Curzon Street Conference

1 October, 2013

On 19th September in Curzon Street, Birmingham, Greengauge 21’s Industry Leaders Group conference on HS2 set out the economic benefits of high speed rail for all to see. The golden thread running through the conference was that HS2 is a once in a generation opportunity. Long term projects need long term commitment and that’s the issue that British politics must confront if the massive long term benefits of high speed rail are to be delivered.

The Challenge and the Opportunity

Lord Deighton kick-started the day, making the point that HS2 is not just a new railway, it is a springboard for economic growth. In his first public address since becoming chairman of the HS2 Growth Taskforce, he set out the case that HS2 will help generate jobs, rebalance the economy and secure Britain’s future prosperity.

Lord Deighton made the all so obvious point that as a nation we have underinvested in our infrastructure for far too long and need to think big and bold to stay globally competitive. He pointed to recent research that sets out the economic benefit of HS2 as £15 billion every year when and after it opens. These benefits can also come earlier as construction gets under way.

In addition Lord Deighton emphasised that HS2 isn’t just about the quantifiable benefit. High speed rail will transform the way the world thinks about Britain in exactly the same way as the Olympics did, and will encourage people to invest in Britain.

Sir David Higgins, Chief Executive at Network Rail, continued in similar vein.  He opened by noting that the UK is playing an enormous amount of catch up as a consequence of living off the infrastructure built by the Victorians.  It is much more much more expensive to play catch up. And it becomes all the more expensive the longer you take to act to catch up. Sir David said nobody else in the western world runs its railways like the UK does, with high speed inter-city, freight and commuter trains all sharing the same tracks. He likened the way we currently manage the capacity challenge on Britain’s rail network to trying to run a motorway up a high street.

Sir David declared the West Coast Main Line to be full, quoting the decision backed by the Rail Regulator that it is just not possible for Virgin Trains to run additional services because of the lack of capacity, and adding that lengthening trains and platforms could only provide incremental, stop-gap improvements. He warned that if HS2 doesn’t happen now, it won’t happen again for another generation and the country will suffer the significant negative consequences of congestion.

Stephen Hughes, Chief Executive Birmingham City Council, focussed on the transformational potential of HS2. He asserted HS2 will have the same sort of transformational impact as the Jubilee Line and the Docklands Light Railway had on Canary Wharf and Docklands in London adding that such impacts are not considered as part of the traditional transport cost benefit ratios.

The wider effects – the national rail network

Rupert Walker from Network Rail, repeated that the West Coast Main Line is full and struggling to cope with the record demand for rail journeys and. Without HS2 it will grind to a halt. Passengers using Euston are growing at an average of six per cent a year, the fastest growth rate of any London station. Even with longer trains and upgrading the line with the latest technology it would not be possible run enough trains on the tracks to meet the demand predicted. No alternative comes close to providing the additional capacity that HS2 does.

Rupert went on to say that HS2 offers the opportunity to reshape the existing railway – allowing services on the existing network to be planned in conjunction with services on HS2, allowing more capacity for commuter services and freight, and getting around the problem of inter-city high speed, commuter and freight traffic all sharing the same tracks.

The wider effects – job creation

Leo Eyles, Director of Albion Economics, spoke to recent work for Greengauge 21 about the employment implications of planning, constructing and operating HS2. These direct and indirect employment effects amount to 890,000 job years across 60 years with at least 20,000 full-time jobs per year across a 13 year period and up to 50,000 jobs in planning, constructing and operating HS2 at any one time. The year by year jobs profile highlights the build-up of jobs and skills in construction and the supply chain. It also raises questions of continuity and making effective use of these construction and design skills – looking ahead to extending HS2 to Scotland and the North-East.

Steve Scrimshaw, Managing Director of Siemens Rail Systems, spoke about the spread of jobs through the supply chain. He emphasised that HS2 Ltd and Government need to move quickly to ensure the UK supply chain maximises the benefits of HS2. Steve highlighted how early confirmation of the procurement timetable would give suppliers certainty to plan ahead and the procurement process could be designed to drive job creation, skills and research and investment.

The wider effects – nations and city regions

Sir Richard Leese, the Leader of Manchester City Council, said HS2 is vital – with HS2 we’ll get growth but without HS2 the North will inevitably get the contraction that the lack of capacity will cause. Sir Richard highlighted that Manchester will have two stations, one at Piccadilly and one at the Airport. HS2 together with the Northern Hub will improve the connectivity of the Manchester City Region across the North and the Midlands as well as with London and Europe. Sir Richard also referred to the huge scope for the regeneration of land. The masterplan recently published by the City Council envisages a world class HS2 station at Piccadilly and several new neighbourhoods around the station, with the opportunity for development being unlocked in advance of completion of HS2.

