UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1185-iii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Transport Committee

High Speed Rail

Tuesday 12 July 2011

Jerry Marshall, Bruce Weston, David Bayliss OBE and Lord Wolfson of Aspley Guise

COUNCIllOr Martin Tett, Chris Stokes, Professor John Tomaney and COUNCIllOr Sue Vincent

Evidence heard in Public Questions 184 - 316

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Oral Evidence

Taken before the Transport Committee

on Tuesday 12 July 2011

Members present:

Mrs Louise Ellman (Chair)

Steve Baker

Jim Dobbin

Mr Tom Harris

Julie Hilling

Kwasi Kwarteng

Mr John Leech

Paul Maynard

Iain Stewart

________________

Examination of Witnesses

Witnesses: Jerry Marshall, Chairman, AGAHST (Action Groups Against High Speed Two), Bruce Weston, Director, HS2 Action Alliance, David Bayliss OBE, Trustee, RAC Foundation, and Lord Wolfson of Aspley Guise, gave evidence.

Q184 Chair: Good morning, gentlemen, and welcome to the Transport Select Committee. I would like to start by asking you to give your name and the organisation you are representing, if any.

Lord Wolfson: I am Simon Wolfson. I am not representing my company but I am the Chief Executive of Next plc.

Bruce Weston: I am Bruce Weston. I am a director of HS2 Action Alliance.

David Bayliss: Good morning. I am David Bayliss and I represent the RAC Foundation.

Jerry Marshall: I am Jerry Marshall. I am Chair of AGAHST-Action Groups Against High Speed Two.

Q185 Chair: Mr Marshall, could you tell us something about the group you are representing and try and give us an idea of who is involved and how representative what you are saying is?

Jerry Marshall: AGAHST is a federation of 77 local groups from Camden in the south to the Tamworth area in the north. It includes two national groups: HS2 Action Alliance, who are our evidence-based part of the campaign, and Stop HS2, who are the campaigning part of this organisation. It is a group of all the organisations that exist exclusively for the purpose of bringing to light the difficulties in the business case for HS2 and suggesting a better alternative.

Q186 Chair: Mr Weston, can you give us some information about who you represent and who is involved in your organisation?

Bruce Weston: HS2 Action Alliance is an organisation questioning whether HS2 is in the national interest, so we are very much concerned-

Chair: But who are you?

Bruce Weston: Who are we? We are a company limited by guarantee that is supported by a number of subscriptions from individuals and occasional fund-raising events.

Q187 Chair: But who is involved in the organisation? We need to know, when you are giving us your views, on behalf of whom you are speaking.

Bruce Weston: We have 73 affiliated organisations of the organisations that Jerry spoke of who support us. As an organisation ourselves we have four directors, so we are small. Nobody is paid. We get our support from the 73 affiliated organisations and other action groups.

Q188 Chair: Lord Wolfson, you have told us that you are not representing your company today. Are you representing anyone apart from your own views and perhaps those of the people who signed a letter to the press?

Lord Wolfson: Not at all, no. I am representing my own views. I am not sure why I was invited to come, but having been invited I thought I would come and put my views to you.

Q189 Chair: Thank you. We are very pleased to hear it and we will listen to what you have to say with interest.

The Secretary of State has suggested that some opponents of HS2 are Luddites and nimbys. Would any of you put yourselves or your organisations in that category?

Jerry Marshall: I would like to answer that, if I may. Clearly, the very beginning of the campaign came about when people close to the line and affected by it looked at the business case and blew the whistle. Now it has widened to a much wider grouping, most of whom are not involved, ranging from the TaxPayers’ Alliance at one end, for example, to the Green Party at the other, and many, many councils, as you are aware, and environmental groups. That is not, of course, a fair description of business people like me who look at it concerned that this is very poor value for money.

Q190 Chair: Lord Wolfson, are you a Luddite or a nimby?

Lord Wolfson: I have been an active campaigner for more investment in infrastructure in this country for the last five to 10 years, both publicly and privately. I have advised the people who are proposing this scheme that they need to invest more in infrastructure. My opposition to it has nothing to do with Luddism or nimbyism. It is to do with the fact that it is not good value for money. The key, if we are going to have good infrastructure in this country, is that we have to invest sensibly and carefully rather than just throw lots of money at an investment that is not going to produce a good enough return.

Q191 Chair: Mr Weston, are you a Luddite or a nimby?

Bruce Weston: I would not describe myself in that fashion. Again, it is true that we became interested in HS2 because we live fairly near the line, but our opposition to it is entirely based on its business case. Frankly, if we did not believe that the business case did not work, we would not have spent anything like as long working on it as we have. The initial interest was driven by proximity but the opposition is driven by it being a waste of money. That is basically why we have such a wide group supporting the case against HS2 now.

Q192 Kwasi Kwarteng: To make this very clear, Lord Wolfson, what is your interest in this? Do you have any direct personal interest in where the line is with regard to where you live or anything?

Lord Wolfson: No. It comes nowhere within earshot or even a short travelling distance from where I live. I live just by the M1 so that is where I get my noise from, not from rail. I have no personal interest in this other than that I would like to see more investment in the infrastructure that we desperately need in this country. That is both in my personal interest but also in the interests of my company and business in general.

Q193 Mr Leech: You have all said this morning that your opposition is based on the business case and that you do not think it is good value for money. Would you all accept that there are other people who are arguing very strongly that there is a good business case for HS2 and that there is a reasonable alternative view? You just take the view that it is not a good business case.

Lord Wolfson: No, I would not. I am a businessman. I listen to business proposals all the time. There are two things you have to consider. One is the absolute level of return and the other is the level of return on an investment relative to what you could be spending that money on elsewhere. Even if you look at the slightly spurious benefit-cost ratio arguments that are put forward for HS2, they are less than two and a half times the benefits of an average pool of road investments. Even on the basis of the arguments put forward for HS2, it is not a terribly compelling return on the investment that we are getting relative to what we could be doing with that money.

Q194 Mr Leech: In your view, what should we be doing with that money?

Lord Wolfson: We should be prioritising the highest return investments first. It is a very simple rule of any form of investment. If you look, for example, at the Eddington report and the average benefit-cost ratio of the road schemes he looked at, it was around 3.7. That compares to 2.6 for HS2. It is quite clear that there are many other projects that should be taking priority over this one and are not.

Q195 Mr Leech: Can you give us some specific examples of projects that you think should take precedence over High Speed 2?

Lord Wolfson: For example, the widening of motorways and the elimination of known pinch points in our road network where, every single day of the year, people have to sit in traffic jams that do not need to be there. I can give you countless examples of them if you want. The Blaby road into work, which I sit in every day, is fine, but there is a lot of investment in road that needs to be done now and is not being done.

Q196 Mr Leech: Are you really suggesting that the solution to rail capacity is modal shift from rail to road?

Lord Wolfson: Absolutely not. Ninety-three per cent of the motorised passenger miles in this country are done by road. That is where we should be prioritising investment. If you say there is a limited pool of capital to invest in transport overall, then ring-fencing a huge quantity of that to put into a low return investment in our railways does not make sense in the national interest.

Q197 Mr Leech: If you are not suggesting that it is about having modal shift from rail to road, what do you say to Network Rail and others who are arguing that certain areas of the rail network will be at full capacity within a decade?

Lord Wolfson: I would say that plenty of our roads are at full capacity. It is not that we should not be investing in rail. It is that we have a limited amount of money and we have to spend that where it is most useful. It is not getting the return that it requires by investing it in rail. In an ideal world I would like to invest more in infrastructure overall across rail and road, but given that we have limited amounts of capital, that has to be used sensibly. It is not in the national interest to take a huge chunk of that and invest it in a very low-return project.

Q198 Mr Leech: On that basis, if we did not have a limited amount of money, would your opposition to High Speed 2 be removed?

