High Speed Rail (Preparation) Bill

Baroness Kramer Excerpts

Tuesday 19th November 2013 Lords Chamber

Moved by

[Baroness Kramer]

That the Bill be read a second time.

[The Minister of State, Department for Transport (Baroness Kramer) (LD)]

My Lords, I open this Second Reading by reminding this House why so many of your Lordships across the political divide have given their support to a high-speed rail network. The noble Lord, Lord Faulkner, has said:

“There you have the essential case for building High Speed 2 —not as a separate line, physically and operationally away from the current railway, but as a crucial part of a reshaped and improved national network”.—[Official Report, 24/10/13; col. 1226.]

The noble Lord, Lord Greaves, from the Liberal Democrat Benches, who is not in his place but was involved in the previous debate, said:

“It will herald a new era for railways in Britain, and it will form a vital part of bringing together the different parts of England and closing the regional divide”.—[Official Report, 24/10/13; col. 1221.]

The noble Lord, Lord Heseltine, who sends his apologies because he is committed to a speech tonight, said:

“HS2 is about our country’s competitiveness for half a century or more. It is about so many more people sharing growth that has, for too long, been concentrated on London and the south-east. It’s all about drawing together our economy as a whole as well as improving our access to the enlarged, and enlarging, home market of Europe”.

Of course, there are opponents of high-speed rail and specifically of HS2. I respect them; they raise real challenges; and I shall address those challenges today.

The Bill before your Lordships is a paving Bill. Mercifully, it is simple and clear. It grants the Secretary of State authority to incur expenditure, which must be also approved by the Treasury. It describes the route as publicly committed, but allows for future extensions as well as connections to the wider network. It requires an annual report to be made to Parliament for all expenditure incurred, including any variation from budget. It requires reporting on those receiving vocational qualifications as a consequence of the project, and, of course, it is a money Bill. Each phase of HS2 and any future extensions will require a separate hybrid Bill without which construction cannot begin. That will be the opportunity to debate and scrutinise the route in detail and the manner in which the project will be delivered.

There are three key arguments for HS2 and the high-speed rail network that this Bill presages: capacity, connectivity and growth. In Britain, we are running out of capacity on our most important north-south routes. Demand for intercity rail travel has doubled in the past 15 years. By the mid-2020s, the west coast main line, our main rail line connecting London, the Midlands and the north, will be full. That is calculated on very modest figures for passenger growth: 2.2% a year. I should note that for the past decade demand has grown at 4.4% a year or more. Already in 2011, during the morning peak, 4,000 people were standing on arrival into Euston and 5,000 people were standing on arrival into Birmingham. It is close to impossible to get train paths for new services on the west coast main line.

We need a high-capacity answer, and that is HS2. It gives us 18 trains an hour in each direction when complete, each carrying up to 1,100 passengers. By taking long-distance travellers off the existing lines, it releases space on the west coast, east coast and midland main lines to be used for much needed regional and commuter services. Network Rail estimates that more than 100 cities and towns could benefit from the released capacity. It also releases essential capacity for freight: demand for rail freight is forecast to double by 2043, and there is not the capacity to carry it.

I am, of course, aware that many have proposed alternatives: upgrades to our existing lines to provide that capacity. Many of the ideas are interesting—in fact, some will probably be implemented—but they leave us with two problems. The first is scale. Including every reasonable alternative, we can achieve a 24% increase in capacity. HS2 gives us a 105% increase. It is a complete step change.

The second problem is disruption. As upgrades mean working on active lines in daily use, we have to resort to closure for much of the work. This House will have seen the Atkins report showing 14 years of weekend closures, and that is with an aggressive work programme of two simultaneous schemes on each route at any one time. It would frankly be a nightmare.

HS2 also transform connections across Britain. It will link eight of our 10 largest cities. It links up great cities of the north and the Midlands. Just as important as cutting times from London to Birmingham and Manchester, HS2 takes more than an hour off the journeys between Birmingham and Newcastle, York and Leeds. It will be integrated with the nation’s main airports, with stations directly serving Manchester and Birmingham and short connections to Heathrow via Crossrail and to East Midlands Airport from Toton station. It is this new connectivity that provides a spur to growth, and it is the reason why the great northern cities are so supportive of HS2.

