Economic Case for HS2 (Economic Affairs Committee Report)

Baroness Kramer Excerpts

Wednesday 16th September 2015 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I supported HS2 in government and I support it out of government. I will deal with just a limited number of the issues as I have just six minutes.

That trains today are 60% to 75% full and that there will be no new source of capacity is probably the most frightening statement for anyone in the railway industry to hear. The forecasts for capacity are among the most conservative that anyone could imagine in the industry. Our year-on-year experience already overwhelms those forecasts. Without HS2, I dread to think what we will do with passengers who need to travel when we get to 2026.

I shall address capacity in terms not just of seats, but of train paths. This August, the west coast main line was able finally to offer six to seven additional services from London to Blackpool via Shrewsbury, only off-peak. That was done only by the most strenuous reworking of that timetable. We are out of train paths. With so many cities in the Midlands and the north telling us that they need additional train services for their business communities to grow and to remain viable, the department and the industry would be most grateful to know which trains Members wish to take off to free up the train paths that are very evidently needed. They are coming to the department with very significant business cases behind them. We are out of capacity.

The alternatives offer only about one-third of the capacity that HS2 offers. Consider the impact of delivering those alternatives. They require virtually every tunnel, viaduct, bridge and embankment to be rebuilt, taking virtually every weekend, year in, year out, causing the most extraordinary disruption. We live in a society in which people travel on weekends, not just on weekdays. We have the experience of the west coast main line to go by. A £10 billion investment over 10 years, causing disruption virtually every weekend and indeed on a significant number of other days, and delivering almost no increase in capacity because it is so challenging to deliver on the existing lines—very many of which, frankly, Brunel would recognise—constitutes a huge challenge and does not deliver very much. Living with it in the interim would be a nightmare as it would in effect shut down business for a significant number of communities. Of course, this project matters for regeneration. Even the methodologies used by the department, which are dictated by the Treasury, and which I think most of us would consider underestimate the benefits and the cost-benefit ratio, demonstrate that it would deliver a cost-benefit ratio of more than 2.3. However, that assumes that passenger numbers are frozen three years after phase 2 opens in 2036. I do not think that anybody in this Chamber believes that that is a viable scenario, so we are looking at a cost-benefit ratio far more like 4.5 or even higher, and that is phenomenal. The systems that we use to assess cost-benefit ratios significantly understate major long-term project benefits, and that is a reality which I think many in this House understand.

There is an argument that this project benefits only London. The people who say that should talk to those driving growth in the Midlands and the north who negotiate with investors who will come in and build new businesses, because they argue that they need local connectivity. I will come to that, and it is absolutely crucial. When we compete for an investment that could be placed in Poland, France or Spain, we have something to offer that those countries cannot, which is excellent access to London, the largest financial, legal, PR, advertising and technology market in Europe. That tips the balance in a highly competitive environment. When we compete for every penny of investment we get, it is a question of whether it goes not to another part of the UK but to another part of the EU. That is absolutely crucial. I have heard this from people involved in the day-to-day hard negotiations, and I take their word for it.

It is also true that we must build local connectivity but these issues are not alternatives. I will enjoy hearing from the Government how they are progressing with the review of electrification and other programmes in the north but I am very aware that Network Rail struggles with skills, capacity and management issues. That is entirely separate from the investment in HS2. I honestly do not believe that this is an investment issue: it is a capacity issue within the current system. It has to be resolved but these are not, frankly, alternatives.

This scheme should have been built 15 years ago. There is genuine opposition to it. It would go through beautiful countryside and many people are appalled by that. I understand that. However, we are at the point where we simply cannot delay any longer. People need to move to live the lives that they want and to generate the economy that we need.