The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, I join noble Lords in thanking my noble friend Lord Greaves for obtaining this important and timely debate. However, before I begin, I pay particular tribute to the noble Earl, Lord Attlee, who is suddenly in his place—he did not know that I would say this. He managed transport business in this House with great knowledge and skill and I know that your Lordships will wish me to express our respect and our thanks.
Noble Lords
Baroness Kramer
I feel rather redundant. The case for HS2 has been made so powerfully by the noble Lords, Lord Greaves, Lord Faulkner—whose book, Holding the Line, which he modestly did not advertise, sits on my desk as a bible—Lord Bradshaw, Lord Grocott, Lord Rooker, Lord Lea of Crondall, Lord Snape, Lord Berkeley, the noble Earl, Lord Glasgow—what a list. Every one of them is an expert, respected by this House, and I know that this House will listen to them. I welcome the words of the noble Lord, Lord Davies of Oldham, who reaffirmed from the opposition Front Bench his party’s commitment to this project. He is right that this issue must stretch across the politics of these Houses—it concerns the long-term infrastructure of this country—and I thank him for his words. I will touch on three key issues and will then respond to some of the remaining challenges raised in this debate.
When I joined the board of Transport for London in 2000, London was running out of transport capacity. “Make do and mend” was no longer sufficient, and we had to commit to Crossrail. As I came to the department, therefore, it was with a sense of déjà vu that I saw that we face the same problem but on a national scale. Without HS2, key rail routes connecting London, the Midlands and the north will soon be overwhelmed. Demand for long-distance rail travel has doubled in the past 15 years to 125 million journeys a year. By the mid-2020s the west coast main line will be full. As any user of the line knows, the pressures are obvious now, as they are on the east coast main line.
We cannot simply run more trains. Each new service has to be planned around what runs already. It is nearly impossible to find new train paths, and there simply is not scope for future demand, even if we use the very modest forecast of 2.2% growth in demand every year. Already, in my first two weeks in the department I have had to take note of two turn-downs by the Office of the Rail Regulator, for routes from Shrewsbury to London and Blackpool to London, because it is simply not possible to find an adequate train path for those services. However, HS2 gives us the capacity we need. It doubles the number of seats between London and Birmingham; it is capable of carrying a number of passengers equivalent to the population of Nottingham every day; and it will run 18 trains an hour when we finish phase 2, each of which carries 1,100 passengers.
I will leave your Lordships with one set of numbers to remember. If we look at all the proposals for enhancing the existing rail network as an alternative to HS2, the most we can squeeze out of those enhancements is 53% new capacity from London to Birmingham—and as the noble Lord, Lord Snape, and other noble Lords have said, that is despite years of disruption to the routes on which that work will have to be done. We would gain 53% that way, but if we build HS2 we will add 143% more capacity, and that is the transformation we have to achieve.
Transferring long-distance passengers to HS2 frees up the west coast and east coast main lines to develop significant additional regional and commuter rail services. We very much need those for the future, but we could even use many of them now. Very importantly, as the noble Lords, Lord Berkeley and Lord Rooker, have underscored, it leaves room to move far more freight onto rail. The west coast main line is especially crucial as we anticipate growing freight demand as the economy expands. Frankly, the road network simply cannot cope so rail has to take its share and only with that transfer of long-distance passengers and the ability to use those main lines can we achieve it.
HS2 will be an engine for economic growth and jobs. The current estimates are that HS2 will contribute £60 billion to the economy. That is actually quite a narrow calculation and the wider effect could be much greater as we link key northern cities to each other and to the south. Incidentally, those who referred to the KPMG report must have misread some of the lines. It shows benefits to far more areas than those which suffer a relative disadvantage. It will help to rebuild our economy. The noble Lord, Lord Greaves, used that key phrase, “closing the regional divide”, because although London gains, the big winners are the northern cities like Sheffield, Wigan, York and Wakefield. I understand the demands to look at the case of Scotland. Scotland will benefit from phase 1 of HS2 and even more from phase 2, but there are ongoing discussions and we have all undertaken to examine this area.
HS2 will also be a catalyst for city-centre regeneration. We have seen that with Crossrail and Kings Cross. The HS2 growth taskforce led by the noble Lord, Lord Deighton, who I know is so widely respected in this House, is now working to make sure that we maximise all of those opportunities. Frankly, if the noble Lord, Lord Mandelson, doubts that the north is going to benefit, I recommend that he have a conversation with the leaders of Manchester, Birmingham and Leeds. They want this line sooner because they recognise the benefits that are coming. Of course the line does not serve every city and region and the boost is naturally greatest in the places it serves directly. That is the character of infrastructure. We were right to build Crossrail even though the main winner was London and not elsewhere.