My noble friend Lord Deighton and the HS2 taskforce are looking at ways to maximise the growth benefits of the line. The great cities are doing exactly that without prompting. They can see the opportunity to rebalance the economy of the Midlands and the north. The economic analysis shows them gaining double the benefits of the south.

The national gain is £15 billion a year by 2037. Construction and its supply chain alone will provide 19,000 jobs. The Core Cities group predicts that HS2 will underpin the delivery of 400,000 jobs, and 70% of the jobs created by HS2 are expected to be outside London. HS2 will be an opportunity to build a British supply chain, as discussed previously in this House, with skilled jobs for our young people—a supply chain and skill set that will support not just this project but British industry at home and abroad in future infrastructure markets. Of course not every part of the UK benefits from HS2. It benefits more the areas that it physically reaches. However, so does every transport infrastructure project past, present and future; that is a characteristic of infrastructure.

That brings me to the cost. The budget for HS2 is £42.6 billion. That is an upper limit with a contingency of £14.4 billion. Rolling stock will be another £7.5 billion. This means a benefit-cost ratio of 2.3, which is frankly remarkable for a large project, especially given the limitations of a formula that caps passenger demand three years after phase 2 is finished. Sir David Higgins, the new chairman of HS2, has been instructed to bear down on those costs, and he has said that he can and will do so. The noble Lord, Lord Heseltine, recently reminded us that part of those costs can be picked by up the private sector rather than the taxpayer. That is the intention of the Government and will be part of plans going forward.

I remind your Lordships that while the sums for HS2 are large, they are only part of the transport spending budget. In the next Parliament we will spend £73 billion on transport, only £17 billion of which is for HS2. We are tripling the national roads budget and adding 400 extra lane miles of motorway. We are tackling 195 local pinch points to break up jams. We are delivering the biggest rail modernisation programme for generations, with more than £9 billion of government funding for major rail projects, including a new £500 million rail link from the West Country to Heathrow, an 850-mile national programme of rail electrification, Crossrail and Thameslink in London and more than £900 million in flexible funding for smaller schemes.

However, infrastructure on this scale always has some negative impact, and I understand the anguish of those who cherish the countryside along the proposed route. That is why 70% of surface lines between London and the West Midlands will be insulated by cuttings, landscaping and fencing. We are at present consulting at present on property compensation, another issue that is often raised in this House. An exceptional hardship scheme is already in place. The Government have said that they intend to be fair but generous, going beyond the requirements of the law. I urge noble Lords with an interest in this area to respond to that consultation before it closes on 4 December. The detailed environmental statement for phase 1 will be laid alongside the hybrid Bill. It will be the largest environmental impact assessment ever undertaken in the UK.

We have the opportunity today to support a Bill that takes Britain into the future. We cannot opt again for make do and mend, relying on an exhausted Victorian system for our vital rail transport. Doubters have always decried new infrastructure projects, from the M25 to the Jubilee line to HS1 to Crossrail, but we will build HS2 responsibly and within budget. I ask your Lordships across all parties to join in this commitment to a modern rail network that can support our ambitions for growth and our economy. I beg to move.

--- Later in debate ---

[Baroness Kramer]

My Lords, what a tremendous debate. Every time this issue comes before the House I learn more, which adds very much to the pleasure. I, too, was appreciative that the Secretary of State came to listen to the early speeches; he then had to leave to vote, but I know that he will read the rest of this debate. I know that that information flow to him is very much appreciated on his part.

Obviously, the overwhelming majority of noble Lords who spoke today spoke so strongly and positively in favour of HS2 and the high-speed rail network that once again I feel almost that the comments that I can make are somewhat redundant; they have been almost better covered by other noble Lords who have spoken. I will begin by trying to pick up on the questions from noble Lords who were perhaps more sceptical, and in particular that issue of cost that the noble Lord, Lord Davies of Oldham, mentioned, which was also mentioned by other noble Lords—by the noble Lord, Lord Howard of Rising, in particular, and in a slightly different way by the noble Lord, Lord Adonis.

