High Speed 2 (Economic Affairs Committee Report)
Lord Howard of Rising Excerpts(4 years, 3 months ago)
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Lord Howard of Rising (Con)
My Lords, I congratulate the Economic Affairs Committee on an excellent report. Another outstanding report that forensically examines the facts is that of the noble Lord, Lord Berkeley.
In the hotly contested competition for the worst possible government project since World War II, including such well-known contestants as the groundnut scheme, HS2 is a strong competitor, in both the class for the worst overall amount of money spent and the class for the greatest budget overrun. There is no certainty about what HS2 will cost, but on existing form it will be well in excess of the present guesstimate figure of £107 billion. In 2010, the estimate was £30 billion and in 2012 it was up to £33 billion. By 2013 it was up to £42.6 billion, and we are now looking at £107 billion and rising. On top of this there will be the cost of rolling stock, estimated at about £8 billion, and a further £43 billion for branch lines.
Originally, the justification for this expenditure was speed—that 20 minutes would be saved travelling between London and Birmingham. That was a pointless argument, as the vast majority of passengers on intercity trains get on with their business during the journey. Half an hour more or less on an intercity train does not matter. What matters is the unproductive time spent getting to and from the station. In four of the seven main provincial cities to be served by HS2 trains, the line will not even go near the city centre. For example, in Nottingham and Derby the HS2 station will be 10 miles from the city centre.
As has already been said, the financial justification assumes speeds of 360 to 400 kilometres per hour—higher than any achieved in either Europe or Japan—and 18 trains an hour in either direction. The maximum that has ever been achieved is between 12 and 14. These virtually impossible assumptions are used to manipulate the cost/benefit ratio, which is in turn used to produce a biased justification for the monumental cost of this project.
A report by Leeds University points out that HS2 is already five times more expensive than a similar line being built between Tours and Bordeaux—£105 million per kilometre compared with £20 million per kilometre. HS2 argues that this is because the French project does not involve new stations. If that is so, why not upgrade one or more of the four existing lines? This would be quicker and cheaper and would solve capacity problems. It is bound to be cheaper if you already have the stations.
Business travellers were asked whether they would like a faster train service. Hard though this is to believe, their answers were used, in all seriousness, as justification for the scheme. It makes one wonder whether the lunatics have taken over the asylum. What on earth did they expect the passengers to say—that they would like a slower train?
The whole tenor of the Government’s response to the committee’s report is the same as so many other responses—that of an organisation scrambling to justify a decision, rather than taking an objective view of the facts. If there was any doubt about this, one has only to read the masterful report from the noble Lord, Lord Berkeley, for the doubt to be removed. This should not come as a surprise when there are 128 employees of HS2 on salaries of £100,000-plus a year, of whom 47 are on salaries of over £150,000. It is hardly surprising that they are fighting for their survival—and I make no mention of politicians and others seeking to justify what is turning out to be a disastrous project.
HS2 is unnecessary. The speed claimed will not be achieved, because of the false assumptions. Even if it is, time saved will make little or no difference. The financial decision is based on inaccurate and misleading information. With four existing railway lines that can be upgraded at less cost, the capacity argument falls away. If successful, HS2 will succeed only in sucking the lifeblood out of the north as access to the wealth and success of the south is made easier. It would be better by far to spend the money, only some of which would be necessary, to improve local services and east-west communications in the north and Midlands—which, as my noble friend Lord Forsyth pointed out, are absolutely abysmal and need help.
High Speed Rail (Preparation) Bill
Lord Howard of Rising Excerpts(10 years, 5 months ago)
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Lord Howard of Rising (Con)
My Lords, this country’s debt is increasing at a rate in excess of £100 billion a year. I find it hard—almost impossible—to believe that in these circumstances Her Majesty's Government propose to enter into a financial commitment the case for which—I say this in spite of the eloquence that I have heard today—looked at in the very best, kindest and most positive way, is weak. Looked at in any normal way, HS2 is, frankly, insane. No sane businessman, dealing with his own money, would dream of making an investment based on the criteria being used to justify HS2.
