Posts Tagged ‘HS2’

In answer to a parliamentary written question from Cheryl Gillan MP, the transport minister Simon Burns has revealed exactly how many people are currently employed on HS2 – and how many more are expected to be employed in the coming years:

“HS2 Ltd currently directly employs the equivalent of 246 full-time members of the staff, by the end of 2013 this is expected to rise to over 500 full-time members of the staff. In addition, HS2 Ltd employs the equivalent of over 1,200 full-time contractors and a further 118 members of staff at the HS2 Ltd development partner. To date, HS2 Ltd’s contractors have enabled over 800 graduate trainees and apprentices to work on the project.

“We expect HS2 Phase One to directly create 9,000 jobs in construction and 1,500 permanent jobs in operations and maintenance. Up to 30,000 indirect jobs are also expected to be supported by HS2 in station redevelopment areas in Euston, Old Oak Common, Birmingham Interchange and Birmingham Eastside.

“We expect HS2 Phase Two to directly create 10,000 jobs in construction and 1,400 permanent jobs in operations and maintenance. In addition, up to 70,000 indirect jobs will be supported around the proposed stations.

“Some regional groups foresee even higher levels of job creation. The Core Cities group predict that HS2 will actually underpin the delivery of 400,000 jobs within the cities and 1 million in the wider urban areas. Centro estimate that, in the West Midlands alone, HS2 could support a £1.5 billion increase in economic output, an extra 22,000 jobs and an average wage increase of £300 per worker per year.”

By way of some comparison, the Highways Agency (which runs the strategic road network carrying more than a third of all traffic) annual report shows that for the financial year 2011-12 it employed 3,512 permanent and temporary members of staff excluding contractors and consultants.

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Alongside the Action for Roads document published earlier in the week, which outlined the government’s spending plans for roads in the next parliament, out came the latest road transport forecasts looking as far ahead as 2040. This is a critical piece of work and not one for the faint of heart, but at its core are assumptions about three key variables:

  • The price of fuel
  • Population growth
  • Economic growth

Taking various positions on these, the analysts have come up with a range of estimates for both traffic growth and congestion growth. Assuming the central projections for each variable the department is now forecasting:

  • 39% increase in car traffic across all roads by 2040
  • 80% rise in van traffic
  • 19% growth in HGV traffic

They then translate that into congestion which, based on the central estimate, will be up 114% on the strategic roads by 2040 and 61% across all roads.

There are at least two other important things in the report worth noting.

On CO2:

“Up to 2030 CO2 emissions are projected to decline by 20% before starting to rise again due to increasing travel demand. Without further policy intervention and improvements in fuel efficiency, this would imply a 15% reduction on 2010 levels by 2040.”

On HS2:

“HS2 Ltd forecasts that around 7% of its travel demand will be shifted from road travel. In 2037 this means that around 25,000 trips per day, equivalent to 0.9% of long distance inter-zone car trips will be shifted to HS2. This 0.9% is equivalent to one year’s traffic growth and highlights that the impact of HS2 does not affect the key facts and conclusion of this document.”

The RAC Foundation welcomed the plans detailed in the Action for Roads document to invest in motorways and other major routes, but by 2018 more money will be being spent building HS2 than adding capacity to our strategic roads.

And this road transport forecast seems to lay bare the truth about yet another shortcoming of HS2. While drivers and hauliers will stew in ever lengthening jams, ministers are prepared to commit to a £50 billion scheme for the rich that will barely dent traffic growth. So much for letting the train take the strain. For most people, most of the time, the car is public transport – and so it will remain. It’s hard now to see how HS2 stacks up at any level.

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The following article was written by Sir Christopher Foster as the preface to the an independent review into the economic case for HS2 by Chris Castles and David Parish. (They are also authors of a joint letter arguing against HS2 printed in the FT today.)

Sir Christopher is a former chairman of the RAC Foundation but he started his career at the Ministry of Transport where he was chief economist and special adviser first to Barbara Castle and then Dick Marsh.  He then held a number of positions at the London School of Economics, including Professor of Urban Studies and Economics, before joining Coopers and Lybrand where he became Public Sector and Economics Partner and Adviser to the Chairman (first of C&L then of PricewaterhouseCoopers (1988-1999). Sir Christopher’s other private sector appointments include serving as member of the Board of Railtrack (1994-2000).