The cost of the project—the budget—has been set at £42.6 billion. The noble Lord, Lord Howard of Rising, mentioned the figure of £73 billion, which was floated in the Financial Times and some other parts of the press. That is a mischievous number, because of the way in which it is constructed; I was quite sad to see it in a respectable newspaper. It included things like VAT, which obviously comes back to the Treasury and is therefore not a cost to the taxpayer. It also included inflation, although we look at infrastructure projects using current numbers rather than inflated numbers because we do not look at the benefits in inflated numbers. A mischief-making number has, unfortunately, been introduced into this conversation.

I shall say more about cost, because it is important—and what I have to say about it will also address some of the other issues that have been raised. The work that has been done in preparation for High Speed 2, to the point where it is now ready for phase 1 to appear in a hybrid Bill, is far more intense than that for any previous hybrid Bill. I think that that degree of preparation is a good thing, and I am cleared to say that the hybrid Bill will be introduced in the Commons on Monday. That degree of detailed examination and preparation gives us far greater confidence in the actual numbers, particularly for phase 1.

As the noble Lord, Lord Davies, will know—he has read the strategic case—High Speed 2 now estimates that, without any contingency, it could bring in phase 1 at £15.6 billion. The Secretary of State has said that we need to have a little contingency, but he wants to see this come in at £17.16 billion or less. That is the pressure being put on Sir David Higgins, and he feels that it is pressure that he can accept. That is a much crisper number than the more overarching number, including contingency, that we have generally been using. I ask that, as people look at the strategic case, they understand that we are talking about the overarching budget, but that underneath that there is huge pressure to ensure that the cost is pushed down, and we can do that with more and more confidence because of the level of detail that we now have. I hope that that also explains to the noble Lord, Lord Adonis, why there is a generous contingency in all this. The contingency does not reflect the fact that there is very detailed work going on to push the cost down.

That consideration also speaks somewhat to the governance point raised by the noble Lord, Lord Rodgers of Quarry Bank. Sir David Higgins, when he comes in, will make governance and driving down cost two of his highest priorities. The governance programme, which sounds incredibly complex as it is read out in a paragraph, actually reflects a number of bodies that have come together to increase the downward pressure on costs. That is part of the reason why there have been so many parties so absolutely focused on ensuring that the costs of the project have been reduced to the greatest extent possible.

In the same context, Sir David Higgins has said that he will look at delivering HS2 faster. There is an underlying question here, which I picked up from a number of people today—for example, from the noble Lord, Lord Smith of Leigh—along the lines of, “Why don’t we start both phases pretty much at the same time?” The answer is that we have the detailed work to be able to go ahead with the hybrid Bill for phase 1, and to hold that up in order to bring phase 2 to the same degree of preparation would hold back the whole project. We are in a position to move much faster on phase 1. I have heard many people in the House today talking about the importance of going as fast as possible; they compared us unfavourably with France, and I can understand why. We are doing this in phases so that we can get into the ground at the earliest possible date.

Benefits will flow from phase 1 alone. It is true that the maximum benefits will come when phase 2 is completed, but from phase 1 alone there is already an advantage, both in capacity going from London through to Birmingham—on the most congested set of routes that we could possibly have—and also in terms of starting the time reduction, which, as others have said, adds to the connectivity and the potential for development in the north and the Midlands.

The noble Lord, Lord Cormack, referred to the Bill as a blank cheque and asked why it does not have a monetary figure in it. The Bill gives permission for preparatory expenditure and contains a very vigorous reporting process under which the Government must report back annually and record any deviation from budget, and the consequences of that. The wording of the Bill has been strengthened somewhat in the other place, which has put in place a very intense scrutiny process around the budget.

