The Chamberlain News

Peers slam HS2 ‘vanity project’ and question economic growth forecasts

The House of Lords Economic Affairs Committee has hardened its opposition to HS2 in a report claiming the business case for the £50 billion project doesn’t add up and will not deliver promised growth and jobs in the Midlands.

Committee chair Lord Hollick, a Labour peer, told a Lords debate on the economics of high speed rail that while the overall cost of the scheme would be paid for by taxpayers, most of them would derive no benefit whatsoever from HS2.

He noted that when the Chancellor George Osborne appeared before the committee he said that, despite the high cost of HS2 and the controversies over aspects of it, each generation had a responsibility to take big controversial decisions to improve the national infrastructure, and in his view, HS2 was one such decision.

Lord Hollick’s message for the Chancellor was that it would be more sensible to make those benefiting most from the railway, principally business travellers, contribute more towards the cost through higher fares and relieve the burden on taxpayers.

Although Transport Secretary Patrick McLoughlin has said that long-distance services into London are already at capacity, Lord Hollick suggested that this was not borne out by statistics which showed that long-distance services that arrived in London between 7am and 10am had just 57 per cent seats taken on average.

On building HS2, Hollick agreed that investment outside London was long overdue, but the committee was not convinced that the Government had shown that HS2 was the best way of stimulating growth in the cities of the north and the Midlands.

He said 33 per cent of HS2’s net transport benefits worth £19.3 billion were derived from the value placed on non-work travel time which was based on a survey of motorists carried out in 1994.

This cannot be the best basis on which to assume almost £20 billion-worth of benefit for a major rail project.

Fellow committee member Baroness Blackstone (Lab) warned it would be “dangerous” to assume that demand from business travellers would continue to rise exponentially.

The mere fact that HS2 is planned to travel at a maximum speed of 400 kilometres per hour suggests that it has become something of a vanity project.

Criticism from Labour peers is out of step with the party’s official line, reaffirmed following the election of Jeremy Corbyn as leader, which is supportive of both the first phase of HS2 from Euston to Birmingham and the second Y-shaped route from Birmingham to Manchester and Leeds.

HS2 is forecast to boost the West Midlands economy by £4.1 billion each year and create more than 51,000 new jobs while providing extra capacity and better connections to London and the north.

Birmingham council’s Curzon masterplan details land use around the HS2 city centre station which would create more than 14,000 jobs, 600,000 sq metres of new employment floorspace,2,000 new homes, and boost the economy by £1.3 billion a year.

The committee’s deliberations came amid a growing row over forecast long delays in rebuilding Euston station to accommodate HS2.

HS2 Ltd, the company behind the rail link from London to northern England, last week said the redevelopment of the station would finish in 2033 – seven years later than planned.

Local MP Sir Keir Starmer (Lab Holborn and St Pancras) said those living nearby faced “decades of blight from construction.

Lord Adonis, the former Labour transport secretary who initiated HS2, and now sits as a member on the HS2 board, argued that HS2 would treble west coast main line capacity and suggested that without HS2, “we will most likely end up spending as much on upgrading the three existing Victorian main lines from north to south…”

Adonis told fellow peers that overseas high-speed networks had seen huge regeneration dividends from new stations, citing examples in France.

Former deputy prime minister, Lord Prescott (Lab), argued that the northern extension was the important part in rebalancing the economy.

He raised concerns with delays, with the line estimated to arrive in the north in around 2035.

Liberal Democrat peer, The Earl of Glasgow, criticised the economic affairs committee report as “rather negative and depressing”.

He argued that if a new railway line was to be built, then “it is only sensible to build a modern high-speed one.”

Baroness Randerson (Lib Dem) argued that rather than the planned 360km per hour, if the trains ran at 300 km per hour that would save 50 per cent of the cost on trains.

Responding to the debate, the Parliamentary Under-Secretary of State, at the Department for Transport, Lord Ahmad of Wimbledon, agreed that high-quality transport infrastructure was essential for future prosperity.

Even with over £50 billion of planned transport investment over the next six years, the railways will be overwhelmed.

He noted that the West Coast Main Line between Euston and Glasgow via Birmingham, was now the busiest mixed-use rail line in Europe, and despite an extensive £9 billion upgrade programme completed in 2008, “train paths on this line are effectively full.”

He argued that HS2 could triple the number of seats out of Euston, and unlock capacity for freight on the west coast main line.

The minister spoke of the additional skills and jobs it would provide across a wide range of disciplines, calling the National College for High Speed Rail an integral part of the Government’s strategy for delivering a national high-speed rail network.

Returning to the issue of rail fares, the minister confirmed that it would be a decision taken by future Governments.

On the impact across the UK, Ahmad reaffirmed that the full Y-network would reduce rail journey times to Glasgow by 30 minutes and Edinburgh by 45 minutes.