“Almost fifty years ago, Alec Valentine, then chairman of London Transport, asked me to look at the economic case for what is now the Victoria line. The Treasury had to be persuaded that though it would require a subsidy – not a huge one – it was worthwhile. I remember summarising the argument in two articles on The Times’ editorial pages. The Treasury was persuaded. Londoners have used the Victoria line for many years. Travel in London without it now seems unthinkable.

“If only London Transport had gone onto persuade the government to let them build Valentine’s second favourite, the Hackney–Chelsea line, or a version of Crossrail had been built, say, twenty years ago, how much better off Londoners would be. But two factors, as well as economic stringency, have intervened: politics and ‘optimism bias’ – a tendency to look on the bright side that is wholly out of place in serious objective analysis.

“Valentine and his staff who helped me were scrupulously and deliberately honest. Costs were never underestimated and benefits were rigorously analysed. Unfortunately, over the years political considerations and optimism bias, which can be accidental or deliberate, have played an increasing role in project appraisal of major projects. An example is the cost of the London Olympics 2012, which was grotesquely underestimated – some would say deliberately – to secure the event for Britain. Another example is Ministry of Defence procurement where, repeatedly and persistently, the costs of projects have been seriously underestimated and the benefits overestimated to the point where some have been a complete waste of money. Evidence for both comes from the National Audit Office (NAO). Not only has such wasteful expenditure over broad tracts of the British economy been misguided but, over the years, it has been a powerful contributor to the current fiscal crisis.

“I doubt one could find a worse current example than High Speed 2 (HS2) of a failure to make a credible case for a major project. As a surviving pioneer in the use of cost–benefit analysis to evaluate projects I have over the years known many economists active in this field. I do not know one economist I respect who believes in the case for HS2.

“I believe Chris Castles and David Parish’s admirable summary will persuade any reasonable reader why this is so. It is followed by their report which sets out clearly the arguments and evidence supporting the conclusion that there is no economic case for HS2. I have known both for many years and I often worked with them in the past. Their experience of project evaluation in many countries around the world is formidable.

“Let me end by briefly explaining why HS2 is a bad project. The main reason is that it is not needed. The existing network can carry all the forecast traffic; even if one were to accept – as the report demonstrates one should not – the optimistic traffic forecasts presented by the Government. The benefits of faster journey times have been greatly exaggerated by the false assumption that time spent by business people on trains is wasted. HS2 will divert only 1% of traffic from the motorways competing on the line of route. Neither will it reduce the flights at London airports. HS2 will be at best carbon-neutral in its environmental impact. But it will generate new traffic which will harm the environment. In addition, a new line across the British countryside will have a very damaging effect on the environment wherever it is. The claims of large economic benefits to the regions are unproven, certainly exaggerated.

“Experience in other countries suggests it is more likely to benefit the capital London than the regions. Far greater economic development benefits could be achieved by a balanced programme of complementary investment in high-priority rail and road projects.

“The overall impact of proceeding with such a misconceived scheme will be counterproductive. Now, more than ever, is the time when limited funds for public investment should be spent wisely and on the basis of a careful, transparent review and analysis of the relevant evidence. However, as the report explains, the evaluation that has been done is not only deeply flawed in the respects already shown, but it also breaches many rules laid down in the Treasury’s Green Book on project evaluation. For all these reasons the HS2 project does not live up to the claims that have been made for it. As the authors show, the costs are likely to exceed the benefits substantially.

“These benefits will only be realised, the Government concedes, if well over half the capital costs are met by the taxpayer. The report argues that this is a gross underestimate of the likely burden on taxpayers. Moreover, the irony of the situation is that the people likely to travel by high-speed train, which the taxpayer will be subsidising, are assessed as having average incomes of £70,000. Most will be businessmen.

“The Government should recognise and face up to these shortcomings. It should explain to Parliament and the public the difference these errors make. It should cancel the project.”

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By Professor Stephen Glaister, director of the RAC Foundation.

The Coalition government has, quite rightly, made strong commitments to delivering new, high quality infrastructure and to doing that soon.

This includes roads and railways. The Secretary of State for Transport is in the process of announcing a number of important decisions. There are number of rail schemes contained in “the biggest rail investment programme for a century” in addition to High Speed Rail; a number of new national and local road schemes; not to mention the development of a national roads strategy and the announcement of the outcome of the  “feasibility study” of new funding and ownership models for national roads.