One of the reasons why there is no monetary figure is because this is not just the paving Bill for HS2 but allows us to look at extensions. The noble Lord, Lord Dubs, talked about the importance of going beyond HS2 and looking at Scotland. I was up in Glasgow and Edinburgh just over a week ago, announcing formally the initiation of a study which will look at bringing the benefits of high speed to Scotland. Automatic benefits come from bringing High Speed 2 as far as Leeds and Manchester. In fact, Scotland benefits even from the run to Birmingham. However, taking it beyond that, the study will look at how to maximise high speed on existing rail lines and at potentially building what some people have dubbed “High Speed 3”. This paving Bill creates the context for what in the end will be a high-speed rail network. The word “network” matters in the context of some of the questions about economic growth. Dedicated high-speed trains can run only on high-speed lines. However, in addition, these lines can be used by the classic trains which currently operate on our long-distance services. They can travel part of their journey on a high-speed line and then deviate off on to the west coast main line and various other lines, creating a much more interconnected network.

The noble Lords, Lord Stevenson of Balmacara and Lord Cormack, and, to some extent, the noble Lord, Lord Rodgers, raised concerns about the Chilterns and its highly valued landscape. We all value that landscape; I do not think there is any question about that. However, I think that we have also always understood that there are circumstances in which we have to weigh the significance of infrastructure projects against that value. We must mitigate any effects to the extent that we can. I listed earlier many of the mitigations. Looking much more narrowly at the Chilterns, I say to the noble Lord, Lord Stevenson, that, between Chalfont St Peter and Hyde Heath, which is a distance of 8.3 miles, of which 5.8 miles lies in the area of outstanding natural beauty, the route will be in a tunnel. To minimise the visual impact in the AONB, the following mitigation measures will also be taken: 3.5 miles in cuttings; 1.5 miles in “green tunnel”; 0.6 miles on viaducts; and 1.4 miles with embankments. This means that fewer than two miles of the 13 miles of the route through the Chilterns area of outstanding natural beauty will be at surface level or above. The noble Lord, Lord Stevenson, has asked why we cannot extend the tunnel. Unfortunately, that would require the construction of ventilation shafts and an emergency access station at Little Missenden. Weighing that damaging environmental impact against the current mitigations has led us to the conclusion that we have used tunnelling to the best effect.

[Lord Stevenson of Balmacara]

I am very sorry to interrupt the noble Baroness, and it is a very trivial point, but it would have helped if we had been able to have the meeting that I requested over a month ago. It has not yet happened and if it had, we could have explained this. This canard about having to open up an opening near Little Missenden is not what is proposed. The alternative, which I sketched out for her and which I am happy to present to her in more detail, provides for an opening, required under European law, to be within the 22 miles covered by the AONB. It is near Wendover—in fact, at Wendover Dean—it is agreed by residents, agreed by all the authorities around and does not affect the central part of the Chilterns. This point was raised by her predecessor in a debate more than a year ago, and I tried to correct it then. I am clearly not effective at doing that, so can we please meet?

[Baroness Kramer]

As we agreed earlier, I am looking forward to that meeting and I apologise. Because I am new to the department, it has basically been triage. I regret that we did not have the chance to have that meeting before this debate, but we will have it. As the noble Lord, Lord Stevenson, recognises, the course of the hybrid Bill will address many of these issues.

The noble Lord, Lord Cormack, was very concerned that HS2 is a London-centric project rather than one which will spread economic opportunity out across the country. I could make the case in the other direction— I thought that I had in my opening speech, as had the noble Lord, Lord Adonis, and others, in the course of their speeches. I pray in aid the noble Lord, Lord Smith of Leigh, who from his position in Greater Manchester has been able to represent to this House today the great potential that Manchester and the other great cities of the north and the Midlands have seen in this project.

They are using this opportunity in a very positive way, which perhaps is relatively new as a British approach to infrastructure. So often, we have built an infrastructure project in a silo and left it to see if anything good generates around it. In this case, the noble Lord, Lord Smith, and others are working within the various local authorities and within the various key cities. My noble friend Lord Deighton, too, is working with his task force in order to try to reinforce and support the process. This is a very different approach that will ensure that we garner the economic benefits.

