Lobby Day – High Speed Rail – Deceiving the regions

Prof Mike Geddes has had a career in regional regeneration and is a Honorary Professor at Institute for Governance and Public Management, University of Warwick.  He spoke at Monday’s Parliamentary Lobby Day on whether the proposed HS2 would really have eceonomic benefits for the regions.

Prof Geddes wrote the following, which is slightly edited from Monday’s presentation.

Speaking at the Conservative Party Conference, Transport Secretary Philip Hammond said the high speed rail network would

“change the social and economic geography of Britain; connecting our great population centres and international gateways”.

Hammond further suggests that linking England’s main cities with a high-speed link – with further links to Scotland in the future – could help break down the north-south divide.

“Bringing those economies in closer reach of London, allowing them to benefit from London’s magnet effect in the world, is going to help solve some of the most intractable postwar social and economic problems Britain has faced.”

The Guardian, 3 and 4 October 2010

This echoes a number of Influential public and private voices, especially the promotional group Greengauge 21, who argue that high speed rail will create jobs, improve the competitiveness of regional economies and promote regeneration.

Research by KPMG for Greengauge suggests HSR could create 25-42,000 new jobs and higher wages with most impact in the North and Midlands, especially in the core cities.  Steer Davies and Gleave for Greengauge claim that wider economic benefits to the West Midlands could be in the region of £5.3 bn.

But claims such as these are highly unreliable.  They project benefits over long periods (up to 60 years), well beyond any reputable economic forecasting horizon.  They produce little evidence of how HSR is supposed to generate economic benefits.

In fact the evidence is very different.  The study conducted for HS2 Ltd by Imperial College says that the amount of new economic growth created by HS2 would be ‘very small indeed’ –  maybe £8m pa.  Moreover, most of the wider economic benefits claimed by government from HS2 do not depend on the new high speed ‘connectivity’ but on improvements to local services.

But what HSR will do is to redistribute economic activity between places, and in general the larger the local economy the more it will benefit.  So-called ‘agglomeration benefits’ flow primarily to the most economically powerful existing agglomerations.

Thus the likelihood is that the greatest benefit from HS2 and the wider proposed HSR network is likely to be London.

We do not yet have robust evidence about whether other major cities, such as Birmingham, would benefit and if so how significantly.  But what we can say is that if London (and possibly other major cities) benefit from the redistribution of jobs and businesses induced by HSR, this can only be at the expense of regions, towns and rural areas not served by stations on the proposed route.

These losers from high speed rail are likely to include whole regions such as East Anglia and the South West not connected at all to the proposed network.  While Birmingham might possibly gain, this could only be at the cost of other West Midland towns and rural areas, especially perhaps those suffering reduced conventional rail services to London.

Thus HSR would indeed  “change the social and economic geography of Britain”.  But to argue that to argue that it will promote regeneration and regional development seems like a big city stitch-up aimed at deceiving the regions.

Mike Geddes

Honorary Professor, Institute for Governance and Public Management, University of Warwick

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