HS2 is not a panacea

One striking feature of the discussions on HS2 is the way so many organisations who advocate for HS2 don’t just want someone to spend the £33 billion that HS2: they also want a range of other improvements to transport services in their area as well.

For instance, transport leaders in Manchester told the Transport Select Committee that they want two HS2 stations for Manchester (a city centre one and an airport station).

But even having two high speed rail stations is not enough for them – Keith Whitmore, Chair of the Transport for Greater Manchester Committee, said

“We are also making it clear to the Select Committee that the full benefits of High Speed Rail rely on the full delivery of the Northern Hub programme, which would improve and expand the ordinary rail network around Manchester and allow passengers to make their onward journeys.”

Writing in their blog that high speed rail is “not a panacea”, the Mid Yorkshire Chamber of Commerce is a bit less enthusiastic about HS2. They’ve spotted that building a new high speed line has the potential to create new division in the country. If Manchester has a connection, but Yorkshire doesn’t, there will be a new East-West divide in the country, says Steven Leigh.

And like the Manchester transport bodies, the Mid Yorkshire Chamber of Commerce thinks that regional transport improvements are more important. They want “serious upgrades” to the East Coast Main Line, and improvements to the Trans-Pennine links.

They say

“Our members have made it clear that the upgrading of regional rail services and particularly Trans-Pennine links are of more importance to business than would be a slightly shorter journey time to London and beyond.”

So there you have it: as we have said before, the people who are supposed to benefit from HS2 have other priorities.

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25 comments to “HS2 is not a panacea”
  1. finmere, you could say that about any project where costs might increase due to fluctuations in raw material prices. and then you just start making figures up like saying oh it could be £70 to £80 billion ! how do you arrive at this ????

    • No one knows what the actual costs will be but they will be a lot more than the £32bn at 2009 prices.

      The Wendover group have already pointed out that for stage one to Birmingham the actual cash cost post 2016 could easily rise to £34bn http://www.wendover-hs2.org.uk/WHS2%20One%20page%20Financial%2018-02-2011.pdf and that does not include design changes, rises in fuel and material prices or interest costs.

      It is not correct to claim that the annual spend on HS2 would be the same as for Cross Rail, which was the main point of my comment.

  2. that will help reduce the deficit but the debt’s a much bigger mountain and thats what we pay interest on —what a mess!!!

    • Those greedy bankers have got a lot to answer for John !! Not suprised we have returned to Keynesian economics…….

  3. Gary says–Govt spends around 30 billion on interest a year.
    I think you’re a bit out of date as debt interest is nearer 42bn a year and is forecast to hit above 60 billion a year
    We cannot go on borrowing money

  4. also, they actually appear to be asking to be connected to hs2 if you read what penny has quoted. they say there will be a new east west divide. that isnt asking for hs2 not to be built but that it be extended to them !
    and the y plan includes connections to leeds and manchester which is what makes it a y because if it didnt go to leeds then it would be an i shape !

    and there is no reason why hs2 trains to manchester could not continue to leeds via the trans pennine routes aswell as the direct london leeds trains. i think they are making the valid point that whilst hs2 is needed and is very important to both the national and local economy, local connections are also very important. so if london gets its crossrail and thameslink so manchester should have its enlarged tram system and the northern hub.
    and leeds should also get its tram or trolley network.

  5. it is also a train from london to the north as well as vica versa ! and they are falling into the “few minutes quicker” syndrome that critics all seem to suffer from. it is like some kind of temporary amnesia or denial syndrome ! london to manchester with hs2 will probably save about an hour on current times when the y leg is completed, so saying that an hour saved on a 2 hr 15 min journey is not much or only a few minutes is substantially incorrect any way you look at it. even with the first leg manchester london will be 45 minutes quicker.

    and we all know it isnt about just speed anyway but capacity and the current lines will benefit from the capacity released by hs2. and as gary has pointed out we can have all these other improvements as well as hs2. and lets not forget that if hs2 is not supported and doesnt get built the government might go cold on the whole improving the railway scenario and spend the money on road or air or not at all !

    if we assume that people will still wish to travel, and wont accept stop hs2 telling them they are not allowed to, we must transport people in a way that causes less pollution. so we need to spend the transport budget on not only hs2 but the entire railway, and not fund any new roads airports or runways.

    • Nick – “and we all know it isnt about just speed anyway but capacity ”

      if its not all about speed but capacity as you say – then why do we have to have “ultra high speed” rail?

      Is it because perhaps the business case doesn’t stack up at all on just “high speed”? i.e. the cost benefit ratio would be even worse than it is now!

