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HS2 will serve wealthier passengers and deliver more benefits to London than the North

Analysis from the New Economics Foundation shows that HS2 will exacerbate and not redress the UK’s stark regional economic imbalances

The High Speed 2 (HS2) rail line will deepen the regional divide and should be shelved in favour of investments across the rail network, especially in the north of England, according to a report published by New Economics Foundation (NEF) today. The report shows that the 40% of projected passenger benefits’ that HS2 Ltd say will flow to London would, even compared with the most extreme scenario of London-centric growth, run significantly ahead of the capital’s share of national gross value added, which in 2017 was 23.1%.

The report analyses a range of rail schemes across the existing network and recommends that, for a similar sum of investment as is currently earmarked for HS2, government could improve journeys in all regions and nations and ease overcrowding, especially in the north of England.

The report also highlights that the links to the northern cities through HS2 could be at risk. The current budget for HS2 is around £56 billion, which is the maximum the government has stated it will make available for the project. However, only phase 1 to Birmingham has formal Parliamentary consent and is already showing signs of overspending. If costs escalate, as two recent leaked reports have suggested, then the second phase of the line linking in Manchester and Leeds could be in jeopardy. The cost estimates for the line have already inflated by more than two-thirds in real terms, from £33.3 billion in 2011 to £55.8 billion in 2017 (in 2015 prices), since the scheme was first appraised in 2011.

The report finds that:

  • HS2 Ltd’s own figures, to be found only in an appendix of its most recent assessment of the scheme, state that 40% of the passenger benefits’, the crucial calculations that underlie the economic case for HS2, will flow to London, while only 18% will accrue to the north west,12% to the west midlands and 10% to Yorkshire and Humber.
  • London was worth 23.1% of UK gross value added (GVA) in 2017 growing from 18.4% in 1997 (NEF calculations using ONS data). So, even if London increased its share of UK GVA over the next 20 years at twice the rate of the past 20 (an extreme scenario), then it would still be worth less than 30% by 2037. Therefore HS2 is not only reinforcing existing regional imbalances, it is further exacerbating them.
  • Among households of a single adult, the top 20% by income made 20 times as many long-distance rail journeys for business during 2010 as did the bottom 20% by income. For households of two adults, the difference was even wider (the richest group took 24 times as many trips as the poorest), whereas for households with children the richest group took 7 to 12 times as many trips of this kind as the poorest group. As ticket prices for HS2 may well be higher than those for the classic network, this effect can be expected to be more pronounced.
  • The Department for Transport demand model for HS2 assumes that between 56% and 64% of journeys between London and Birmingham, Manchester, and Leeds are made for business purposes.
  • Some versions of the Department for Transport demand model are based on commuters having an average household income of £60,091 and leisure travellers having an average household income of £45,583 (both in 2010/​2011 prices). The median household income for the top 10% of UK earners in 2010 – 2012 was £60,700, suggesting that the HS2 demand model forecasts that its average commuting passenger will be in the top 10% of the income distribution.
  • A comparison with France’s high speed rail shows that, just as for rail travel in the UK, the majority of long-distance high-speed rail journeys are taken by those who earn the most. People in the top 10% of incomes made 28% of all high-speed rail journeys of 80+ km in France in 2008, with this richest 10% taking nine times as many trips as the poorest 10%.

The report proposes that a National Rail Investment Fund is established to pump much needed capital into the existing network and redress the four-to-one regional imbalance in transport spending between the south and north of England. NEF estimates that a package of £55.2 billion spent over the next 10 years, including £18.9 billion for the north of England, would help commuters, speed up long distance journeys, cut carbon emissions and bring benefits to many regions that won’t be served by HS2. It also argues that hat government should bring forward a comprehensive strategy for the railways that prioritises improving journeys for the majority, the creation of good, unionised jobs and carrying more freight.

The alternative package set out in the report includes:

  • Full electrification of much of the northern rail network.
  • The reopening of the trans pennine Woodhead line between Manchester and Sheffield to provide a fourth east-west link in the north
  • A Bradford Crossrail, to link the two lines that terminate in Bradford and put the city at the epicentre of northern rail.
  • The full electrification of the midland and great western lines.
  • The creation of more four track sections on the three core, north-south mainlines and of bridges to take slower, regional lines over intercity lines to speed up long distance journeys

The report also calls for data on passenger flows across the UK network and the rail handbook used to forecast future trends to be released publicly. Both are currently owned privately due to the way the UK franchises the operation of the railways to private companies, with only average snapshots being released publicly by the Department for Transport.

Andrew Pendleton, Director of Policy at New Economics Foundation and one of the report’s authors said:

Investment in the UK’s railways is urgently needed, but HS2 is trickle-down transport policy. It will be used by the wealthiest travellers, intensify the north-south investment divide and is a standalone project that simply does not integrate well enough into the existing network. It’s an expensive answer in search of a question.

In the context of Brexit, we need a bold new strategy that brings the railways and the rail industry back to the heart of the economy and to the many towns and cities that desperately need better transport links and more investment. This will cost money — perhaps more than the government currently plans to spend on HS2 — but it will bring real benefits to millions of travellers and to lots of left-behind places and will also help rebalance the wider economy.”

Professor Paul Salveson, a rail expert and another of the report’s authors, said:

The UK needs new rail lines and it needs fast new rail lines, but HS2 is an engineering rather than a strategy-led project. Government should not put away its cheque book, but rather think again about how the money it is poised to invest in a railway for the rich few can instead bring benefits to everyone across the whole rail network and stop the endless cycle of investment skewed towards the south east that always becomes a self-fulfilling prophecy.”

Mike Childs, Head of Science, Policy and Research at Friends of the Earth England, Wales and Northern Ireland, who commissioned the study, said:
Transport is the UK’s biggest source of climate wrecking emissions. In order to deal with the climate crisis we know that we have to encourage people out of their cars, but right now cycling across much of England is unsafe, bus routes are being cut, and far too many trains are overcrowded, late and ridiculously expensive.

White elephants like HS2 aren’t the answer. It will take over a decade to build, destroy ancient woodlands, and only 4 per cent of those projected to use HS2 would otherwise have driven.

Cancelling HS2 and reprioritising this money is necessary. Investment is needed to repair existing railways across the country, to shift freight from road-to-rail, and boost walking, cycling, buses and trams in order to prevent climate chaos and cure commuter misery.”

Download the report

Notes to Editors

1. The report A Rail Network for Everyone’ is written by Andrew Pendleton, Professor Paul Salveson and Emmet Kiberd. It was commissioned by Friends of the Earth England, Wales and Northern Ireland, though researched and written entirely independently by the New Economic Foundation and Professor Salveson.

2. HS2 phase one, between London and the west midlands was granted Parliamentary consent on 23 February 2017. Enabling works have begun at London’s Euston station and at Old Oak Common, where HS2 will intersect with Crossrail and the West Coast Mainline, but the government’s Notice to Proceed has not yet been granted. The Hybrid Bill that would lead to Parliamantary consent for phases 2a and 2b, connecting phase 1 with Manchester and Leeds, has been delayed and is now not expected to be introduced into Parliament until 2020.

3. NEF’s research indicates that the extensive public resources allocated to HS2 would represent a large transfer from the majority of the population towards a wealthy few. All the available evidence suggests that it will be business travellers and the wealthiest segments of the population who will benefit most from using HS2, with much of the rest of the population seeing little benefit from the service.

    4. Proceeding with HS2 as planned will do nothing to address inequality between the South-East and the rest of the country, and in fact HS2 is likely to worsen the existing regional inequality.

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