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”
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.
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.
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.
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.
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.