Lord Wolfson: Absolutely. If you want to say that we have an infinite amount of capital to spend, then yes, any investment, no matter how low the return, as long as it is marginally above the cost of interest; but we do not have an infinite amount of capital.

Q199 Mr Leech: On that basis, if politicians and political parties are prioritising rail over road, HS2 would be a reasonable investment.

Lord Wolfson: If you look at competing rail investments it is not in any way the best return on capital. My question is, why are we prioritising rail over road when more than 90% of our passenger miles are done by road?

Q200 Steve Baker: I would like to pick up on Lord Wolfson’s point there. Why would you say that politicians are prioritising rail over road?

Lord Wolfson: I have no idea. I have spent the last 20 years building a retail portfolio and I can see the immensely transformative effect that new road networks have on local economies. It amazes me that we do not want to invest in roads. The love affair that we have with railways amazes me.

Q201 Steve Baker: Could anybody else comment on rail versus roads?

Jerry Marshall: I would like to go back a stage and say that one of the fundamental problems of HS2 is that it does not look at our key transport priorities. It picks up something which is not one of the top priorities. We have a very good service north-south. In fact, 92% of-

Q202 Chair: Mr Baker was asking you on this point of road and rail whether you think it is right to prioritise rail over road, or would you deal with current problems by road investment first?

Jerry Marshall: I just wanted to point out that there is an overall case to look at the broader picture and not just pick out this one issue. We have no particular opinion on road. We do think there are much better alternatives with much stronger business cases in terms of providing our capacity through rail.

David Bayliss: We need a national transport strategy and a regional development strategy within which the relative roles of road and rail can be properly judged. At the moment we have this proposition to spend £30 billion or so of money on rail. National rail carries 7% of the passenger market in this country and 9% of the freight market. Of that 7%, only about a third is long distance rail. Here we are, at a time when we have barely sufficient funds to keep the existing system going, committing huge amounts of money to try and solve the problems on a tiny part of the travel market. It seems to me that in the absence of a proper thought-through national transport strategy that is foolhardy.

Q203 Chair: Mr Bayliss, I go back to the written evidence you produced for the Committee where you elaborated a little on this. Would I be right in saying that if there was a national strategy that looked at all modes of transport, you might agree with High Speed 2-if you had a national strategy against which to consider it?

David Bayliss: If the national strategy identified this as part of the national problem that needed solving, then High Speed 2 would be a candidate but not the only candidate because there are other railway schemes that could help. High Speed 2 will not help the railway south of the river. It will not help Anglia Railways. It will not do anything for railways out to the west country. One needs not just a comprehensive transport strategy for all modes but a comprehensive strategy for the railway system.

Q204 Steve Baker: Can I return to this question of nimbyism? The pro-campaigners tried to set up a conflict between jobs in the north versus lawns in the south. What would you say to people who think that this project is about the revitalisation of the north? Perhaps, Mr Weston, you would like to answer.

Bruce Weston: It is a very interesting debate. Lots of people seem to take it as read that HS2 would benefit the north and the midlands as opposed to London. The evidence such as there is-to be clear, as far as I can see, the evidence is ambiguous in the generality-seems to point at the principal benefits going to London, on the basis that, if you have a dominant capital city and you improve the transportation to that city, the economic benefit tends to go to that dominant capital city.

It is a very complicated area, and a number of people who have spent an awful lot more time looking at these things than we have done have expressed their views on it. In your evidence, you will see that Professor Mackie has cautioned that probably the net effect will be a benefit to London rather than to other regions. Professor John Tomaney has given evidence in which he reviews all the studies that have-

Chair: We have received that evidence and we will be hearing from Professor Tomaney.

Bruce Weston: Although it is saying it is not conclusive, it is pointing in the direction that if there is a net benefit anywhere, that benefit would go to London. It seems to us quite bizarre that it is being sold on a ticket that this is part of rebalancing the economy. We just cannot see the evidence for it.

Lord Wolfson: It just does not make sense. We have a lot of shops and in fact our headquarters are in Leicester, and that is where I work every day. The idea that somehow building one railway line to Manchester and Leeds that will be open in eight, nine, 10 or 25 years-I can’t remember how many years’ time it is-will somehow regenerate that area is nonsense. Every single day of the year, if you want to travel into Manchester from the south, in the Altrincham area, the best way of doing it is to go all the way round Manchester and in the other side because the roads are so terrible in the south of Manchester. If you want to travel on the M62 from Leeds to Manchester, every day there is a traffic jam-every single day. The idea that there are not better infrastructure schemes in which to invest to make people’s everyday life better in those areas is just nonsense.

It is that emphasis on "everyday life." It is what people are doing every day when they are going to their work. The quicker they can get to work, the more likely they are to take a job. If you can reduce the travel time to work, you increase the numbers of people who can go to work.

Q205 Chair: Lord Wolfson, are you saying you do not think that rail strategy has a part in this? You have spoken very forcefully in your views on value for money, and now you are talking about dealing with congestion and getting people to work. We have had other witnesses from business who are adamantly opposed to your views and have given us an entirely different view. Why do you think there is such a discrepancy?

Lord Wolfson: Most people would recognise that the difficulties people have getting to work are the biggest transformer of policies.

Q206 Chair: But why have we had such different opinions from other business leaders?

Lord Wolfson: I do not think anyone would argue that congestion, whether it be on commuter rail or commuter roads, is not a problem for business. The question is how much benefit we will get from investing the £33 billion.

Q207 Chair: But other business leaders who have come to our Committee have diametrically opposed views to yours. Why do you think there is such a difference?

Lord Wolfson: I was halfway through. I do not think they are diametrically opposed. I think what they will say is, "Look, there is a benefit of putting high speed rail into Manchester and Leeds." I would agree with them on that. There is a benefit. The question is, is the benefit anything like worth £33 billion?

Q208 Mr Harris: There has been a lot of talk about opposition to HS2, which is simply the first phase of what is envisaged to be a national network. But HS2 itself will only go from London to Birmingham. Do you accept that the business case for high speed rail would be transformed with the introduction of a national network linking London, we hope eventually one day to Glasgow, and that business case would be very different from the business case for HS2 as an isolated piece of infrastructure?

Chair: Mr Marshall, do you have any views on that or are the views of your group based just on the first part of these plans?

Jerry Marshall: I cannot see that extending the line further to Scotland will significantly change what is already a very weak economic case. I disagree with Lord Wolfson in that we believe the costs are greater than the benefits. We have done the sums and you have seen them. They have been peer reviewed by FTI and led by Vicky Pryce. You have solid evidence that it does not stack up. The problem is that people have misunderstandings about major issues like the value of time, which I am sure you have looked at; but 40% of the benefits come from the value of time. Given that people do work productively on trains, that is erroneous. I am almost as productive on the train as I am in the office. The time saving to Scotland of an hour would have little benefit in terms of time. The fundamentals of the case do not stack up, whether it is to Birmingham, Manchester and Leeds or Scotland.

The cost-benefit ratio is affected by the value of time and also by the unrealistic comparator. We should also consider the alternatives in terms of rail. There are much better and cheaper ways to provide all the capacity that we need: doubling West Coast Main Line capacity without any major infrastructure changes; trebling with a few pinch points; and providing less crowding than HS2 offers. There are far more benefits that will come out of that than through creating a completely new line to Scotland.

Q209 Mr Harris: One of the elements of the business case is attracting additional people to use HS2 who may currently fly or drive 400-odd miles. This is a new argument on me. Are you saying that the more you reduce the time of a journey the less attractive it becomes to people because they do not have enough time to work on the journey?

Jerry Marshall: No. I am saying that the benefit of time reductions is very marginal. What is more important is being able to work consistently. This goes beyond Scotland, but for those who have to get the train into New Street, walk to Curzon Street in Birmingham and then carry on, clearly it is a much more difficult journey than being able to work effectively on the train. The benefits of time savings are fairly marginal. When it eventually goes to Scotland there will no doubt be some people shifting from aviation. HS2 say 6%. We think that is overstated for all kinds of reasons. The routes from London to Scotland are already declining and much of it is already taken by train. The environmental benefits of modal shift from planes to the trains will be relatively slight.

