating the line but due to the economic and productivity impact on the regions of much closer links with London. In itself, 40,000 jobs would generate a huge bonus for the Exchequer, but none of that is currently in the business case that is being debated.

A lot—in fact, nearly all—of the comments up till now have been on the environmental issues surrounding the line. I do not want to minimise their impact, but the Government are the Government of the whole country, not just of the south-east of England and London. It is important that we properly weigh up some of the unpleasant environmental impacts against the greater good.

[Jo Swinson]

I am very much enjoying the hon. Gentleman’s speech. Does he accept that building high-speed rail with a Y shape going as far as the north-west will bring benefits to other parts of the country, including Scotland? Extending high-speed rail to Scotland would cut the journey time from four and a half hours to more like two hours. Even as it is being built, it will start to decrease the journey times because people will be able to change trains part way through, if they wish.

[David Mowat]

I certainly agree that, in time, the line needs to go to Scotland. I have very much bought in to the productivity improvements and the step change in how we do business in the country that could be achieved with such a line—so, yes, I agree.

Going back to the environmental impact, it is obviously right that compensation is paid and that we do the right thing by the people whose property rights are being impacted. However, that cannot be our pre-eminent concern.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

Does the hon. Gentleman accept that the environmental impact is about more than landscape? I think he was making that point. Environment is about people, communities, jobs and productivity as much as it is about the landscape that we might enjoy through the window of a train or, indeed, of a car.

[David Mowat]

I accept that. Indeed, where we have areas of high unemployment, the ability of people who live there to enjoy their environment is much less than it would be otherwise. The Government also have a duty to take into account the impact on prosperity and employment throughout the country.

I want to make a couple of slightly more detailed points. It is important that whatever we build is linked to Heathrow. Those are probably the Government’s plans, but it seems to be absolute nonsense to build a high-speed rail link to the north and not to link properly Manchester airport and Heathrow, so as to see some of the traffic from Heathrow move.

I am of the view that the line needs to go to Euston and should not stop and link to Crossrail. I am not an expert, but Euston seems to be close to the business centres of London, so the impact of achieving that would be substantial.

I would like to see a spur to Warrington and Preston as soon as possibly, but I realise that the Minister might not think that that is her highest priority.

With reference to an earlier point, not linking High Speed 2 with High Speed 1 would be absurd. In my understanding of the initial business case for High Speed 1, the reason why we went into St Pancras in the first place was to allow that line, eventually, to go north. We are now building a High Speed 2 line to the north, so it ought to be linked.

Finally, it is very important that the Government maintain their commitment to the plan and realise that they are the Government for the entire country, and the entire country needs this.

[Frank Dobson]

Will the hon. Gentleman give way?

[David Mowat]

I have finished now, so I will not give way.

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[Andrew Gwynne]

I was referring to the west midlands metropolitan area, but I am not responsible for the replies given by the Department for Transport.

[David Mowat]

On that point, the figure cited by the hon. Gentleman of just over £5 billion came from the West Midlands chamber of commerce. The figure was generated in the region, and one would imagine that it is most unlikely that some of the money did not come from Staffordshire.

[Andrew Gwynne]

I am grateful to the hon. Gentleman for clarifying that point.

If, in time, an extension of the network to Scotland was to proceed, there would be a benefit of nearly £20 billion to its economy. HS 2 believes that the benefits of high-speed rail far outweigh the estimated costs, with the project yielding more than £2 of benefit for every £1 of cost.

There are clearly several arguments in favour of high-speed rail. It is a possible solution to the expected increase in passenger numbers, it will undoubtedly slash journey times and it could allow a much better integration of existing rail services regionally, nationally and internationally. However, we have to take on board the fact that not everyone is in favour of high-speed rail. I accept that, as the hon. Members for Wycombe and for North Warwickshire (Dan Byles) said, some communities will be impacted through the construction and operation of high-speed rail. The Labour Government were mindful of the fact that, in making proposals for a route, there has to be an attempt to minimise local impacts while achieving the wider objectives.