HS2 is only one part of a much bigger investment programme which includes the electrification of the East Midlands, the west of England and Wales. There will be a £1 billion electrification of the Great Western main line to Cardiff and Swansea with intercity express trains from 2017. There will be a dualling of major road links in Cornwall and East Anglia. The noble Lord, Lord Alton, asked about the north. I have such a long list, I will read only some of it. We are electrifying the line between Liverpool, Manchester, Preston and Blackpool. We are also electrifying the trans-Pennine route from Manchester to York via Leeds. We are introducing electric trains between Manchester airport and Scotland. It is crucial that this House understands that the overall investment in transport infrastructure in the next Parliament is £73 billion and that of that, HS2 is only £17 billion. I can confirm that in response to a question from the noble Lord, Lord Bradshaw.
Lastly, let me make a couple of comments on actual delivery. The upper limit of the cost is £42.6 billion. As others have said, that includes a very considerable contingency of £14.4 billion, so we have genuine scope to bear down on that number. The cost of £7.5 billion for rolling stock also includes a contingency. Let me assure the noble Lords, Lord Watson and Lord Truscott, that we are much better today at understanding how to work out cost and how to manage and build, which is essential to the HS2 project.
The noble Lord, Lord Bradshaw, raised the question of using property uplift values as part of the way to pay for that. That is very interesting and we will look at that going forward. There is going to be a significant private-sector contribution because the stations, other than the operating part of the stations, undoubtedly can be provided by the private sector. We have seen the capacity to do that in places like Kings Cross. And after HS1 was completed, although it is a 100-year railway, a 30-year concession for that line was sold which paid for at least a third of the actual cost of construction. We have mechanisms in place to make sure that the cost is controlled and that we can turn to the private sector for significant parts of the financing. I intend to become very much more involved and look intensively at that issue.
The Government are also committed to fair compensation for those along the route who are impacted. I say to the noble Baroness, Lady Mallalieu, and the noble Lord, Lord Stevenson of Balmacara, that the consultation is under way now and that they should contribute to it, as it is crucially important that they do. The package—and the Government are committed to this—will go above and beyond what is required by law. This will be a fair and generous package. We are looking at issues, and part of that consultation includes things such as property bonds, voluntary purchase and rural support zones. I recommend that the noble Lord encourage his neighbours and others interested to participate, because we need that dialogue.
HS2 will also be built to the highest environmental standards, with, for example, some 70% of the surface lines between London and the West Midlands insulated by cuttings, landscaping and fencing. I say that again partly in response to questions raised by the noble Baroness, Lady Mallalieu, and the noble Lord, Lord Stevenson. I accept that when one builds a piece of infrastructure, there is an impact. It is impossible to do it without an impact, and it is difficult if it impacts on an area that you either live in or know and love. This project has made a real effort to minimise the impacts, but it must pay attention to costs, and the balance that we have struck is, frankly, the right one.
The noble Lord, Lord Low, brought up the issue of Maglev technology. In China, Maglev goes between Shanghai airport and the city of Shanghai. For the kind of long-distance services that we are looking at with HS2, the Chinese are using very similar technology to that which we are proposing. We are choosing it because it is safe and proven. I think that we would all think that that was an appropriate approach to take for that size of infrastructure project.
There are opportunities to build British capacity for business and to build jobs around this project. It is by far the largest infrastructure project in Europe. One focus that I and others in this Government will have is to look at how we can build the British supply chain to make sure that we reap benefits in gathering expertise and experience in business and then put those businesses in a position where we can export that kind of expertise to other projects across the globe. With all that come jobs for young people and highly skilled jobs; this is a fantastic job opportunity. To look back over the kinds of numbers that we have seen, the Core Cities Group alone predicts that HS2 will underpin the delivery of 400,000 jobs. Construction jobs, at their peak, will be in their thousands—50,000 at peak and probably 19,000 over the average of the project.
HS2 is simply the most significant transformation of our infrastructure in a generation. It will link eight of the 10 largest British cities, serving one in five of the UK population; two-thirds of the population of northern England will be within two hours of London. As others have said, there will be interconnectedness between those communities as an additional base for stimulus within the north itself. This is a time for ambition; make do and mend will not serve this country.
The noble Lord, Lord Mandelson, may have viewed the decision on HS2 as a vanity project, but he does not do justice to his colleagues when he says that. We have heard discussed again and again the requirement for capacity, and it is simply incontrovertible. We have to be able to move people in the modern era, and to move freight. To have a project that focuses on bringing prosperity to the north of England, so often forgotten in previous schemes, is critical and important. So although it is all right that the debate should continue, this Government remain—and I assure those who have asked—committed to this transformational project. I thank the noble Lord, Lord Greaves, and others for having this debate today.