Q210 Mr Harris: Can I ask the whole panel whether you see modal shift from air to train of itself as a good thing? Do you have a view on that?

David Bayliss: Can I make two comments? To deal with the first question, I have doubts about whether a more comprehensive network would substantially affect the benefit-cost ratio, but it might do. If we had a national rail strategy which dealt with the full picture, we would know the answer to that. My own view is that the economic geography of Britain is not well suited to high-speed rail when you compare it with France and Spain, for example.

The switch of travel from air to rail would be a good thing. It would reduce aviation emissions provided the airlines responded appropriately. In principle it is a good thing, but you have to ask the question, "At what cost?"

Q211 Mr Harris: I have one last question on the figure of 7% of all journeys being made by train. This becomes a bit of a circular argument: if only 7% of journeys are made by train, let us spend more money on roads. Do you think the Government have a role in rebalancing those figures and encouraging more people to travel by train rather than by car? Are we content for 93% of journeys to be made by car? Is that a good thing? Do we want to see more money invested in roads to try and get that 93% figure up a bit?

David Bayliss: You have introduced the figure. There are parts of the transport market where it would be advantageous to switch people from road to rail. I accept that and it needs to be thought through in the context of the different travel markets. My concern was that a huge amount of potential money is spent on meeting the needs of a small part of the transport market at the expense of the majority. Most travel goes by road, and road is more important to commerce and industry. You have had evidence on the importance of rail to commerce and industry, but all the literature shows that road is regarded by commerce and industry as more important. The problems on the road are more debilitating than problems on the railways.

Jerry Marshall: I think rail is a great way of travelling. I go by rail whenever I can because I can work on the train. We need to make it accessible to as many people as possible. One of the problems with HS2 is that there is not the level of connectivity that the West Coast Main Line has because that connects up all the urban areas in the midlands and obviously continues to the north.

Q212 Chair: If, together with the building of High Speed 2, there was a plan to make better use of the existing line and to link those lines up in a connected system, would that change your attitude?

Jerry Marshall: Why pay for capacity that we don’t need? The background forecast in growth from 2008 is 102%. The peak-time standard class capacity that we can create, simply by longer trains and by substituting one first-class carriage for a second-class carriage, is 138%. That is just the peak time standard class, so we do not need both.

Q213 Chair: Are you saying then that your argument is about capacity, not about linking up networks?

Jerry Marshall: We are already very well linked. The existing West Coast Main Line links up all these key cities in a way that HS2 does not do. People from Coventry will have to travel-

Q214 Chair: Yes, but my question to you was that if-and it is a big "if"-the HS2 plans were part of a linked network system would that change your view on it? From what you are saying, it appears it would not because you are looking at the capacity issue where you just disagree with the assumptions made for HS2.

Jerry Marshall: The benefits would have to exceed all the costs, properly assessed. If the benefits exceeded costs, we would certainly look at it. That is the basis of our objection to HS2. It is incredibly poor value for money. We are open to all alternatives and would look at them.

Bruce Weston: I would like to declare an interest in this. I am very keen on rail. My day job is as a railway consultant. I am not at all against rail. What I am against is HS2; I think it is the wrong project because, basically, we simply don’t need it. We are already a well-connected country. We are a small country. We have good, frequent, fast InterCity services. In the Eddington study, they did a piece of work that looked at the degree of connectivity by rail between capital cities and the next five largest conurbations. The UK came out pretty well from that. We have repeated that exercise and we still come out with faster average journey times than France, Germany, Italy and Spain. People realise this. Last month there was a publication of a survey of 25 European countries done by the EU, asking questions of long and medium-distance rail passengers about-

Chair: Mr Weston, for the moment I want to concentrate on the issue that has been raised. Other members may well raise wider European issues.

Q215 Iain Stewart: Rail Package 2 is often cited as the viable alternative to meeting forecast growth in passenger numbers. Would you not agree, though, that in the long term RP2 will only give a finite capacity increase and that looking at the position over the next 30 to 50 years, we are going to need RP2 or elements of it and another strategic north-south rail route?

Jerry Marshall: RP2 in itself is not an optimal solution. We are working on a much better version than that. There are two issues here. One is that HS2 only delivers the urgent capacity needs such as the overcrowded fast commuter trains to Milton Keynes and Northants in 2026. I do not think Milton Keynes can wait as long as that. By dealing with Ledburn Junction at £243 million-a third of what the Government are paying in this Parliament just to plan HS2-we can double capacity from four to eight trains an hour to Milton Keynes. That can happen quickly. There is a speed issue in the first place.

Secondly, there is the long term that you are raising. As I mentioned earlier, we can treble the capacity if we deal with the rolling stock changes, which go a little bit beyond RP2, with, ultimately, 12-car trains except for Liverpool, and four of the pinch points identified in RP2. That trebles capacity, against which we have this 100% expected increase in capacity. We have an opportunity to do the simple rolling stock changes and then review in the 2030s and see whether we really are growing as fast as is expected. We strongly suspect that that growth will drop off because there has been no increase in long-distance domestic per passenger travel for decades in the UK. What we have seen is a modal shift to rail for lots of good reasons-for example, being able to work on trains-which are coming to an end simply because once you are working as efficiently as you are in the office it won’t continue. I think it will go back to norm, which is that for many decades rail travel has not particularly increased.

Add to that that we are now at a tipping point in terms of technology. A lot of us have started to use Skype video conferencing and webinars instead of one-to-one meetings in the last year. We have only had the internet 15 years. The benefits for this go up to 2086. Look ahead another 15 years. I think we will really see a step change in the way that particularly business people communicate. It won’t cut business travel. I recommend you always meet someone the first time, but it will reduce the growth significantly. Taking the HS2 very high-risk approach, all or nothing, £33 billion, when you’ve got it you’ve got it, doesn’t make sense. I believe you should be taking an incremental approach. The danger is that we do HS2 to Birmingham and then give up because it is not being used. It is underused, as is HS1, and it becomes, as we have been saying for a while, a white elephant.

Q216 Iain Stewart: Can I challenge some of your assertions there, particularly that RP2 will treble capacity?

Jerry Marshall: Not RP2. I am talking about an alternative.

Q217 Iain Stewart: Or RP2 plus. Some experts in the rail industry have calculated that at peak times, which are obviously when the main capacity demands are, RP2 will only increase capacity by 25% and will not even come close to meeting the forecast increase. The second point I would like you to address is that RP2 will deliver some extra capacity on the InterCity services but at the expense of stopping services to places like Milton Keynes, Nuneaton, Lichfield and Tamworth, which have already seen a diminution in services since the West Coast Main Line upgrade.

Jerry Marshall: On the first point, it is just a matter of arithmetic. It is not really complicated. The peak-time standard class number of seats between 4.30 and 6.30 in the evening out of Euston on the InterCity services is under 6,000 at the base level 2008 timetable. By making the various changes we are suggesting, we get the seat numbers up to just over 13,000. That is an increase of more than 130% where you need it: standard class peak-time capacity. It is simply wrong to say that that is not the case.

Q218 Iain Stewart: These are not my figures. These are credible industry experts who have challenged the numbers. I do not want to get into an argument but I am just trying to make the point that your case is not a unanimous view.

Bruce Weston: Could I try and clarify this a little because the way that the Rail Package 2 numbers are presented is frequently quite misleading? They are presented as an increase over the do-minimum situation, which has everything up to the increase in most of the Pendolino fleet plus the four extra Pendolinos built into it, plus the high intensity December 2008 timetable, none of which is actually in the base from which you calculate the demand increase. If you do it on a like-for-like basis, instead of getting a 54% increase with RP2, which is what it delivers against the do-minimum basis, if you do it on the same basis as the demand, you get an increase of 151%. This is entirely from DfT numbers that we provided to them. The only comment we have had is, "We don’t do our numbers that way." We can take it as read that you get a lot more capacity.