Granted, the economy is improving, so that by the time bills have to be paid the financial position might be better, but the country will still have a burden of £1 trillion of public debt to deal with. There is no certainty about what the project will cost. I do not think anyone knows. In 2008 the cost was estimated to be £17 billion, in 2010 the estimate had increased to £30 billion, in 2012 it was up to £33 billion, and this year the figure has increased to £42.6 billion. And that is without counting the cost of the odd £10 billion for rolling stock. For what it is worth, the Financial Times has estimated the true cost to be £73 billion. Who knows what the final cost will be? Major Government spending plans have a habit of going over budget distressingly frequently.
Until quite recently the main argument to support this project has been the financial benefit to be gained from faster train journeys, because they would give more time for travellers to get on with their affairs—indeed, 79% of all benefits in the business case for HS2 are attributed to these savings. However, the vast majority of passengers on trains do get on with their business: reading, writing, using laptops and so on. They do not just sit there doing nothing. If the proponents of this Bill had ever sat on an intercity train they would have seen this. As a businessman who has never had a head office, but has had interests all over the country, I have spent many hours travelling; half an hour more or less on a train has never mattered. In practice, travelling time on trains is useful, as it enables one to get on with things, such as writing and reading, without interruption. The other point your Lordships might care to note is that the time-saving calculations assume trains travelling at 140 mph—a speed not yet achieved.
More important is the time spent journeying to and from stations, when it is considerably more difficult to use the time to good effect. In five of the seven main provincial cities to be served by HS2 trains, the line will not even go into main railway stations. In Sheffield, Nottingham and Derby the HS2 station will be 10 miles from the city centre. With the extra time required to get from the station to the final destination, one has to question whether there will be an overall time saving at all: will the journey door to door take just as long with HS2 as it did before?
With increasing recognition of the weakness of the time argument, the justification now being emphasised is the need for the extra capacity that HS2 will provide. How this will happen with, for example, the number of platforms at Euston presently used for existing services being reduced from 18 to 13 is difficult to understand. Figures that became available in December 2012 as a result of a judicial review show that intercity trains on the west coast main line were only 52% full in the evening peak period, and there was still scope to increase the size of trains if necessary. In spite of what the noble Lord, Lord Adonis, said, I believe that if there is a need for spare capacity there are other and considerably cheaper solutions.
The existing line could be upgraded. Claims that this would take 14 years and cost £19 billion have been comprehensively rubbished by a number of different commentators—so much so that the objectivity of the arguments in favour of HS2 must be seriously suspect. In any event, it would take 17 years before both phases of HS2 were complete.
There is also the possibility of opening up the Chiltern Line, another cheaper alternative. We are a trading nation and depend on the trade we do with other countries, be it in services or manufactured goods. To be effective we need the best possible communications with the outside world. It beggars belief that Her Majesty’s Government are proposing to spend quantities of billions of pounds on a project for which the business case does not even stand the most cursory examination, instead of getting on with increasingly desperately needed airport capacity—something the Minister hardly even mentioned in her long list of money to be spent on transport. Even today there is an article by Sir Martin Sorrell in the newspapers begging for better airport capacity. I urge the Minister to have a look at this side of life as well as the trains.
Lord Faulkner of Worcester (Lab)
My Lords, I hope that the House will forgive me if I do not follow the noble Lord, Lord Howard of Rising, in all the points he made. Needless to say, I disagree with every single one of them. On the question of cost—
Lord Faulkner of Worcester
On the question of cost, to which he referred, if he reads the speech by his noble friend Lord Heseltine to the Royal Town Planning Institute, he will find that a number of those issues are addressed and answered very fully. I draw his attention to the fact that the noble Lord, Lord Heseltine, refers to the Government selling a 30-year concession in 2011 for High Speed 1 to a Canadian pension fund for £2.1 billion. I understand that something in the order of £10 billion could be realised for a similar concession on HS2, and there is a great deal more of the same.
I start by thanking the Minister—the noble Baroness, Lady Kramer—for convening the meeting for Peers with her officials last Tuesday. I certainly found it helpful and informative and left the Committee Room hopeful that this Bill and, indeed, the whole High Speed 2 project are in good hands. As we had such an excellent debate on High Speed 2 in your Lordships’ House on 24 October, there is no need for me to go over the ground that I covered then. However, I am grateful to the noble Baroness for quoting a sentence from what I said that evening.