Yet there is no stated policy context for these decisions: by what criteria is the Secretary of State deciding to allocate the desperately scarce publicly funded capital between the competing possibilities? The government has committed to producing a series of National Policy Statements (NPS, see the explanatory note below) which would have helped, but we have been promised the one on roads and railways (“surface networks”) for years and it seems to have sunk without trace.

On more than one recent occasion the Secretary of State for Transport has shown no knowledge of or interest in the concept of a National Policy Statement—although he was keen to outline his choices of specific nationally significant road and rail schemes. This can only be taken as evidence that officials and the Department for Transport as a whole now see announcing projects as a higher priority than developing a national policy context. He did not seem keen on the idea of any kind of strategic review.

For schemes of national significance delays caused by the planning process is one of the fundamental obstacles faced by both this government and its predecessor (the other being funding—how it is going to be paid for).

The planning approval for Heathrow T5 took years (it saw the longest public inquiry in British history) because a debate about a specific scheme became hijacked by a dispute about high level national policy. Similar things have happened with inquiries into road, rail and port schemes. In the attempt to rationalise this and speed things up the Labour government passed the Planning Act 2008.

Under this Act the government publishes for general consultation a statement of national policy in a particular area. After the public have had a say it will, after revision, be submitted for approval by Parliament. Once approved, if a specific application for a “nationally significant infrastructure project” is consistent with its relevant NPS, the policy underlying the project cannot be an issue when the application is examined. And there are clearly defined time limits within which a decision must be reached.

This system was adopted by the Coalition government: the only major change being to transfer responsibility for final decision from an Infrastructure Planning Commission (which was wound up) back to ministers.

The government has designated six NPSs on energy, one on ports and one on waste water. One on hazardous waste is promised soon.  It has probably attempted several drafts of an NPS on roads and railways but it has never published one.

It is a characteristic of large road and rail schemes that they tend to require significant financial contributions from the Exchequer (from you and me).  Parliament and the general public deserve to know ministers’ views on what problems they are trying to solve with our money and how they think the particular schemes they are promoting will help.

There are other interests. The government is—rightly—keen on attracting private funds to invest in transport infrastructure: for instance in major rail freight terminals and the A14 road improvement scheme. But why would a private enterprise risk wasting endless time and money on promoting a scheme in the knowledge that it might fall foul of some unannounced national planning policy and without the assurance on timely decisions that the NPS system is designed to provide?

Maybe this does not matter: there are (sometimes cumbersome) parliamentary procedures available for railways. The surface transport planning process has not yet ground to a complete halt, though the going may become harder when large and controversial schemes come up for decision.

This integrated transport policy seems destined to go the way of all previous attempts. We will muddle through as we always have. But, surely, this is a becoming a great missed opportunity?



An explanatory note on the Planning Act 2008 by Ian McCulloch, Bircham Dyson Bell LLP

The Planning Act 2008 introduced a new regime for authorising nationally significant infrastructure projects (NSIPs), as defined by the Act.

National Policy Statements

A central element of this new regime is the concept of National Policy Statements (NPSs).  An NPS is a statement by the relevant Secretary of State setting out Government policy in relation to one or more specified descriptions of development in the fields of energy, transport, water, waste water and waste.

An NPS may specify the amount, type or size of development which is appropriate nationally or for a specified area; the criteria to be applied in deciding whether a location is suitable; the relative weight to be given to such criteria; the identification of one or more locations as suitable (or unsuitable) for specified development; the identification of one or more statutory undertakers as appropriate persons to carry out such development; and the circumstances in which it is appropriate to mitigate the impact of specified development.

The idea is that, if a specific application for an NSIP is consistent with its relevant NPS, the policy underlying the project cannot be an issue when the application is examined.

From an applicant’s/developer’s perspective, it is therefore desirable to have an NPS in place providing policy support for the specific proposal.  More generally, the existence of NPSs should be facilitating the whole agenda for infrastructure development and implementation.