Rail Package 2 is not particularly efficient as a way of addressing peak capacity because it is a clock-face timetable: the same number of trains each hour at the same times each hour. The alternative that has been developed, which is an improvement on that, is not a clock-face timetable and provides considerably more peak capacity. The way to do the sums is not against a do-minimum that is fairly near the conclusion but to start it back from the level at which you are taking the demand, and that is the 2007-2008 base, not where you get to after you have had all the timetable changes and you have lengthened most of the Pendolino fleet.

Jerry Marshall: On your second point, which was the fast commuter train capacity up to Milton Keynes, we have developed train paths which show you can increase from four to eight trains an hour. I completely accept that that is urgently needed capacity. The way you can do that is through the grade separation project at Ledburn Junction. That is urgent.

Q219 Iain Stewart: I am not just talking about commuter services from places like Milton Keynes to Euston. I am talking about InterCity services that stop at several points along the line of route. The trend is to speed up the journey times from London to Manchester and London to Glasgow but you start stripping out these intermediate stops. For my constituents that is causing quite considerable anger. I can only see RP2 exacerbating that.

Jerry Marshall: As I say, we can more than double capacity on the West Coast Main Line InterCity services through these train extensions or where the companies-

Q220 Iain Stewart: You are missing my point. These are stopping services. RP2, it is put to me, will certainly enhance capacity on the major city centre to city centre times but at the expense of intermediate stops.

Jerry Marshall: I do not see why there is any difference in terms of capacity if you have a longer train and only three rather than four first-class carriages.

Iain Stewart: It does not stop.

Q221 Chair: Mr Marshall, the issue that Mr Stewart is putting to you is that it is not necessarily just about capacity but intermediate stops.

Jerry Marshall: Sure, but what I am saying is that if you don’t have more trains but you have more capacity on the InterCity through these changes, it does not reduce the capacity for the stopping trains.

Q222 Paul Maynard: It is fascinating to listen to you all so far. I have to congratulate Mr Marshall on his incredible ability to be more productive on the train than he is in the office-

Jerry Marshall: I am not saying I am as productive.

Q223 Paul Maynard: I am sorry. I have not actually finished. Can you possibly be quiet and listen for a moment rather than talking to me? As a frequent commuter on the West Coast Main Line in standard class I certainly do not recognise that. I am also always reluctant whenever anyone talks about reaching a technological tipping point that that is also the tipping point where they are beginning to lose the argument.

I have listened carefully to your responses to some of the questions, particularly from Mr Harris. Whenever an alternative scenario is produced , I note that your responses often focus on either the benefit-cost ratio or the economic scenarios. Most would agree that it is very easy to deconstruct the business case and indeed the economic case. It is a very subjective process. You can alter any one of a number of variables and effectively have a random number generator.

Equally , I note that some of you- Lord Wolfson and M r Bayliss, for example- look at this from a more macro level of , "Shouldn’t we be investing more in roads? Shouldn’t we be investing in that? " As an apostle for road charging , I would agree with Lord Wolfson entirely, but our job on this Committee is to try and assess whether High Speed 2 is an appropriate project to embark upon and also in particular to test the arguments of both sides-both Government and the opponents.

When I am listening to you as opponents of this project , you almost fall into your own trap. If we could take some of Mr Marshall’s assertions regarding Rail Package 2, I n ote he is trying to say that he i s coming up with a sort of super version of Rail Package 2. That is a bit like a benefit-cost ratio ; y ou can put whatever you want in it and get whatever you want out of it. But d o you have a figure for the revenu e impact of declassifying first- class carriages? I could no t see it anywhere in your written evidence that I have gone through. I am asking Mr Marshall and not you , Mr Weston.

Jerry Marshall: No, I do not have a figure on that. Bruce may have a figure. We could work it out and send it to you. The load factor is only 20% on the first-class carriages so I do not think there is any great difficulty in going down from four to three carriages because they are grossly underused at the moment.

Q224 Paul Maynard: Is that the average load factor or the load factor at peak times or off peak?

Jerry Marshall: It is the average load factor.

Q225 Paul Maynard: Just looking at the strategic case for high-speed rail, Mr Marshall, because that seems to me to be as important a consideration as the economic and business cases, how would you view the extension beyond Birmingham in terms of the strategic case for high-speed rail? I know that you can have a discussion about its impact on the benefit-cost ratio, but with regard to the strategic case for high-speed rail would you not agree that it becomes a more strategically defensible proposition once you go north of Birmingham?

Jerry Marshall: If it happens at all, it will be less of a white elephant if it goes to Manchester and to Scotland. But the evidence from, say, HS1 is that it will be heavily underused. HS1 is running at one third of forecast capacity.

Q226 Paul Maynard: What differences do you see between HS1 and HS2? Why do you think they are comparable projects? I notice that many opponents of HS2 constantly cite HS1, even though, to my mind, it is a very different project. It just has two of the same letters in it; that is all.

Jerry Marshall: They are very different projects, but I think one can learn from other high-speed projects not just in the UK but elsewhere. One of the consistent factors about rail project forecasts is that nine out of 10 rail projects overestimate the number of passengers. They forecast too high by an average of 106%. We can learn lessons from that. There are some similarities of course. Because it is the UK, distances are relatively low, and the cost per mile is very high compared with, say, France. That is similar with HS1 and HS2.

Q227 Paul Maynard: When we were in Germany last week, which I think is perhaps the most similar situation to ours, and speaking to Deutsche Bahn, they were quite clear that they had adopted what they thought were conservative demand forecasts that were exceeded by the demand for the new lines that they then put in. You can assert that demand is never exceeded, but what if it is? What do we do then?

Jerry Marshall: I did not say that; I said nine out of 10. Germany is very different because there was a radical reduction in travel time. They have played catch-up. It is now very similar to the West Coast Main Line in terms of both distance and travel time between London and Birmingham. Cologne-Frankfurt is very similar to that. Inevitably, there would be good use of it because of that very substantial reduction in travel time compared with the time differences that HS2 would make. When the railway first came in, the time distance from eight hours, Liverpool-Manchester, to just over an hour when trains came in, was a step change and it made a radical difference.

Whenever that has happened on the continent, and it has often happened that journey times have halved, it has made the line more successful. Others all over the continent are close to bankruptcy because they have not stacked up and have not had the demand. The line into Amsterdam, for example, is close to bankruptcy. The line from Milan to Paris has been downgraded to standard speed. Across Europe there are lines that are in deep financial difficulty.

Paul Maynard: And there are others that are successful. Thank you.

Q228 Kwasi Kwarteng: I want to talk about the European experience of the Committee and see what you thought about some of the findings. We asked the Deutsche Bahn person about slashing the times. He said that on some of the routes there was a capacity issue; it was not the saving of the time, but the increase in capacity. I do not think any of you as yet have really addressed the capacity issue in the sense that Lord Berkeley, who is involved in freight, said that High Speed 2 was absolutely essential to increase the capacity for freight. This was similarly something we came across in Germany. In terms of the freight routes, it is very important and they were transformed by High Speed 2.

Jerry Marshall: Freight forgets that the new line from Felixstowe to Nuneaton will increase freight capacity enormously. Bruce will know the figures more accurately, but that will be a very substantial input in creating capacity and taking it away from the southern part of the West Coast Main Line. I do not think there is a capacity issue in terms of freight.

The other point that I do not think was brought out in the business case at any point was the Chiltern Line speed increases and time reductions. That will bring the Chiltern Line down very close to the West Coast Main Line speeds which will inevitably draw off capacity from the West Coast Main Line. It is seven minutes slower than the West Coast Main Line to Snow Hill. That has not been included in the figures that the DfT have prepared. That opens later this year.