The important thing that came out of the debate was a demonstration of the overwhelming need to add capacity to our railways as a consequence of the phenomenal growth in demand for rail transport over the past 20 years. Passenger demand has doubled since 1995. As the noble Lord, Lord Rodgers, is still in his place, I will go back to 1976 and recall a conversation that Sir Peter Parker had with Tony Crosland, who was then Secretary of State for the Environment, which Sir Peter wrote about in his autobiography. He said that he was depressed by Tony Crosland saying to him:
“Peter, I see a future for BR as a smaller, sensible little railway”.
Spare capacity was ruthlessly removed throughout the 1970s and 1980s as BR desperately tried to cut costs to meet the financial objectives imposed on it by the Treasury, about which my noble friend Lord Adonis spoke so eloquently earlier. Therefore, it is no wonder that more capacity is needed for the railways now.
Given the gloomy forecasts for passenger and freight demand produced at that time, which were all proved hopelessly wrong within 10 years, I am reminded of the words of the great economist John Kenneth Galbraith, who said:
“The only function of economic forecasting is to make astrology look respectable”.
The lesson we should have learnt, post Beeching, is that you must keep your options open, retain the flexibility for future growth and never sell the track bed as it is a resource that must be protected.
At the Minister’s meeting on Tuesday I pointed out that the task of building a high-speed railway to the Midlands and the north would have been much easier if previous Labour and Conservative Governments had not closed the Great Central Railway—the last main line to be built in Britain until High Speed 1, and the only main line, until High Speed 1, built to the continental gauge. One of its routes to Rugby, Leicester, Nottingham and Sheffield went straight through the Chilterns, including the towns of Amersham, Great Missenden and Wendover. I am sorry that my noble friend Lord Stevenson is not here to—
Groceries Code Adjudicator Bill [HL]
Lord Howard of Rising Excerpts(11 years, 10 months ago)
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Lord Knight of Weymouth
I am grateful to the noble Viscount for his intervention. Clearly, the public are the consumers. I am certainly aware that not every supermarket is guilty of abusing its power. The competition between supermarkets generally has been very good for consumers but that does not mean that they should continue to be able to use that power to exploit their relationship with suppliers.
To give another example, I heard about a company which was developing an innovative low-sugar jam. It took the product to a very large supermarket because, having invested in developing this new product, it needed to get the volume of sales that could be achieved only by using one of the large supermarkets. The supermarket was very interested and said, “Leave it with us. We will give you a call.”. It gave the company a call and said, “Do come in. We want to talk to you about the low-sugar jam that you showed us.”. The supermarket called the company in just to put on the table its own product which it had developed in response to that company’s innovation. Therefore, that investment was a loss for that innovator. Similar stories of abuses of market power by some supermarkets—not all of them—are legion. I referred to the helpful briefing from the National Farmers’ Union. We have had similarly helpful briefings from the Country Land and Business Association and the Federation of Small Businesses. All were extremely supportive of the establishment of this adjudicator because they agree that we need a referee.
I know that we will go on to talk about some of these things throughout the proceedings of the Committee. In response to my intervention, the noble Viscount, Lord Eccles, said that not many farmers supply retailers directly. The NFU tells us that some do and, what is more, the Competition Commission has identified an adverse affect on competition whereby grocery retailers pass unexpected costs and excessive risks down the supply chain. Ultimately, those risks, in the form of extra costs, are passed on to producers, even when they do not deal directly with retailers.
Lord Howard of Rising
I must declare an interest as I have a tenant who is a direct supplier to a supermarket. The examples that the noble Lord, Lord Knight, gives us are all those of vested interests that would like to have better commercial arrangements. There is nothing whatever to stop any farmer saying to his supermarket, “I do not like your terms of trade and I will not supply you”.
Lord Knight of Weymouth
It is very helpful to have the contribution of the noble Lord, Lord Howard, because he has a particular view that we can leave this all to the market, which is operating perfectly. I disagree. I remember from my economics A-level that you can have perfect markets but you can also have imperfect ones and powerful players within markets who abuse their market position. I believe—as did the Competition Commission in its analysis—that that is the case here. That is where the noble Lord and I will differ as we debate these things. In the end, those suppliers will struggle to find another market. Often, they have worked with a supermarket and built up a relationship where they have been persuaded that it is worth investing in, for example, growing a product. That needs at least a 12-month timeline. The supplier or grower of that product takes on a huge risk because they have invested 12 months in advance but the contract will only give them at best three months’ notice of cancellation. They can just be cancelled on and that happens all the time. That is a difficult aspect of that market relationship.
