Is the Department for Transport misleading us (part 3)? – North South divide

Several politicians have claimed that HS2 will tackle the North-South divide. The document “High Speed Rail: Investing in Britain’s Future – Decisions and Next Steps” published in January 2012 went into more detail:

“The Government intends to put in place the necessary measures to meet future demand for inter-city rail travel and, in doing so, to enhance performance – in terms of journey time, reliability and connectivity – as part of a programme of measures to remove barriers to long term and balanced economic growth. Investment in inter-city rail capacity and performance will help to unlock the potential of the regional economies of the Midlands and the North – making them more attractive places to locate and do business. Supporting strong growth outside London and the South East is no longer optional; ……”

However there is no sign of any evidence from the DfT to support the view that HS2 will rebalance the economy between North and South.

Professor John Tomaney from Newcastle University provided a thoroughly researched report for the Transport Select Committee’s investigation into high speed rail in 2011. His bibliography lists 44 documents. His report includes the following:

Summary: “The report examines evidence of the experience of five countries where HSR has been introduced to assess its impact on their economic geography. Taking this evidence in the round it is very difficult to substantiate the argument that high speed rail is likely to have a positive impact on regional inequalities. Cities which are the location of HSR stations may gain some benefits, but distribution of net benefits needs careful analysis. Some of the benefits accruing to regional cities may be at the expense of neighbouring places, while in countries with dominant capital cities net benefits tend to accrue to these.”

Tomaney quotes from a study by Rodriguez-Pose and Fratesi:

4.9 “Spain provides an example of where this mechanism may already be at work. The strong recent investment on transport infrastructure in Objective 1 regions devoted to the construction of road and high-speed rail links between the periphery of the country and Madrid – has probably helped to boost the phenomenal growth rates that Madrid has experienced in the second half of the 1990s, but has left many of the Objective 1 regions, whose economic prospects rail-links were supposed to increase, struggling to catch-up.”

Tomaney continues:

4.17 “Additionally, the prediction that HSR will generate growth in peripheral cities (supported by data from KPMG 2010) is mostly based on assumptions which are difficult to sustain after close scrutiny.”

5.5 “Following Puga (2002), the proposed UK model is a clearly a hub and spoke one centred on London. According to this analysis, there is therefore a high probability that London will accrue the majority of the benefits of the investment”.

6.2 “We noted the theoretical and empirical evidence that suggests investments in intra-urban and intra-regional transport systems may provide more local benefits than high-speed North-South links.”

1.4 “We conclude that it’s difficult to find robust evidence that HS2 will have a transformative impact on the economic geography of the UK.”

http://www.publications.parliament.uk/pa/cm201012/cmselect/cmtran/writev/rail/m14.htm

Professor Tomaney was interviewed by the Transport Select committee on 12th July 2011 during their evidence gathering for their high speed rail investigation. Here are some of his responses:

Q281: “In a situation where you have one dominant capital and you connect that dominant capital to peripheral cities and regions by high speed rail, the bulk of the gains accrue to the capital. The evidence for that is very strong.”

Q286: “Looked at from a regional development perspective, I could say that if I had £30 billion-odd to spend on regional development I would not necessarily be spending it on a high-speed rail system. We have good evidence that what matters for regional development is investment in skills, knowledge and technology.”

Q310: “I am not arguing against high-speed rail personally. I am arguing against the claim that it will transform the economic geography of the UK. There is not any evidence to support that argument. That is my point. If the objective is to transform the economic geography of the UK, you would go about it in a different way from what is being proposed in ministerial speeches and DfT consultation documents.”

http://www.publications.parliament.uk/pa/cm201012/cmselect/cmtran/1185/11071201.htm

Dan Byles MP (North Warwickshire and Bedworth) has referred to a report into high speed rail by the Research Institute of Applied Economics at the University of Barcelona. One of the sections he has highlighted from their report is:

“Finally, the economic impacts of HSR are somewhat limited. The largest cities in the network might receive limited gains, but this is not the case for intermediate cities, which might see economic activities being drained away and suffer an overall negative impact.”

Many of the conclusions reached in this report are similar to those found by Professor Tomaney.

http://www.danbyles.co.uk/conservatives/content/why-i-am-opposed-hs2-regionally

http://www.ub.edu/irea/working_papers/2010/201003.pdf

Maybe we should return to DfT sources. Within the documents produced for the high speed rail consultation in 2011, the DfT expected that 73% of the jobs created by the completion of HS2 phase one would be in London and the South East.

In conclusion, there does not appear to be robust evidence to support the claims that HS2 will help rebalance the North – South divide. If anything it is more likely to make the imbalance worse.

Andrew Bodman

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4 comments to “Is the Department for Transport misleading us (part 3)? – North South divide”
    • @John
      HS2 is a National infrastructure project – direct contributions to the construction budget won’t be structured in the manner you are alluding to. Cities connected by HS2 will make indirect contributions, via the development of station complexes (and their environs) on the new line.

      HS1 was classed as a National infrastructure project and underwritten in the same way, ie. by the UK (as in all of us) taxpayer. I can just as easily draw attention to HS1 as a project that almost exclusively benefits London and the South East.

      Now before you bang on about CrossRail (which I’m sure you are dying to), do some research on where the funding for Cross London Rail Links Ltd (now simply known as CrossRail Ltd) comes from. Yes, ultimately, Londoners and London businesses will contribute to the funding pot but that’s only right and proper, given that it is essentially a London based infrastructure project.

      • Lion’s share of any benefits of HS2 will be felt in Manchester , Leeds and arguably Birmingham so they should pay.

        Ask businesses in those areas if they are happy to take a Supplementary Business Rate like London has for Crossrail ( up front not “ultimately” ) and see what answer you get. If they aren’t prepared to pay it proves the benefits are overblown.

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