Bruce Weston: Neither has the lower price of Chiltern, incidentally.

Q229 Kwasi Kwarteng: Does anyone else have a comment on freight, because I have a supplementary question I would like to ask?

Bruce Weston: Only that the Felixstowe to Nuneaton line could take half the freight that is currently on the southern part of the West Coast Main Line.

Q230 Chair: Mr Bayliss, what are your views on freight? We did have very strong evidence from Lord Berkeley that High Speed 2 was very important for releasing other lines for freight. He did make this case very strongly. Do you have a view on freight?

David Bayliss: Not specifically on freight, Madam Chair, but on the general principle that if we see an increase in demand then we must increase capacity to accommodate it. I thought we had got beyond that. That was called predict and provide and we don’t do that any more on roads or air travel.

Q231 Chair: Do you think we should do it for freight?

David Bayliss: Why should we do it for freight?

Q232 Kwasi Kwarteng: This is a more general question. As you know, the Committee went to France and Germany and looked at how high-speed rail had developed there. Not once did anyone say, "Don’t do it. This is going to be a disaster." On the contrary, people suggested that they were trying to extend their networks. The French are trying to extend it. They have something like 18 lines. The Germans were looking to increase the network by 60% from now to 2020. Everyone was broadly positive. What do you say to that? Are you saying that we are so different and so special that the experience they have found in the last 20 years, which is one of almost unalloyed success, would not be repeated here and, on the contrary, it would be a disaster in Britain?

Jerry Marshall: There are two main differences. One is that 92% of passengers in the UK are very satisfied with journey times. That is higher than France, Germany and all our main competitors. It is the second highest in the EU. We already have a very good system that people are very happy with.

Q233 Kwasi Kwarteng: Rail is so good here that we don’t need it.

Jerry Marshall: That is only one factor. Secondly, our cost per mile on the route to Birmingham is £160 million. In France, it is between £11 million and £16 million per mile. The cost structure in the UK is very different. That is partly to do with density of population and partly to do with distances. I don’t know who the people talking to you were or where they were coming from, but the third thing is that if you look more broadly, unemployment in greater Lille has actually increased relative to the French national average since high-speed trains arrived. There has not been a transformational effect on Lille or Lyon if you look at the broader picture in those areas.

Q234 Kwasi Kwarteng: Does anyone else have a view?

Lord Wolfson: It is not a question of whether this would be a nice thing to have. It would definitely be a nice thing to have-lovely.

Kwasi Kwarteng: That view is not unanimously shared.

Lord Wolfson: It would be lovely to be able to jump on a train; very nice. The real question is about cost. The interesting thing that struck me about Germany when I was there last week was how good their motorways are and how relatively uncrowded they are. I went from Gütersloh to Frankfurt. It took me two hours, virtually uninterrupted. You would never get that experience on a British motorway at peak times. This whole issue is not about whether high speed rail is a good idea. It is about whether it is a good investment for this country at this time, given the fact that we have limited resources. That is my objection. My objection is not that in itself this is a bad idea. It is that in itself it is a bad idea if it means that we cannot invest in other infrastructure that is desperately more important.

Bruce Weston: There is one other very important difference between the High Speed 2 proposal and the situation in Europe. The extended network, which is what the Government are consulting on in terms of their strategy and the economic case, requires 18 trains per hour in peak with no services going to Heathrow. They are either extra or emendation. In contrast-you have heard evidence on this-12 has been the maximum in Europe. This is very important because nowhere is able to do 18 trains an hour. It requires new technology. There is a risk that that technology will not be deliverable. We have asked HS2 Ltd questions about this. We have asked them for the evidence on which they are basing the assumption that it will become possible. They have not given us any. They have told us that they have spoken to train manufacturers, signal manufacturers and operators of other high-speed railways in coming to this view, but they are refusing to elaborate. We made a complaint to the Information Commissioner on this. It is absolutely crucial because if you cannot deliver 18 trains an hour, you cannot get the benefits and it becomes pointless taking a branch up to Leeds because you cannot carry the traffic. Nowhere in the economic case that has been made for HS2 is there any discussion of this risk. There is no account taken either in terms of costs or in terms of producing the benefits.

The situation is actually worse than that. Although HS2 Ltd have put in their documentation that they expect this will become deliverable, last summer they are on record basically accepting that it was not; that the maximum they would be able to deliver on a Y configuration would be 14 to 15 trains an hour. There were several options for what they could do. They could four-track the stem of the Y. They could reduce the services or build a second railway. HS2 Ltd are recorded as favouring building a second railway.

Q235 Kwasi Kwarteng: What Lord Wolfson said was very interesting. He said it is very much a return on capital point and that there are other projects where we could get a better return. Broadly, if we had infinite capital, he thinks that there would be benefits from this. You are suggesting that, even if you had infinite capital, we would not gain anything. I would be interested to know what the position of Mr Bayliss and Mr Weston is in regard to this project. Is your issue with it that there are other projects that we can get a better return on, or do you think in absolute terms that it is a turkey and that we would lose money?

Bruce Weston: I think in absolute terms it is a turkey. If you do the sums properly, you get less money back in terms of economic and social benefits than you put in in terms of subsidy. It has a benefit-cost ratio of about half.

Q236 Kwasi Kwarteng: What is your position on this?

David Bayliss: It may be, if we had enormous amounts of capital, that this scheme would be worth building. However, before you could determine that, you would need to look at the other things that should be done more cost-effectively to the rail network. I suspect the residual benefit-cost ratio after that would be rather low.

Q237 Kwasi Kwarteng: Your position is rather similar to Lord Wolfson’s that there could be a return on this thing.

David Bayliss: It is possible, but on the basis of what we see now it seems rather unlikely.

Q238 Iain Stewart: I have just one very quick follow-up question to Mr Weston’s point. I am a little puzzled. As part of your evidence you are suggesting that the passenger demand will not need to be met by High Speed 2-it will be "a turkey", as you say-but then you are also criticising the number of train paths as too much for the line. Surely both positions cannot be correct.

Bruce Weston: I think they can be correct. Basically the point we are making about demand is that there is tremendous uncertainty. The Government have taken a number of positions which favour more rail growth than they would do if they were taking better evidenced positions. Putting that on one side, to be competitive with existing services you need a level of frequency on the services on high-speed rail. They have worked out what they need and they say that is 18 in peak. All I am saying is that, as a matter of fact, there is a very serious technical risk about whether that is deliverable. The West Coast Main Line route modernisation, which was based on the idea that you would bring in a new signalling system and it would reduce costs, was abandoned and you went back to conventional signalling. If something similar to that happened, you would not be able to deliver the service specification to be able to go up to both Manchester and Leeds. That seems to me a pretty important risk.

Q239 Jim Dobbin: I have a couple of points to raise, Chairman. I was interested in Lord Wolfson’s concern about the lack of road space. The M62, as it happens, goes right through the middle of my constituency with one town on one side and one town on the other side. The biggest bane of my life and my local community is heavy goods vehicles trundling along the M62. Do you not think that if you were to expand the motorway system, all you would do is fill it full of more HGVs, which will further disrupt the quality of life of my constituents?

Lord Wolfson: It is a very good point. The real question is, do we want economic growth? If we want economic growth, that will involve more traffic. I agree with you that more capacity on the road networks will result in more traffic, and that traffic will represent increased economic growth. There are two ways of tackling this problem. The first is the genuinely Luddite way. It is to say: just stop the traffic, strangle it; put it in traffic jams and it will go away. The second is to say: invest far more in technology to reduce the noise that roads make. It is criminal in this country that we do not do more to reduce the noise from railways and roads. Even in China, which relatively is a much poorer country per head than Britain, they go to great lengths to shield the noise when they have roads and railways going through high urban areas. The technology is there. You can reduce the noise by 50% by using different types of surfaces on the road and different types of sound barrier next to the road. We do very little of that. I would answer that question by saying, rather than strangle the economy and stop the traffic, make the traffic less noisy and address the problem that way.