Keith Brown, Minister for Transport in the Scottish Government travelled to Birmingham to support the conference, reflecting wryly that Alistair Darling cannot look at a progressive problem without saying “no” these days. The Minister asserted HS2 could be made better by extending a new line to Scotland. This would deliver £24 billion benefits to Scotland, compared to £3 billion as proposed at present where services would continue to Edinburgh and Glasgow on the existing main lines. He said this was not just about better connectivity with London but also cities in the North and the Midlands with journeys between Scotland and Birmingham for example having grown by 261%. He announced that a proposal to link Edinburgh and Glasgow with a high speed line, with a 30 minute journey time, would be presented to the Scottish government in spring next year.

Geoff Inskip, Chief Executive of Centro, outlined how Birmingham will be at the heart of the Y-shaped network, with a single hub station encompassing New Street, Moor Street and the HS2 station at Curzon Street that will provide the focal point for Eastside regeneration. Geoff reminded everyone that there was already a capacity problem in Birmingham with the Birmingham-Coventry corridor already significantly impacted by the December 2008 timetable. HS2 provides the long-term solution to the capacity problem and would help create 51,000 jobs in the West Midlands and an extra £4.1 billion economic activity per year.

The wider benefits – a leading economists view

Paul Ormerod, economist, columnist and author of the Death of Economics and Butterfly Economics set up discussion over lunch and the afternoon session with a thought provoking dialogue. Paul highlighted how trade and transport connectivity had driven economic prosperity across the centuries citing for example Marco Polo and the development of the silk route, Victorian times and the advent of the railways, modern day port connectivity and international trade, and the impact of the Jubilee line on the growth of Canary Wharf and Docklands. Paul’s very simple but equally clear conclusion is that zero infrastructure equals zero trade. Zero trade equals zero jobs. Time saved is a valuable but is a static concept and the main benefits of infrastructure are dynamic – how places can be transformed.

The wider benefits – the new economic analysis

Laura Webster from HS2 Ltd outlined how cities are vital for the UK’s economic growth and that improving connectivity means increasing market access in terms of labour market connectivity as well as business to business connectivity. HS2 delivers significant and widespread improvements in connectivity, not simply focussed in the cities served by HS2 stations but evident across the country. The recently published work by KPMG indicates that HS2 could boost UK productivity by £15billion every year. This is the dynamic benefit described by Paul Ormerod but does not capture all of that dynamic benefit. All regions do well but particularly the North and the Midlands which can be expect to receive a boost of up to around 2% of the total economy compared to about 0.5% in Greater London and the rest of the UK.

The wider benefits – lessons from HS1

Stephen Gasche from Kent County Council, set out lessons learnt from HS1. From the outset Kent took a strategic view in principle support for the Channel Tunnel Rail Link –“mitigation not opposition” – and developed a series of key tests against which to judge it. Evaluation shows that HS1 has significantly improved journeys between Kent and London across the Medway towns, Margate, Ramsgate, Dover and Folkestone as well as Ashford and Ebbsfleet. Annual journeys between this geography and London have increased from 19,000 in 2009 to 1.8m in 2010 and 4.5m in 2013 (year to 20 July). There have been significant increases in house prices across the same geography. Stephen concluded that there have already been significant economic and transport benefits for Kent with negotiations underway to provide regular international services from Kent stations to Calais, Lille and Brussels.

David Joy, Chief Executive of London and Continental Railways Ltd, said that his company’s objectives for HS1 were to deliver value to help pay for HS1, maximise HS1’s impact on regeneration, maximise development value over the long term, select development partners at an early stage to add value to LCR’s interests, and deliver quality place making.

David described the transformation of the area around Kings Cross and St Pancras, Stratford and Ebbsfleet. Outlining work by Buchanan and Volterra in 2009, David said that the total benefits of HS1 would amount to almost £18 billion over 60 years, made up of £4bn transport benefits, £4bn wider economic benefits and £10bn regeneration benefits. The lessons were to set clear objectives, build consensus, diversify the benefits and funding sources, establish a strong client and work closely with partners.

The wider benefits – integration and freight

Susan Williams, Director of North West Rail Campaign, said that everyone agrees that the West Coast Main Line is becoming clogged up – on track and on train. It is not just passenger demand that is set to double by the 2030s but also freight. The risk is freight will be forced off rail onto road. With HS2, capacity will be freed up on the existing West Coast main Line for more freight and importantly more efficient freight services as well.

Maggie Simpson, Executive Director of Rail Freight Campaign, went on to say that rail freight benefits are key to the HS2 case. Highlighting Greengauge 21 research she said the carbon savings from the additional unclaimed capacity of three trains per hour in each direction on the West Coast Main Line would add 55% to the direct carbon saving of HS2. This is such a strong advantage that it will be worthwhile examining measures to ensure a major switch from HGV road traffic to rail freight. Quoting WSP research Maggie added that HS2 could take 500,000 HGV lorries off the M1, M40 and M6 each year saving over 65,000 tonnes of carbon emissions per annum.

Final summing up

Summing up the day Jim Steer concluded that some of those opposed to HS2 hadn’t properly considered its potential benefits, and that discussions throughout the day confirmed that there is a very confidant story to tell, focused around the massive dynamic benefits of HS2 to the economy that simply are not captured by conventional transport appraisal.