The previous Government indicated its intention to produce 12 NPSs across a range of industry sectors.  The Coalition Government has designated eight NPSs – six on energy, one on ports and one on waste water – and a ninth awaits designation – hazardous waste, which we could expect to see soon.  The NPSs not yet made are for water supply, for roads and railways (the so-called National Networks NPS) and for airports (which presumably now has to await the outcome of the Davies review into capacity in the south east of England).

Consultation on NPSs and Parliamentary Scrutiny

The Secretary of State must carry out public consultation in relation to each NPS and must have regard to responses to such consultation.  In preparing an NPS the Secretary of State must have regard to the objective of contributing to the achievement of sustainable development.  Draft NPSs are subject to formal sustainability appraisals.

NPSs are also subject to a form of parliamentary scrutiny. The SoS is obliged to lay a draft NPS before Parliament.  In the House of Commons, either an ad hoc Committee or the relevant Select Committee will call for evidence, scrutinise the draft NPS and publish a report on it.  In the House of Lords, an NPS is debated in a Grand Committee and also on the floor of the House, if called for.

The Government must consider representations made during the consultation, any committee recommendations and any resolutions of either House of Parliament.  It must then lay before Parliament a statement setting out the Government’s response to the resolution/recommendations before amending the NPS and must also allow the Commons 21 days to have a chance to disapprove of the NPS before designating it if no such disapproval is forthcoming.

Process for Development Consent Orders

When an application for a Development Consent Order (DCO) is submitted to the Planning Inspectorate (PINS), PINS has 28 days to accept or reject the application.  PINS may reject an application if, for example, it considers the content not to be of a satisfactory standard or if it considers that the pre-application consultation has not been adequate.

When an application has been accepted, it must then be publicised.  A period of not less than 28 days is allowed for initial representations to be made by third parties.  Then, after a period of evaluation by PINS, a Preliminary Meeting is held where PINS’ proposed timetable for the examination stage is discussed (which will include an opportunity for further representations to be submitted).

The examination stage takes the form of a mixture of written representations and short, topic-based, hearings.  There is no public inquiry of the kind that is held under other procedures.

PINS is under a duty to complete the examination of an application within six months of the preliminary meeting.  PINS is also under a duty to make a recommendation to the Secretary of State within three months of the end of the examination of the application.  These periods may be extended by the Secretary of State but this has not yet proved necessary.  Once a recommendation has been received by the Secretary of State, it must be decided within three months.  This date may also be extended by the Secretary of State but this has not yet happened either.  These periods are set out in sections 98 and 107 of the Act itself.

The only period for which there is no statutory time limit is the period between acceptance of an application and the holding of the Preliminary Meeting.

In practice, the way this is working out is:

  • Application to acceptance: 28 days (say one month)
  • Acceptance to Preliminary Meeting: say 3 months
  • Examination stage: 6 months
  • Report to Secretary of State: 3 months
  • Decision by Secretary of State: 3 months.

This totals 16 months, which, for a complex or controversial scheme, is short compared with the likely period under the procedures that would have applied previously.


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This is the list of postcode areas through which the second phase of HS2 will pass. It is from the Parliament website.



CW1-3, CW10, CW5, CW7, CW9

DE12, DE13, DE55, DE7 ,DE73, DE74

LE65, LE67

LS1, LS10, LS11, LS15, LS24-LS26

M1.M12-14, M20, M22, M23

NG10, NG11, NG15-17, NG6, NG8, NG9

S13, S20, S21, S26, S35, S43-45, S5, S60-62, S70-72, S74, S9

ST15, ST18, ST21, ST5

WA13-16, WA3

WF1-4, WF6

WN2t WN4



Phase Two of HS2 will pass through the following constituencies on the West Midlands to Leeds leg.

North Warwickshire; Tamworth; North West Leicestershire; Rushcliffe; Erewash; Broxtowe; Nottingham North; Sherwood; Ashfield; Bolsover; Chesterfield; North East Derbyshire; Sheffield South East; Rother Valley; Rotherham; Sheffield Brightside and Hillsborough; Penistone and Stocksbridge; Wentworth and Dearne; Barnsley East; Barnsley Central; Hemsworth; Normanton, Pontefract and Castleford; Morley and Outwood; Elmet and Rothwell; Leeds Central; Leeds East; Selby and Ainsty.

