Andrea Leadsom MP: High Speed Rail 2 is flawed - There are better ways of delivering improved transport links at a lower cost

Andrea Leadsom is MP for South Northamptonshire and a member of the Treasury Select Committee and replies here to the argument made earlier in the week here by Transport Minister Theresa Villiers.

At a feisty debate in Parliament last week there was universal agreement about the need to improve Britain’s transport infrastructure! But that’s where the consensus ends - and I for one am sick and tired of the debate on High Speed Rail being trivialised into a debate on Southern Nimbys versus the poverty stricken North.

The debate should be about how best to deliver badly needed infrastructure and ensure a re-balancing of our economy with a private sector led recovery across the UK.  HS2 would cost each family in Britain more than £1,000, so it must be properly scrutinised to deliver not just extra capacity, but also the value for money that taxpayers are entitled to expect for their money.

I think HS2 is flawed in three main areas; the business case, the environmental case and the claims about job creation and the potential for regeneration. HS2 Ltd claims a net benefit ratio that includes the wider economic impacts of 2.0 - this means £2 of benefit for every £1 spent.  This is about the minimum return that could be expected from a rail project and far below the bar set for road projects. Even this modest claim makes enormous assumptions.  Specifically, a core and ludicrous assumption is that all time on train journeys is wasted, and therefore that every minute of a train journey that is saved can be given a value in pounds. This wouldn’t matter so much except that the journey time savings account for over 50% of the £20 billion of total economic benefit expected from the project!

Passenger forecasts are another major assumption within the business case, relying on a 216% rise in demand for train travel. The Department for Transport’s own National Travel Survey shows that overall transport demand is no longer growing with GDP. Eurostar’s passenger numbers in 2009 only reached around a third of the level forecast at the time of building the HS1 link. The Department for Transport appeared before the Public Accounts Committee over HS1, and assured them that lessons had been learned and any future major project would factor in more severe downside assumptions...

In cash terms HS2 will never pay for itself.  Once built only a third of the total claimed benefits will be captured through fares.  The value of the net revenues once it has been built, forecast to be fares of £14 billion less operating costs of £6 billion over a 60 year project life, will cover less than half of the capital costs. Between 2009 and 2015, the DfT expects to have spent around £1 billion just on preparing the way for High Speed Rail. At a time when families up and down the country are feeling the pinch infrastructure projects must, now more than ever, offer value for money.

Second, the environmental impact: HS2 Ltd themselves say that this project is at best, carbon neutral. They predict that 65% of passengers will either transfer from existing rail services, where faster trains inevitably increase carbon emissions, or are additional ‘new’ journeys as a result of the faster trains, which also increases emissions. The shorter journeys by air that will transfer to HS2 will ironically provide more capacity at our regional airports for cheaper long haul flights. It is estimated that the modal shift from car to high speed train will be 7%. HS2 Ltd’s own forecast is that M1 traffic volumes will only reduce by 2% as a result of HS2. There will also be a significant environmental impact during construction, as well as to the English countryside, wildlife and historic sites. I won’t go into this in detail here, but the impact on communities and countryside is hugely damaging.

Third, the prospects for job creation and regeneration. The Department for Transport forecasts that HS2 will create 30,000 new jobs. 9,000 will be construction jobs and likely to be temporary. The rest are expected to be skewed towards property development and retail near to stations.  Up to 70% of these jobs will benefit London, where Old Oak Common is believed to be the best location for regeneration. Research done into capital expenditure in the wider economy suggests that the cost to create one job in the first phase is around 4 times what experience elsewhere would predict...

HS1’s experience has not yet delivered the predicted regeneration of towns like Ashford. In fact, traditional commuter trains are now in some cases slower and more packed than ever while the expensive HS1 thunders by half empty.

I think that there is a viable alternative to HS2 – I have urged the Government to carry out an independent evaluation of Rail Package 2. RP2 claims to provide 135% extra capacity extendable to 176% and a significant advantage of it is that it can be introduced incrementally as passenger demand increases. RP2 would require lengthening all Pendolino trains to 11 cars from the current mix of 9 and 11 cars, replacing some commuter trains with 125mph stock so as not to delay faster trains, dealing with bottlenecks at seven specific points along the line, adding platforms at Euston and Manchester and considering laying more track into Birmingham.

RP2 claims a benefit cost ratio of 1.9 (versus 1.6 for HS2 London to West Midlands excluding the ‘wider economic impacts’). It can be delivered far quicker than HS2, dealing with the problem of over-crowding now rather than leaving the commuters of Manchester, Birmingham, Rugby and Milton Keynes to wait for relief until 2026. The danger of overestimating demand is also removed. RP2 can be implemented incrementally; it’s not all or nothing, problems can be dealt with as they arise. It is of course, around half the cost of the first phase of HS2!

Supporters of HS2 should stop passing off opposition as NIMBYISM.   There are legitimate questions about value for money and many organisations are now questioning the business case including the TaxPayer’s Alliance, the Adam Smith Institute, the Institute of Economic Affairs, Friends of the Earth, the Sustainable Development Commission, rail experts and the Countryside Alliance. We must have a robust debate on High Speed Rail. Taxpayers should not be picking up the tab for a project with an uncertain outcome until all legitimate questions and concerns have been properly addressed.