Q240 Jim Dobbin: What about transferring freight from road to rail?

Lord Wolfson: There is a big problem with that, and I speak as a major haulier myself. Ultimately, all that freight has to get to the consumer. The consumer does not come to the rail hub. The consumer goes, in our case, to 550 shops. All the freight we get in by ship we take by rail to a hub to put into our warehouses. To get it from the warehouse to the stores and customers-we deliver next day to most of our mail order customers-rail is just not an option because it cannot do it in the time. The idea that rail could service shops or consumers in their homes in a timely fashion, for example, is not really feasible.

David Bayliss: May I add to that, Chair? I agree that we need to do something about the road network. I am looking at a chart showing that we have a third of the provision of motorways per capita as Germany and less than that compared with France. It is not simply adding new capacity. We need to manage the demand on the main road network by the introduction of some sort of road pricing system. More capacity coupled with road pricing is the way ahead, with high environmental standards, as Lord Wolfson has said.

Q241 Jim Dobbin: Other members of the Committee have touched on the comparisons between Europe and the UK. There is just one point. Would you all agree that the channel tunnel has been a benefit to this country in so far as we have access to our biggest trading partner?

Lord Wolfson: The key question is not whether it has been a benefit but whether it has been a benefit sufficient to pay for the capital that was invested in it, taking into account the opportunity cost of what could have been done with that capital.

Q242 Kwasi Kwarteng: What is your view on that?

Lord Wolfson: My view is no, but I do not have the figures. It is my gut feel. It was predicted as having 25 million passengers by now and it has had about 10 million. One can only assume that the case upon which it was based has not succeeded.

Q243 Chair: Are you saying, then, that it should not have been built?

Lord Wolfson: I think if we had our time again we could have spent the capital more wisely.

Q244 Chair: In doing what?

Lord Wolfson: Investing in our road network, for example, or improving our commuter trains into the centre of London. I think there are plenty of examples.

Kwasi Kwarteng: That is a consistent point.

Q245 Jim Dobbin: That is interesting. The point I am trying to get out is that, in my view, the channel tunnel has benefited part of the country, between here and the south. Therefore, it becomes a magnet for industry and people who want jobs.

Lord Wolfson: Does it really, though? Has that really happened?

Q246 Jim Dobbin: Do you not think that we should be sharing that with the rest of the country?

Lord Wolfson: But has that really happened? Has it really been a magnet for jobs?

Jim Dobbin: Those are all the indications.

Lord Wolfson: Not in my experience. In the south-east of England I cannot see where it has created jobs.

Jim Dobbin: That is the first time I have heard that view.

Lord Wolfson: I just wonder where they have come from and where they are.

Q247 Chair: Does anybody else want to comment on the economic impact of the channel tunnel?

Jerry Marshall: On the specific case of regeneration in the south, if house prices are a reasonable proxy of development, I understand that house prices in Ashford have not risen as fast as house prices away from HS1 and the channel tunnel route. I do not see that there has been great stimulation to the south. What was forgotten there was the level of competition from the ferry companies. Again, with HS2, we have forgotten that there will be competition from the West Coast Main Line, the Chiltern Main Line and, ultimately, airlines from Paris to Birmingham.

Q248 Jim Dobbin: You are really suggesting is that HS2 would be of no benefit to the midlands, the north-east, the north-west and Scotland.

Lord Wolfson: No. We have to be very clear. What virtually everyone on this panel is saying is not that there would be no benefit but the benefits will not be sufficient to warrant the investment of capital in that form of transport, particularly given the requirements elsewhere of our other infrastructure and how much better that money could be put to use. Coming back to your channel tunnel thing, it is not about saying: is it beneficial or not? It is about quantifying the benefit and working out whether that benefit justifies the investment we have made in it as against other investments we could have made.

Q249 Chair: You keep saying, Lord Wolfson, that other things could make better use of the money. What are the other benefits, assuming the same money was available over the same period of time, and we are talking about a 10-year programme?

Lord Wolfson: If you look at the Eddington report, you can take a list of any number of road improvements with benefit-cost ratios of more than 7.

Q250 Chair: So it is road improvements.

Jerry Marshall: I would say rail as well.

Q251 Chair: I am asking Lord Wolfson at the moment.

Lord Wolfson: It is anything where you are getting a high benefit to cost ratio. That is the rationale of business. What drives business is the careful and sensible use of capital. I see no reason why that should not drive Government as well.

Q252 Chair: I know the general statements. I am trying to get behind that.

Lord Wolfson: M25 Junction 28 to A12 Brook Street improvements-7 points. I can go through the whole list.

Chair: All right, you have said roads. Maybe you are aware that Sir Rod Eddington also came to this Committee following his report and expressed support for high-speed rail-not for maglev but for high-speed rail.

Q253 Kwasi Kwarteng: Lord Wolfson, I am equally aware that you are very conscious of return on capital, and that is very important. But I have to stress the experience that we found in Europe. They are equally eager custodians of capital.

Lord Wolfson: No. If you look at European Governments, they are not terribly great custodians of capital.

Q254 Kwasi Kwarteng: Just to the general panel, what you are saying goes against the evidence of every country that has had high-speed rail. No country has said, "We want to uproot the system and destroy it." You refer to China. They are building thousands and thousands of kilometres of high-speed rail.

Lord Wolfson: Yes, I saw it just last week.

Q255 Kwasi Kwarteng: And you have been on it. Every industrialised country in the world is investing in this infrastructure. You are saying that, for whatever reasons, because we are very particular or because the rail is so fantastic here-

Lord Wolfson: No, that is not what I am saying.

Chair: Please let Dr Kwarteng finish his point.

Q256 Kwasi Kwarteng: I understand your return on capital point, but I am trying to extend that. If what you say is true, why is it that every industrialised country that has this technology is seeking to extend it and does not regret their initial move to introduce it? Why is that the case?

Lord Wolfson: Two answers. First of all, Governments are always loth to admit that they regret anything. How many Governments do you think are going to stand up and say, "Actually this is a great big waste of money"? It is just not going to happen.

Q257 Chair: More to the point, first, you think that Governments in general do not want to say that they are wrong.

Lord Wolfson: Exactly; of course not.

Q258 Chair: Anything else?

Kwasi Kwarteng: It was Government people we were speaking to. We were talking to businessmen.

Lord Wolfson: I cannot answer the question.

Kwasi Kwarteng: Sorry.

Lord Wolfson: The answer to the question is that once you have got it, of course you do not regret having it. The question is, is it the top priority for UK investment? The answer has to be no. It comes back to that. I do not think HS2 is necessarily a bad idea, but it is a bad idea if it means that we are not investing in projects that are far more deserving of the money that is being spent.

Q259 Chair: Let me go back to what they might be. Mr Marshall?

Jerry Marshall: Yes; there are other rail projects which will do far more to regenerate the north. For example, the Northern Hub will be crucial. Electrification of the Midland Main Line and electrification of the line to Swansea and into Cornwall will have great environmental and business benefits and is relatively inexpensive compared with HS2. I would dispute that every country says it is a good thing. Portugal have decided to suspend construction of their high-speed line. The line I mentioned to Amsterdam is close to bankruptcy. There are some problems overseas as well.

Kwasi Kwarteng: That is particular networks, but they all remain committed to the thing in principle. We are just talking about one line.

Chair: It is a fact that in investigations that the Committee have carried out, not talking to Governments particularly but talking to businesses a lot more, certainly a different view has been given, but we must move on now.

Q260 Julie Hilling: I have a few little areas which are dotted around. I want to pick up the point you are making about other investments. You seem to indicate that, if we are going to do High Speed 2, then none of the other investment will take place. That is patently not true and that should be recognised. The Northern Hub will hopefully be in the next control period funding. That is not dependent on whether or not High Speed 2 goes ahead.