And through the following constituencies on the West Midlands to Manchester leg:

Lichfield; Stafford; Stone; Crewe and Nantwich; Eddisbury; Tatton; Wythenshaw and Sale East; Altrincham and Sale West; Manchester Withington; Manchester Gorton; Manchester Central; Warrington South; Warrington North; Stretford and Urmston; Leigh; Makerfield.

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By Professor Stephen Glaister, director of the RAC Foundation.

It is good to be in a position to debate a full proposition for high-speed rail. There was never much sense in a link just between London and Birmingham: they are too close to justify the vast cost of building through London and the home counties. This is revealed in the government’s estimate that shows a benefit of only £1.40 for every £1 spent.

That is poor compared with other ways of using the money. The benefits of the full scheme are now claimed to be of the order of 2:1. This is better but still easily beaten by other rail and road projects.

Key figures to focus on are that the capital and operating costs are estimated, as of August 2012, at £59bn and the revenues at £33bn. Crucially, this leaves £26bn to be funded by the taxpayer. No amount of clever financial engineering or attempts to involve the private sector investors can escape this.

We must decide: is this £26bn of public spending somehow going to be extra, or will it come at the expense of an alternative way of addressing the objectives? The state of public finances suggests that each £1 dedicated to HS2 is £1 not available for something else.

The initial justification for HS2 was to expand capacity, but advocates have failed to address the extent to which this is needed only at the peak. There are plenty of empty seats on the west and east coast main lines. To unquestioningly plan to meet growing peak demand can only be described as “predict and provide”. With £26bn at stake there must be a more committed attempt to see if there are cheaper ways of dealing with a problem that affects a relatively small number of people.

The government has applied the best analysis to assess the value of “wider economic benefits” for competitiveness, labour markets and agglomeration. Adding these only raises the total benefits from £2 to about £2.5 per £1 of spending; and they are not normally counted when appraising alternative schemes.

Everything claimed beyond that is speculation. That does not make them wrong. It’s just that they are without supporting evidence and hard to balance against the indisputable costs.

Experience overseas is helpful. But the story is mixed. Where there has been development around stations it is rarely clear to what degree this has been at the expense of competing neighbourhoods. But if development is to occur the local planning regime must encourage it, rather than restrict it – and that may be a problem in the UK.

The effects on “regional development” and the “north-south divide” could go either way and one person’s assertion is as good as the next. Where is the evidence that bringing Manchester within an hour or so commuting time of London will not amplify rather than attenuate London’s gravitational pull?

A disproportionate amount of the construction spending on HS2 will be in London and the south-east because that is where the engineering is most expensive. But jobs would be created however the public money were dispensed.

We always come back to the same question: if we have £26bn of public money to spend in the name of regional development or job creation or whatever, should we allocate it to this single, geographically specific scheme?

The nation needs more infrastructure – in particular transport infrastructure – to meet the needs of a rapidly growing population and economic recovery. We must spend the desperately limited public funds on those projects with the best return. While HS2 may score highly in terms of political and personal legacy, it will not help the tens of millions of ordinary travellers for whom it is an irrelevance.

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Lucky old Philip Hammond. For all the obvious challenges at the Ministry of Defence he must be counting his blessings that is no longer having to manfully struggle on at the DfT in the face of worsening news about its flagship policy: the latest downgrading of the economic case for HS2.

A document just published shows that because of a revision over the point at which passenger growth for HS2 should be capped (i.e. regarded as having saturated) the already low BCR values need to be cut even further:

“Adjusting the cap year in this way would reduce the BCRs for both HS2 and the alternatives to HS2, including a new conventional speed line and enhancements to existing routes. For HS2, this modelling change would lead to a reduction in the BCR (excluding wider economic impacts) for the London to the West Midlands scheme of approximately 0.2. The impact on the BCR for the full Y high speed rail network (excluding wider economic impacts) is estimated to be a reduction of between roughly 0.3 and 0.4.”

That means the BCR of phase one of the scheme now becomes an officially ‘low’ 1.2 and, at worst, the BCR for the full network also tumbles to 1.2.

All of which means that Mr Hammond must be glad he doesn’t now have to act on the words he previously uttered in front of the Transport Select Committee when talking about the original benefits of HS2:

“As rail projects go, a benefit-cost ratio of 2.6 is quite reasonable. If it were to fall much below 1.5, I would certainly be putting it under some very close scrutiny.”

Oh dear.

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