      So make your mind up – is it about speed or capacity? I think you are contradicting yourself as much as those who say “it’ll only shave off a few minutes”!

      • missy….the higher the speed , the greater the capacity. In other words, we can run more trains on the same track, or to put it another way, currently a pendolino makes 3 round trips a day between London and Manchester. The equivalent unit on a high speed track will be able to make 6. Thus ensuring each train works harder……and higher revenue against the same fixed cost of the unit.

      • i am not contradicting myself in any way whatsoever. the main reason for hs2 is to provide capacity to relieve the existing overcrowded lines. the reason for making it high speed is to allow people to take the train instead of their car or a plane because the destination is reached more quickly than by normal speed trains.

        and since we already have trains running at 320 kph or higher on high speed lines already (france china spain)or more i dont see a problem with having an ultimate capability of 400 kph. i beleive that the maximum in service speed is planned to be 350kph which is only 30kph or 18 miles per hour faster thatn the examples above of exisitng services worldwide.

        • sorry to reply to myself but i have been checking online and apparently some chines and spanish high speed trains are running now at 350km/h. lyons to marseille is 320kph.

  6. 1 – Manchester is in the middle of construction of a massive expansion of the metrolink tram network. The original scheme from the 90s removed 2 million car journeys a year form the Bury to Manchester route. The absolute centre of Manchester is Piccadilly Gardens, all trams converge on this point from the suburbs ( North South East and West) …..and include both mainline rail stations on the network. Also included in the current expansion is Manchester Airport. The recent conversion of the Oldham loop line to tram operation freed up some Northern Rail rolling stock which is now being used elswhere on increased frequencies.

    2 – The electrification of the Liverpool to Manchester line is now under way, prep work involving some 50 bridges to accomadate the wires is required ….the whole project which also includes Preston to Manchester via Bolton should be complete in about 4 years.

    3 – A new piece of track is being built to connect Victoria to Manchester , this will allow Calder Valley passengers a direct service to the airport, and also provide extra capacity for Transpennine Services.

    4 – Leeds is on the HS2 map …..

    5 – Leeds station itself is to get another entrance on the south side , this is a very busy station which has amongst other things , 4 transpennine trains an hour east and west, and 2 per hour south to London. Some of the regional towns such as Bradford, Harrogate and Skipton also have direct services to London.

    6 – Sheffield station recently underwent a re vamp, as well as East Midland trains south to London, there are 2 per hour transpennine services east and west.

    I could go on about all this up here, the reality is there has been, and will be, huge investment in the transport infrastructure up here. Its already happening…….

    • I am very pleased to hear about the investment. It’s exactly what the economies of Northern cities need. Local investment in local infrastructure will benefit the local economy much more than a fast train to the South ever can or will.

      Just think what could be achieved – and in many more towns and cities across the North – with £32billion more to spend.

      • According to stopHS2 campaign, there isnt 32 billion to spend…….one of the straplines is ” No money to pay for it “.

        So if we havent got this money, how can we spend it on regional schemes ?

        • You are right – we don’t have the money, we have to borrow it. Borrowing to generate results with low cost and high return is called investment. Borrowing huge amounts to not even make any return after many decades is called burdening future generations with debt of elephantine proportions.

          • andrew is absolutely right, projects which have twice as many benefits will be an investment. hs2 has a benefit to cost ratio of 2 to 1 so is a very good investment

          • That’s conjecture on your part @Andrew Gibbs but as @Gary has pointed out what is fact is that investment in non-HS2 infrastructure is already happening anyway, right now and during the next few years, whereas the vast bulk of HS2’s projected budget is is ten years away

            Of course it’s convenient to quote headline figures, such as 32 or 40 billion, or whatever figure comes to mind for that matter, in order to attract attention. Fact is HS2 will be paid for over a prolonged period of time to spread the cost. We’re currently spending £2billion a year now on projects like CrossRail and Thameslink and we don’t hear a thing about the unaffordable cost of those projects – one wonders why?

            HS2 will cost approximately £2billion per annum during its fifteen year design, construction and commissioning cycle (you know the timescale referred to in a previous StopHS2 article) so why all the fuss about projected budgets; answer, neither Thameslink nor CrossRail are coming through the backyard of some well heeled and well connected residents?

            • So that’s 2 billion a year for fifteen years….let me get my calculator….
              That’s 30 billion before we see one penny in return. And that’s future spend on money we don’t have.

