Five reasons the government should stick with High Speed Rail 2

Five reasons the government should stick with High Speed Rail 2.

It emerged recently that due to rising estimated costs, Labour would withdraw support for HS2 if the bill reaches £50bn.

Some within the Treasury have already suggested that the actual cost could go as high as 73bn. But rising costs aside, there are still plenty of valid reasons why HS2 is a worthwhile project.

So then, here are my top 5 reasons why HS2 should become a reality.

1. It would connect more than just London and Birmingham

With Crossrail being built and Crossrail 2 in the works, the addition of HS2 from London Euston would connect Birmingham/Manchester/Leeds with dramatically reduced travel times. As current plans stand, all ‘Express’ trains from London’s larger airports would connect in at least one place to the Crossrail networks, which in turn would allow speedy connections to HS2. There are even proposed plans to directly connect Heathrow and both HS1 and HS2.

2. It could help our ever growing need for increased air traffic capacity

As the debate rages on with regard to the future of our airports, the addition of HS2 would provide the northern airports with a fighting chance, should our southern airports be dramatically expanded in the coming decades. Phase 1 (London to Birmingham) is planned for 2026. If a proposed third runway was built at Heathrow, this would reach fruition at the same time, if not later. Plans for an airport in the Thames Estuary still have sketchy estimates for both completion dates and overall costs. With a government decision regarding airport expansion not due until 2015, it would seem short sighted to completely disregard rail development as a means to aid increased passenger numbers.

Birmingham airport currently serves around 27 million passengers a year. With the combination of their own expansion plans and the addition of HS2, this figure could rise almost three fold to 70 million per year. With HS2, similar developments could be made at Manchester airport, as well as Leeds-Bradford, meaning flights from the continent and beyond would have quick links right into the centre of London.

3. Labour should be seen to be ‘pro-North’

As a party with strong northern support and roots, it seems odd that a Labour Party seeking election in 2015 would alienate themselves from their core voters by suggesting that minimising the North-South divide isn’t worth the investment. The cost may be increasing incrementally for HS2, but Labour shouldn’t feel the need to take an absolute position on what could be considered a relatively minor policy issue going in to the next general election.

With voters more concerned on topics such as the economy, the NHS and Europe, being decisive on only HS2 could also be seen to show that Labour is still indecisive when deciding their big policies heading into 2015. Hopefully come conference time Labour will start setting out their agenda, and HS2 can still be considered a possibility, with no fixed decision, giving Labour freedom to manoeuvre should they be elected to government.

4. Britain needs to keep up with European railways

Britain has one of the lowest electrification rates for its railway system compared with the other countries within Western Europe. TGV routes in France, ICE in Germany and the new high-speed line connecting Madrid and Barcelona are all significantly quicker than inter-city alternatives in Britain. Our nationwide rail system is approaching capacity, so like our airports, expansions will soon be necessary.

Plans are set to go ahead that would expand the range of destinations available to rail passengers around Europe. Direct routes to and from London being actively considered include Amsterdam and Frankfurt. The benefits of international trains over planes range from city centre to city centre travel, reduced security and check-in times, and a more environmentally friendly method of transport.

If HS2 were approved it would mean train times between Manchester/Leeds and other European cities would be no longer than flying, and that, coupled with the added benefits of trains, could see it become attractive to business people and see business opportunities increase in the north of the country. The North-South divide need not be solely healed by London and South East England; the north of the continent may also provide a pivotal role in bringing added economic benefits to northern Britain.

5. Massive projects can have positive effects on the economy

From increased employment, to the positive impact of the fiscal multiplier effect, large scale engineering projects can have a vast impact on a nation’s economy, even before the added business opportunities created by building HS2 have taken effect. HS2 could not only bring jobs to the north when it is completed, it can also help to create them in the process of building HS2 and updating existing railways.

In relation to point three, and Labour’s need to be more pro-North, backing projects such as HS2 could be a policy which help to create employment in areas that have suffered during the recession.

Whilst it is not a certainty that a significant increase in government spending can lead to greater economic growth, it has occurred beforehand in situations such as the recent London Olympic and Paralympic Games, where economic benefits outweighed the cost by around £1bn.

Whilst question marks still hang over the longevity of the Olympic legacy, 31,000 jobs have been created and there has been £5.9bn in additional sales as a result of hosting the games. With HS2, it would be hoped that the ‘legacy’ of this project would be much more long term than that of the Olympics. The Olympics lasted 2 weeks; HS2 should last for generations. Fares alone are predicted to generate £36bn over a 60 year period.

The argument against the cost of HS2 is a legitimate line of thought, however, when put in perspective, it no longer seems so outrageous. In the first three months of 2013, spending per head on HS2 equated to £1.88, while spending on the NHS was £519.11. HS2 should more than make up its costs in the long term, the question is however, would a government be brave enough to contribute billions of pounds to HS2 at a time when other departments on Whitehall are facing cuts?