I give another example: I know of an innovator of a new chocolate product using pomegranate dust from Afghanistan. That innovator had to invest significantly in developing the product. It is a fine product but the innovator has to recoup the cost of that investment and needs to get the product out in volumes that are only achievable using large supermarkets. The response from the supermarkets is, “Yes, we like the product. If you want us to stock it then you need to pay us to take it on. If you want a decent shelf position, you need to pay us some more money. If you want point-of-sale merchandising, you need to pay us for that as well”. That individual needs to acquire a huge amount of investment to be able to innovate. In the end, a healthy market allows new players to come into it, to innovate and introduce new supply. That is not happening very easily in this particular market because of that power relationship and the structure of how it is set up. I strongly urge the noble Viscount to withdraw his amendment and strongly urge the Committee to support proceeding with the establishment of the adjudicator.
Lord Borrie
I join in the query of the noble Lord, Lord Teverson, to the Minister, which I hope she can answer, to make sure that those who can make complaints are not only individual farmers, producers or whatever but also trade associations such as the National Farmers’ Union or the British Retail Consortium.
I hope that my noble friend Lord Browne does not think I am going for him today in the various matters on which we disagree, but I am slightly worried—as I think the noble Lord, Lord Teverson, was—by the phrase in Amendment 23,
“complaint by a third party with an interest”.
If the third party is a trade association, then I suppose that parties one and two are the supplier on the one hand and the supermarket on the other. But then, what does “third party with an interest” mean? If that is the trade association, does that mean that it has to have some interest other than the fact that the supplier, who has got a real complaint, is a member of it? Is that what “interest” is meant to mean, or must it be wider than that? That is the query I put to my noble friend Lord Browne but there is also a general point about where complaints can come from. I hope that it is from as widely as possible.
Lord Howard of Rising
My Lords, I feel I should first finish declaring my interests: I am a farmer as well. I find it rather gripping to find the noble Lord on the other side defending the farming industry so strongly during this debate.
My Amendment 27 reflects the wording which was included in the draft Bill and limits those who can complain to parties to the transaction. If anybody else can come and stick their oar in, it is a source of endless trouble. For example—you may find this a little extreme but I am certain it would happen—if I am supplying a supermarket, my competitor thinks that I am doing well and would like to have my contract, he could put in a complaint—anonymously, of course. The supermarket would say, “Oh,” and the whole process would start. While the process was going on, my competitor could leak that it was me who complained—although of course I never did—and the result would be that when my contract came to an end there would be little incentive for the supermarket to continue with me. My competitor might do rather well, at that stage. I just give you that as an example of the sort of thing that would happen if anyone, all and sundry, could make a complaint which had to be listened to.
I ask the Minister one question. In the notes for the draft Bill, there was a comment that the adjudicator has no power to require people to provide information for the purpose of deciding whether to commence an investigation. I would like confirmation that this is still the case in the Bill as it has been presented to the Committee.
Localism Bill
Lord Howard of Rising Excerpts(12 years, 10 months ago)
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Lord Howard of Rising
My Lords, I support the amendment of my noble friend Lord True. In doing so, I declare an interest as a district councillor.
I should like to give the Government and the Minister an example. Norfolk County Council, which is the senior authority of my own district authority, tried to impose an incinerator in Norwich but found that it was unable to do so because of the unpopularity that this aroused and the fact that no one would sell it the land. Consequently it secretly bought a plot at Kings Lynn and said that it was going to stick an incinerator in there. My district council held a referendum which overwhelmingly rejected this suggestion. The local press has been continually complaining about it; there are meetings; there is massive objection to it. Despite this overwhelming unpopularity, Norfolk County Council is claiming to the Secretary of State that the proposition has universal local support.
I urge the Minister to consider the amendment of my noble friend Lord True because, plainly, there is often unhappiness—the example which I have given is not unique—about bullying by upper-tier authorities of lower-tier ones.
Lord Howard of Rising
Lord Howard of Rising
Lord Howard of Rising
“9N Referendum on change to mayor and cabinet executive
The Secretary of State may by order require a specified local authority to hold a referendum on whether the authority should operate a mayor and cabinet executive.”
Lord Howard of Rising
Lord Howard of Rising
Lord Howard of Rising