            • The £17bn to Birmingham and £32bn to complete the Y to Leeds and Manchester are based on estimates at 2009 prices. It’s 2011 now and the prices of steel, copper, cement and diesel have all shot up, and are likely to go up a lot more before construction starts in 2017.

              Also, changes have already been made to the route, including the need to enlarge tunnels, construct green tunnels and construct significantly more structures, especially within the section between Euston and the M25. And let’s not forget the link to Heathrow – another £7bn or £8bn.

              If work does start in 2017, then with inflation and design changes project costs could be £70bn to £80bn, and that’s not including the trains or interest on the debt. No one knows what the actual costs will be, but to say that the annual spend will be about £2bn a year, the same as Cross Rail, is incorrect. It will be a lot more than that.

              Also, Cross Rail was started when business was booming. We are now facing a new economic reality. Rather than seeing rising jobs and prosperity, we are seeing falling employment and personal income, falling government revenues from taxes, and stalled consumption and business profits.

              When we get to 2017 and the country is even more in debt and the government has to make even more ‘hard choices’, it won’t just be nimbys calling for HS2 to be scrapped. The worrying thing is that it might not be stopped until the next parliament by which time £750m, which could have been used for something useful, will have been wasted.

          • Amazing what you learn on here about economics…

            Why would future generations be landed with the debt? Government debt is in the main funded by gilts, these are big business for the pension funds. To imply that in the future we will all see our direct taxes rise to fund this is frankly laughable…..

            As pointed out, the cost/benefit ratio is 2 to 1…….of course this will be well debated until the bill is passed, but the hard fact is that figure easily exceeds the required criteria. If we add in also the known fact that the rail network is fast approaching capacity, then its a no brainer tbh…..

            • Who pays the interest on the gilts and where do they get the money from? What do you think might happen to the interest rate if the government issues too many of them? What happens if it gets worse and the pension funds stop buying them in sufficient quantity to fund expenditure, interest and the need to refinance maturing gilts?

              I will leave others to debate whether a BCR of 2 to 1 is good, bad or indifferent and the capacity issues

            • David…..interest on gilts is funded by government……interest is at the prevailing rate. B of E purchased huge quantities of these as part of the quantitive easing package recently. Gvernment revenues rise when the economy is in good shape, and as part of getting the economy into good shape, investment must continue, we simply dont stop spending just because we are in recession.

            • Where does government get its money from? Do you think the interest rate is entirely independent of the state of the government finances? Can you point to anyone who thinks quantitative easing is a long term answer to the public finances?

              I agree we don’t stop spending because we are in a recession. We restrain spending because we have a substantial existing public debt and one of the highest annual deficits in the developed world. We do that because, as Greece etc are finding out, when you need to continue to borrow money from the market to fund ongoing deficits you need the market to continue to have confidence in your ability to service and refinance your debts (no-one expects governments to actually repay their debts). We could of course print money (effectively QE), but history suggests that this is not a wise long term strategy. As the coalition is discovering, there are few easy choices. Personally, I doubt the problem will be solved by 2015, but I would genuinely be delighted to be proved wrong.

              None of this means HS2 should not be built. I do, however, think that the bar for any government expenditure is currently higher than it would otherwise be.

            • David … interest rates are set by the B of E, it was handed to them by Gordon Brown when Labour got into power. As far as revenue goes, around 29% of income is income tax, 19% Ni, and 15% VAT. The rest is made up of a whole raft of other tax such as Corparation tax and Excise Duites. Govt spends around 30 billion on interest a year.

              As far as QE goes, hindsight will only tell us if it it right or not…..but the reality is that if government had not underpinned the banks, we would be a far worse mess. In terms of spend, yes there are limits, and each will be judged on its merits. HS2 is a project for which there is a actual hard cash revenue return unlike most other government spending. In fact i wouldnt be suprised to see this as a state run rail rather than a franchise, it is somewhat ironic that East Coast ( which is state run ) has actually announced a profit after the franchisee handed back the keys…..

            • The BoE sets the rate at which banks can borrow from it which normally drives the rate at which banks lend. Unfortunately, the BoE does not set the rate at which the government can borrow from third parties eg pension funds.

              I suppose in a sense HS2 does provide a hard cash return to government but its less than the cost. I don’t think anyone is suggesting that there won’t be a substantial net cash cost to government. Also, the costs have to be borne before any revenue comes in ie there is a funding requirement for the full cost unless government manages to get contributions from others

              I broadly agree re the banks, the alternative was worse.

              I don’t really have a view on what will happen to the ownership of HS2 if and when its built

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