For this reason, HS2 still remains on the drawing board, and until the current government stop their internal squabbles, it will remain that way for the foreseeable future.

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14 Responses to “Five reasons the government should stick with High Speed Rail 2”

  1. Garry

    there’s a great deal of investment, (past what has already been set aside), in the existing infrastructure thats needed before this ‘nice to have’ should be seriously considered.

    The 30 minutes less that it may take to get the occasional well off commuter from Manchester to London doesn’t significantly help the north at all. You have the usual London-centric point of view. Improving our existing services is whats needed. Its not all about connecting to bloody London!!

  2. Kevin Leonard

    I would consider an estimate of £73 billion to be a minimum cost of HS2 with the ultimate cost (if it ever got the go ahead) to be around £120 billion and after completion the only people to benefit from it would be the “preferred”franchise holder I.E whichever company greases enough Westminster pockets with directorships or just pure corruption CASH donations to party and individual.

    Personally I believe they should invest £50 billion into upgrading every line whilst taking them back into public ownership when the franchise ends. Just as the east coast mainline is providing a profit to the treasury so too the rest of the network should be working For the people as opposed to the shareholders of mainly foreign owned companies.

    Stop the rip off now. B.B.B.R.

  3. DanFilson

    Since none of us is a cost accountant with access to the current costings of HS2 I for one have no idea whether the cost will be £33bn, £46bn or what. One things is sure, we must improve our cost management of very big projects. .I too support HS2 and would rue its abandonment by Labour.

    1. HS2 will connect not just London and Birmingham. Indeed so. But the benefits of releasing track space on the West Coast mainline have ripple effects to the whole of rail-borne trade activity, not just the cities on HS2 routes. Given the benefits to northern cities it is surprising the second stage of HS2 is not more planned and construction begun on it much sooner. The late start won’t help alleviate the current depression but could help the northern economy generally – if local labour is engaged rather than imported.

    2. I’m not sure Birmingham is the alternative airport that I’d favour. Why not Manchester Airport? In any case why not cut down the internal air flight volume of traffic by ensuring airlines pay proper air fuel duty and take-off/landing charges so that our airports have more capacity for long distance flights. It’s nonsense we are losing out on traffic from China to European nations because low capacity local flights are clogging runway slots.

    3. We must be seen to be pro-north. Sure. But more importantly we must be effective in being pro-north. Being seen as such will follow. HS2 is, in my view, an effective project (once costs are brought under control). But it will take more than HS2 to get the economy balanced north-south. We must also electrify at pace all the feeder lines, and on some routes relay track which is currently of the light railway roller-coaster quality.

    4. I agree on matching the state of European railways though it has to be said that our network of lines is massively larger than that of France or Germany, though very dated. But to make use of HS2 really effectively I wonder whether it would not make more sense to run the HS2 route under instead of alongside Euston Station (saving a lot of land acquisition) Waterloo East (again probably at rovel) and London Bridge and then on to the HS1 routeEuroand on through to say Ebbsfleet and connection with the Eurostar services to Europe. This would enable some passengers from Paris or Brussthe Eurostar lines to get by a single train to northern England and Scotland. It is silly for Eurostar only to terminate at St. Pancras International.when it should connect wth the north. A line that carries Eurstar through London makes more sense than having two terminus stations in north London half a mile apart.

    5.. Massive projects have a beneficial effect on the economy provided they don’t overheat it and can be financed and not at the expense of other equally or more worthwhile projects. Political and economic cost-benefit analysis is not a strong point of government, and certainly no more is it the province of private enterprise which as we all know operates purely for the interests of shareholders (and even then notby fair-handed) measures)..

  4. SadButMadLad

    1. HS2 will connect more than just London and Birmingham. True. But not for decades to come. By that time a new form of transport is likely to have been invented that is speedier still than HS2. I’m thinking teleportation, but even being serious, it’s likely that HS2 will be a slow coach by the time Leeds and the rest of the country are connected. So nope, not a valid argument.

    2. The reason why Heathrow is such a popular airport has nothing to do with internal travel which is the only reason for HS2. Heathrow is an international hub so very little traffic will go via HS2. HS2 is designed to stop people using airplanes. So why do you think that it will increase airport traffic. If HS2 is between London and Brum, why would a Londoner travel to Brum to get a plane when they can go to Heathrow, Gatwick or Stanstead. Your argument just falls to pieces when you actually think what people will do. So nope, not a valid argument.

    3. Labour is already pro-north. It doesn’t need any more help. Labour already ensure that the North East has lots of public sector jobs paid at national rates. The people in these jobs will tend to vote Labour as they don’t want to lose their jobs if the Tories got in and cut costs. Anyway, HS2 does not make it easier for people to move north, it makes it easier for people to move south to London where the money is. HS2 will just turn Birmingham into a commuter city for London, not vice-versa. And just a little point, why should Labour be pro-north. Shouldn’t Labour by pro the whole country? So nope, not a valid argument.