A number of noble Lords, including the noble Lord, Lord Rooker, and the noble Lord, Lord Davies of Oldham, reiterated the idea of the noble Lord, Lord Heseltine, of development corporations. It is certainly true that the Mayor of London would be able to initiate them—that is already within his competencies. However, the Government are waiting to see how local communities in the areas that will be impacted by HS2 will wish to take these issues forward. It is within the concept of devolution that Whitehall should not always know best how each individual area should approach these questions, but I suspect that in many of the schemes and developments that develop, we will look to capture development gain in various ways. Indeed, the Government have already said that they expect all the stations to be built, essentially, with private money, which in and of itself is a development-gain process. So I fully appreciate those comments and I know that they will be studied closely as we go forward.

The noble Lord, Lord Howard of Rising, raised an issue that has been in some of the literature that has been coming through people’s doors and which I would like to take on. He argues that we are not at capacity, citing an example quoted by one of the campaigning organisations, that trains are only 52% full in the evening peak. I think he is referring to a Virgin long-distance train. Certainly, regional and commuter trains are incredibly heavily used. To remove that Virgin train from the train paths in order to allow expansion of regional and commuter traffic would be a drastic option, widely opposed by passengers. There is sometimes no easy trade-off between the issue of train paths and usage at particular times. I also point out that the evening peak is a very well spread peak. During the morning peak we are pretty close to anyone’s definition of being out of capacity as it is, never mind in the circumstances that we will face as we get to the 2020s.

Perhaps I may move on to thank those who spoke so effectively and with much knowledge in favour of this high-speed rail network project. The noble Lord, Lord Adonis, called on the spirit of the Victorian pioneers and the spirit of cross-party working. Both have to inform the way in which we move forward. The noble Lord, Lord Bradshaw, talked from his experience of actually running the four lines that go out of London. That is always an invaluable and incredibly practical touchstone as we move forward in these debates.

My noble friend Lord Freeman brought to us the experience of being the Transport Minister for HS1. That project gave us the confidence to move ahead with HS2, and the lessons that he is able to bring to this debate are therefore crucial. The noble Lord, Lord Berkeley, again reminded us of the freight conundrum that we face. In passing, he also reminded us that it is not just the Chilterns that have an issue but the area around Camden, Euston station and the HS1-HS2 link. We must appreciate and do everything we can to achieve the necessary mitigations. In this case, there is close working now between Camden Council and Network Rail, although many issues have yet to be resolved and answered.

The noble Lord, Lord Faulkner, provided a constant reminder of the lack of alternatives to HS2. The point was put more clearly by the noble Lord, Lord Snape, when he said: if not HS2, what? One alternative is likely to be an exceedingly intrusive motorway. I am afraid that there would be not just one six-lane motorway if we do not build HS2 but probably two. The impact of that on the environment, communities and areas of natural beauty would be something that this House would, frankly, not relish.

I cannot remember whether it was my noble friend Lord Cormack or my noble friend Lord Howard of Rising who talked about aviation as an alternative. Again, the noble Lord, Lord Smith of Leigh, hit the nail on the head; the discussion around aviation capacity is primarily around international capacity rather than around attempts to build up a domestic aviation network of much greater intensity, but I will obviously bow to the Davies commission as it considers capacity issues in the south-east.

I should say thank you to the noble Lord, Lord Lea of Crondall, because on this occasion and previously he made a point that was picked up by others about the cluster potential. That was echoed by the noble Lord, Lord Smith, from the perspective that he and Manchester are looking at development. My noble friend Lord Teverson shared with us reports from Kent of the change from a negative to a positive attitude because of the experience of the benefits of regeneration as a result of HS1.

I am sure that in this whole process there are questions that I have failed to answer. I am reminded that I am coming to my boundary of 20 minutes. I feel that I have had the opportunity to listen to an exciting debate, and if I have not responded to questions we will do so afterwards. Perhaps I may conclude by saying this: let us protect the Victorian spirit that built our railroads, but let us look for an infrastructure that is not Victorian but modern and 21st-century so that we can build the economy of the future. I thank this House and I formally ask that the Bill be now read a second time.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.