Jerry Marshall: The Government clearly want to cut subsidies to rail from the current £5 billion a year. It looks to me as though HS2 will require subsidies. It seems to me that future Governments will be very cautious about other investment, which will be impacted and slowed down and will not happen as quickly, such as the Midland Main Line and indeed intra-conurbation metro services that will provide great benefits. Some of these systems like Northern Hub will be negatively impacted by HS2, because HS2 will provide a drain to London. I note that Geoffrey Piper was talking to this Committee about Manchester being a satellite of London. I am not sure that is what Manchester and the north-west want. They should be strong business areas that are competing on their own terms in a European context rather than becoming satellites or dormitory towns of London.

Q261 Julie Hilling: I do not particularly want to ask you about the business case, but I do want to put on record here that businesses across the north-west, including Manchester Airport, are strongly in favour of High Speed 2. I think that should be on the record. You said earlier that there was no evidence of modal shift. I want to ask you about the modal shift th ere has been in the north-west , particularly in flights from Manchester to London . Less people are using it as a hub airport; people don’t do it any more. Do you accept that there is modal shift if train times are reduced considerably?

Jerry Marshall: Absolutely. Over the last 15 years there has been a very significant modal shift from both cars and coaches. The overall background of a long distance domestic travel passenger has not changed. There has not been a growth in that. That is going up in line with population. But there has been a shift to rail because it has been possible to work on trains, and there is the internet and airline-style pricing. They have been clever about pricing because of service improvements. All these things have made rail more attractive. It is why we have had a significant increase in rail. Another one, of course, is the increase in Government subsidy of rail, but most of those drivers are coming towards the end of their life.

Q262 Chair: So you do not think the expansion is going to continue. That is what you are saying.

Jerry Marshall: I think it will continue, and we accept that the background growth of 100%, though it might be overstated, is the case we need to deal with, hence working on an alternative that will much more than cover that 100% increase.

Chair: You have given us the detail of that in your written evidence.

Q263 Julie Hilling: I do not think you have collectively said how we are going to deal with the capacity issue. You have talked about improving Ledburn Junction, but Network Rail are saying that within 10 years the West Coast route will be at full capacity. We are talking about a need for freight paths. Where does that exist? If you don’t build this, then how do you deal with that capacity? You talk about the expansion of Milton Keynes and Northampton. A big increase is predicted in terms of population in those areas. How are you going to deal with this if we do not build new track of some description?

Jerry Marshall: As I have mentioned before-

Chair: Just a moment, Mr Marshall. I think somebody else wants to comment.

Bruce Weston: There are a couple of points on that. On the idea that the West Coast Main Line is going to be full up in 10 years, I understand that David Higgins gave this Committee evidence concerning how quickly the West Coast Main Line might fill up. He did predicate his observations on the basis of growth continuing as it has in the last few years. Of course Network Rail do not predict that it will grow at that rate. They predict it will grow at a much slower rate.

Chair: We have received evidence from Network Rail directly so we will assess what they told us.

Q264 Julie Hilling: I am still wondering if there is an answer to what you are going to do about that need. Just saying, "We will put another carriage on a Pendolino" does not solve the problem.

Jerry Marshall: It is much more than that. We have supplied the detail, and we have talked about how we can double and ultimately treble capacity on the West Coast Main Line by dealing with pinch points. That creates massively more capacity-all that we need. It also takes it in a more incremental way so that we can wait and see what really does happen to demand. No one really knows exactly what will happen, but if we can cover this immediate forecast to 2043 very comfortably, we can take a fresh look in a couple of decades and see whether it really is continuing to cope with it.

Chair: Thank you. You have also backed this up with written information. I want to move on because we have other witnesses waiting.

Q265 Steve Baker: Very briefly, you have all looked very closely at High Speed 2. You have all passionately argued against it. Is there anything that could be done to HS2 to make it acceptable to you?

Lord Wolfson: Yes. First of all, reduce the cost of it and start to look at innovative ways of funding it. It is absolutely absurd that we are not using the potential uplift in property values around stations to help fund the building of the railway. Secondly, we could build it faster. It is ridiculous that in China they built 1,300 km in four years, 85% of which is elevated. In the UK, it is going to take us four times as long to build something that does not hit anything like the 1,000 km mark. If you build it faster and more effectively, you do not have to start spending the money now. That means the time value of the money increases, which means that you get a much better return on the investment.

There are all sorts of things that can make this project viable if we look at it, but basically it comes down to two things. First of all, reduce or mitigate the cost through being innovative and clever about it. Secondly, increase the speed at which you build it because that reduces the dead time you have between the beginning and end of construction.

Bruce Weston: The problem HS2 has is that as long as there is the ability to improve the capacity you have on the existing network, that can be done much more cheaply and incrementally than building a new railway with all the risks you get with that.

Q266 Chair: The question was whether there is anything that could change your view. Are you saying no because you are looking at other ways of dealing with the problem?

Bruce Weston: What would change my view is if you actually reached a point, which you might in 35 or 40 years’ time, where you have run out of those opportunities and you feel that you need to build a new railway. But if you did, because the approach on time savings is misguided, you might trade off between shorter journey times and environmental impacts and energy consumption and noise. That trade-off will tend to favour a slower speed that could follow existing lines and you would build your new line near a motorway.

Q267 Chair: Thank you. Mr Bayliss, you probably did answer this point earlier, but is there anything you want to add?

David Bayliss: If the Government doubled or trebled its capital transport budget to allow more deserving projects to go ahead, then it may be that there could be a case for High Speed 2.

Lord Wolfson: I agree with that.

Q268 Chair: Thank you. Mr Marshall, is there anything that would change your mind?

Jerry Marshall: Simply to say that the case is so bad environmentally, technically and economically that it is difficult to see how tweaking HS2 would make a difference. You need to go back to the drawing board and look at what the key priorities are and the best ways of dealing with them.

Chair: Thank you very much, gentlemen, for coming and answering questions.

Examination of Witnesses

Witnesses: Councillor Martin Tett, Buckinghamshire County Council, Chris Stokes, 51m, Professor John Tomaney, Newcastle University, and Councillor Sue Vincent, London Borough of Camden, gave evidence.

Q269 Chair: Good morning and welcome to the Transport Select Committee. I start by asking you to identify yourselves with your name and the organisation you are representing.

Professor Tomaney: I am John Tomaney from Newcastle university.

Sue Vincent: I am Councillor Sue Vincent from the London Borough of Camden.

Martin Tett: I am Councillor Martin Tett. I am Leader of Buckinghamshire County Council and I am here in my capacity as Chair of the 51m alliance of local authorities.

Chris Stokes: I am Chris Stokes. I am a rail industry consultant working for 51m and also pro bono.

Q270 Chair: Could you start by telling us your main reasons for opposing High Speed 2?

Professor Tomaney: I should begin by saying that I am pretty agnostic about High Speed 2. My interest is in regional development and assessing the claims that have been made by Ministers in DfT and other documentation that HS2 has the capacity to transform the economic geography of the UK. I am particularly interested in that question. As to the wider issues, as I say, I am agnostic and I am not part of any campaign or representing any organisation.

Q271 Chair: Do you want to declare that you are a member of any other campaigns?

Professor Tomaney: I am not a member of any other campaign, no. I would like that on the record, Chair.

Sue Vincent: I am particularly concerned about the lack of assessment that has been done on the impact of the London terminal at Euston, and, in particular, the comparison between other London terminals; the criteria that High Speed 2 has proposed for the London terminal do not seem to fit in Euston, particularly around the minimal impact on the surrounding area. I am also concerned with the impact that it will have on existing tube networks and the North London line.

Q272 Chair: Is the basis of your concern the local impact?

Sue Vincent: Yes.

