Economic Case for HS2 (Economic Affairs Committee Report)

Lord Turnbull Excerpts

Wednesday 16th September 2015 Lords Chamber

[Lord Turnbull (CB)]

My Lords, I joined the Economic Affairs Committee only in this Session, so I can claim no credit for its report, although I applaud the very searching questions that it has put to the Government.

My starting point is that, in principle, I support the construction of dedicated high-speed lines between our major cities. I do not believe that we can achieve a satisfactory rail infrastructure by the existing policy of patch and mend and incremental improvements. The historical context is that 60 years ago we recognised in the UK that there were different kinds of road traffic. Our existing trunk roads mixed up people wanting to travel long distances at high speeds with local journeys and commuters. So we started to build a motorway network which separated the two. Sixty years later, we need to do the same for the rail network. This will never function efficiently while intercity, commuter, cross-country and freight traffic are all mixed up.

Although I start from a positive presumption, I recognise that the design and cost of what we build has to be carefully examined and justified. Here the committee has raised some valid doubts. I certainly endorse the doubts about the speed of 400 kph, but let me concentrate on a different one. The current plan is to rebuild Euston to be both the London terminus of HS2 and of the existing west coast main line services. We have seen in the last few days that that is going to be much more expensive than previously thought, will take many years, and cause great disruption. One submission to the committee estimated that the cost of the final tunnel and the rebuilding of Euston could be about one-quarter of the total construction cost. The committee has asked, but received no satisfactory answer, how much would be saved by making Old Oak Common the terminus.

The argument that we got from the Transport Secretary last week was that the terminus must be right in the centre of London, but that is based on a simple misconception. Most journeys do not start or end at the terminus; transport planning must work from door to door, not just station to station. So the key requirement is not where the terminus is located but how well it connects to the rest of the London network. In this respect, Old Oak Common will be much better placed than Euston as, unlike Euston, it will be served by Crossrail. It will be a matter of minutes beyond Paddington. It will also, unlike Euston, be connected to Heathrow. I believe, therefore, that we should look seriously at Old Oak Common, which will reduce the cost of rebuilding Euston and save massive expenditure on about 7.5 kilometres of tunnel, which, ironically, will serve only about 60% of the arrivals in London, the rest having got off at Old Oak Common.

Much of the argument of the benefits of HS2 has been around benefits of time saved. The Government’s own analysis puts such benefits at two-thirds of the total. I find this implausible and, like the noble Lord, Lord Desai, I believe that the methodology that produced this result is seriously flawed. Professor Venables, in his evidence, argued that user benefits in time saving, and improvement of productivity were adequately captured, but what he called land-use change or investment and employment effects were not. The result is that current methodology gives too much weight to time saving and not enough to the power of railways to reshape economic geography by opening up opportunities for development, housing and employment. Favouring time over development potential is also skewing the location of stations, as with Sheffield. How much time people save is only part of the story. For example, the impact of the Metropolitan Line, which fundamentally reshaped the geography of London, was not just due to speeding up the journey of the residents of Amersham to London; it was the opportunity to do things that were not being done before, paving the way for the 1930s housing boom which was opened up in north-west London.

In paragraph 247, the committee cautioned that transport infrastructure did not always lead to development. The experience of London points strongly in the opposite direction, with the M25, the Limehouse link and the Jubilee Line extension, which opened up Docklands, and HS1, which opened up the Stratford area and was crucial in changing the perception of the IOC about access to the Olympic park. Without that line, our bid would not have succeeded. That process is still going on—for example, in the land around King’s Cross Crossrail, and Crossrail is revitalising the rundown fringe of central London from Shoreditch to Paddington and expanding the boundaries of what is perceived as central London. It is estimated that over £2,000 per head has been spent on London transport infrastructure, against less than £200 elsewhere in the country. I am confident that using transport to change the economic geography, which has worked so well in London, will work in our other major cities. I believe that the Government have a good story to tell but that they are failing to tell it.