    4. Nope, we don’t need to spend money on our railways just to keep up with the Joneses. And why does HS2 magically make it easier for Londoners to travel to Amsterdam and Europe? Or even the rest of the country? Why would a person in Birmingham take a train to London then change to go to Amsterdam when they can fly direct? However we do need to spend money on the trains as they are near capacity. To really fix that you need more trains and longer trains. And we also need to suck less out of the train operating companies. Currently they have to give a large percentage of their income to the government who then reallocates it as subsidies to other train companies. Why bother with this money merry go round and just really privatise the train operating companies. But making a few trains run 10 minutes faster does nothing for capacity.So nope, not a valid argument.

    5. Massive project do have an effect on the economy. But we need the economy to be affected now, not decades in the future when we’ll probably be in a boom. Huge government projects take years and billions just to get started, and then when they actually progress always are over budget and over time. The Olympics being a classic case. Originally budgeted for £2.5b, they turn out to have cost more like £10b. Likewise, HS2 was estimated to be a few billion and is now rapidly turning out to cost more than £80b and that even before it’s started. So while a HS2 costing a few billion might have a case for economic benefits, one costing £80b has a lot less of an argument. So nope, not a valid argument.

    All in all, a poor case for promoting HS2.

  5. guy

    These are good points but miss the main one. The cost is insane. Its just a railway, 19th century technology. How can it cost about £300 million a mile? Just stand on a railway bridge and see if you would pay that sort of money if were yours. Even a tenth of this would be expensive. ITS a RIP OFF

  6. JR

    Dan Filson is right – this is really about the ability of the Government to get project and construction costs under control.

    This is true for HS2, motorway expansion or anything else. The review being undertaken by John Armitt is about this problem (asked for by Ed Balls), and the appointment by the Tories of Lord Deighton acknowledges the same thing: We have a real problem with infrastructure delivery in the UK. Personally I think this is because Government out-sourced all its expertise in the 80’s, but wider competition issues in the construction sector may also play a role.

    The aims of HS2 are admirable, and thinking beyond the next life extension for our existing network is worthwhile. But if the costs which are being discussed reach such proportions that they could transform the existing network several times over it may continue to be a hard sell.

  7. swatnan

    A timely reminder why we should go ahead with HS2. The Victorian dream was to bring the railway to every corner of Britain; our dream should be to get us there faster.

  8. Duncan

    This is a really sloppy article. Many of the posters have highlighted its basic flaws but to reiterate: HS2 will have minimal effect on aviation; there are quite possibly much better ways to be pro-North (as noted, HS2 is rather pro-London); you can quite easily have more electrification (and we are) without high-speed; and while massive projects do have large economic effects that doesn’t mean that just throwing masses of money at any old thing is a good idea.

  9. Sandy

    The difference between spending on HS2 and on the NHS is that the former is a capital investment. The government can create wealth not just spend it – because it will increase the productive capacity of the economy, it is not necessary to “find” the cost of HS2 in the same way as it is necessary to “find” the cost of additional NHS spend – you can call it borrowing if you want, but ultimately it is simply an increase in overall national wealth.

  10. David

    To me £36bn of revenue over 60 years is not an impressive figure. Assuming today’s prices, that equates to £600m per annum. Assuming a 50% gross margin that implies £300m to cover financing costs. Even if we assume long term gilt financing costing (very generously) 3%, that suggests only £10bn of capex can be supported. Not an impressive return on any of the projected capital costs.
    To turn the question round, how many journeys are required for the line to earn £600m. Let’s assume a fare of £100 (incidentally not competitive with air travel where even after taxes the cost of the airport infrastructure is fully financed) that implies 6 million journies per annum. Or 16,500 each and every day. Or 1000 an hour every hour for 16 hours. Strikes me as a tad optimistic.

    Spend the money on less flashy incremental line upgrades. Double track Coventry to Birmingham. Link WCML to the GWML at Willseden/Old Oak to put a link to Heathrow. Build a south west rail link to Heathrow etc.

  11. Anonomous

    HS2 cost: £32,000,000,000+.
    Money needed to get The National Health Service back up and on track: £25,000,000,000.
    What is The Government thinking. The choice seems pretty clear to me.

  12. george meikle

    it is intended for on line investment nothing else it is not wanted down south a white elephant there is no industry in this country to speak of we are in shut down all production is in china and the far east no real jobs have been created and never will only cheap labour jobs subsidised by the working tax payers a pain in the arse rail network that will destroy lots of homes and townships on its build a blot across the landscape to think otherwise is viewing with rose tinted spectacles

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