Q273 Chair: Is this affecting businesses as well as individual people?

Sue Vincent: Yes, it is. It impacts on existing businesses but also businesses that are here today that are proposing to invest in Camden, but obviously blight has already taken hold.

Martin Tett: I may have a different perspective from the witnesses you heard earlier. As local authorities, we are very used to having to take a bigger picture perspective at times to push through schemes that are quite often unpopular locally. I am sure as MPs you are always familiar with that as well.

We set out to test against four key criteria. We looked at the business case to see if that actually stacked up. We looked to check whether all the options had been sufficiently evaluated. We wanted to check sustainability of the project, particularly its green credentials. We also wanted to test the national interest perspective to see if it really would effectively narrow the north-south divide. Our conclusion in all four is that it has been found seriously wanting.

Q274 Chair: Do you think there is any possibility that you could change your mind and be satisfied on any of those tests?

Martin Tett: I think not, and I will be very blunt about it. The business case has some very serious flaws to it. I am happy to elaborate on those. The green credentials in particular are really unproven. If anything, it will have a serious negative carbon impact, which is something the Secretary of State has significantly-I will be careful how I say this. Those who advocate HS2 have misrepresented the green credentials of this. We are very keen as local authorities on the whole sustainability agenda. We are very keen on a balanced approach to investment. But when you look at HS2 there are some serious deficiencies. It relies on increasing travel.

Q275 Chair: Members may ask you more detail on that. I just want to get a picture of where you are coming from.

Martin Tett: I apologise. It would be very difficult to change the business case and the green credentials in particular in such a way that as local authorities we could support HS2.

Q276 Chair: Thank you. Mr Stokes, what are the main reasons?

Chris Stokes: There are several reasons. First, there is the very high capital cost. I am thinking in terms of the high capital cost per mile which does put HS2 in a different league from the European high-speed lines you looked at. Secondly, there is the time. There are no benefits until 2026. There is overcrowding on the West Coast Main Line route. In particular, Milton Keynes and Northampton peak overcrowding is a problem now. I do not think that can wait until 2026. It is worth making the point that it is very disruptive. Because of the rebuilding of Euston over a seven to eight-year period, HS2’s own submission to you says that they would expect to maintain at least the off-peak level of service worst case. That is a 40% reduction in commuter peak capacity into Euston.

Lastly, HS2 clearly provides a great deal more capacity but it is unbalanced. Birmingham, where 1,100-seat trains can operate four times an hour, has enormous capacity. It is more than I think it could conceivably need. But where trains go on to the existing network-for example, to York and Newcastle, thinking of the full Y, and to Preston and Glasgow-HS2 provides no more capacity than now because it is dumping trains on already very congested parts of the existing network.

Q277 Paul Maynard: Professor Tomaney, I would like to explore some of your evidence. I accept your argument that merely declaring "build it and they will come" in terms of regional development is not a convincing argument. The Government need to adduce more information. What is your assessment in terms of the overseas examples of what impact high-quality regional governments’ economic planning had on the success of individual routes? Was that a controlling factor?

Professor Tomaney: Yes. To the extent that you could point to examples in provincial Europe where there has been development gain as a consequence of the arrival of high speed rail, it seems to me that what has been critically important in that process has been massive investments by regional, state, provincial and national governments in creating the conditions for development around those stations. The stations themselves do not, on their own, provide those development opportunities. What is required is much larger-scale economic development planning, usually by regional development authorities of one kind or another, which is slightly ironic. That, to me, is a very key point. If we look at the well-worn examples of Lille and Zaragoza, that seems to me to have been critical to the relative success of those places in the context of the investments that have taken place.

Q278 Paul Maynard: Would you agree that if we were to have HS2 that ran as far as Manchester, without adequate regional economic planning by some future body that we can only dream of, the line might not in itself generate economic growth? There is particular concern, for example, that Manchester might profit at the expense of, say, Liverpool. How could that danger be mitigated in terms of actions taken either by central Government or indeed by city regions, which will probably be in existence by that point?

Professor Tomaney: I would agree with you that that is a real danger. Even in the context that I have described-the Nord-Pas de Calais region around Lille, for instance-there is quite a bit of evidence in that case and in other cases, in Spain and so on, that some of the gains which Lille has made in terms of economic development have been at the expense of surrounding cities. I think that is pretty clear. The evidence for that is quite strong. It is probably also true of some of the Spanish cities that have made relative gains. The gains that they are making are not relative to their capital city; they are relative to the towns around them in several cases. I agree with you that is a danger. In order to mitigate it, we would need very strong regional planning mechanisms of a type we do not have at the moment. We would need very much more in terms of resource commitments to regional policy than we have at the moment. That is my answer to your question.

Q279 Paul Maynard: You are probably aware of the Northern Way’s research into the impact of transport investment on inter-urban connectivity: i.e. where it is strong in one city and weak in another, the stronger city benefits. What sorts of transport investment, such as the Northern Hub, do you think will be required in those city region areas to make the arrival of high speed a success?

Professor Tomaney: The evidence for high-speed rail to transform the economic geography of the UK is fairly weak. It is very difficult to find and we have looked hard for it. On the other hand, the evidence that investment in metropolitan public transport systems can make a difference to local economic development is quite strong. It is certainly much stronger than the other case. It is in that sphere that I would see potentially important gains to be made, particularly connecting satellite towns to sources of job growth in major cities. It is the intra-regional connections that seem to be important, particularly if the ambition is to build up strong local conglomerations. That seems to be the most critical form of investment in terms of transport. That was an issue which the Committee’s previous inquiry on the transport and economy addressed.

Q280 Paul Maynard: Finally, would you include roads in that package of improvements?

Professor Tomaney: Roads are important but I would not go as far as your previous witness that the secret to economic development is building more roads. I do not think there is any evidence to support that. On the contrary, there is a lot of evidence that that is not a very sensible way of carrying on.

Q281 Chair: Professor Tomaney, I just want to be quite clear on what you are saying. If we had High Speed 2, the Northern Way and regional policy, would that be a good combination for economic regeneration in the north?

Professor Tomaney: I would put it the other way round. We need regional policy and then we need to think about high speed rail. There is very powerful evidence that Mr Maynard mentioned in relation to the Northern Way and the discussions around the Northern Hub. The Manchester Independent Economic Review is going over similar ground. 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. We demonstrate that in the memorandum we have submitted to the Committee.

It would be interesting if we were to think about developing high-speed rail connecting northern cities, for instance. That is counter-intuitive. Nevertheless, in terms of what we know from economics, evidence and actual empirical examples, it might be a better way of thinking about tackling the problem.

Q282 Chair: We have had information, for example, from Centro about the Birmingham area based on a KPMG study which is projecting significant economic success and development in that area as a result of high-speed rail.

Professor Tomaney: I am aware of that study and we reference it in our evidence. One of the issues that arises from that study-it is a generic problem with economics-is how we test for endogeneity. What is cause and effect? I am not convinced that the KPMG study is demonstrating the causality in the right direction.

Q283 Chair: So it is a matter of assessing causality.

Professor Tomaney: Yes.

Q284 Steve Baker: Mr Stokes, you mentioned the capital cost per mile of HS2. You said it put HS2 in a different league. Could I ask you two things? First, could you just elaborate on that point? Secondly, could you connect that to the average capital employed per job in the UK, if you can?

Chris Stokes: The cost per mile of HS2 varies between twice and up to about eight times the cost of equivalent high-speed lines elsewhere in the world. This is partly due to the fact that we are a highly congested country and it is quite difficult to build one of these things without having to tunnel or take major mitigating action. Partly, HS2 Ltd themselves identified in their report last year that capital costs for some reason, which I think Infrastructure UK have been trying to bottom, are higher in this country than elsewhere. The 40,000 claimed jobs for HS2 are very expensive. If that were the only possible job creation, and I defer to Professor Tomaney and others on issues like that, I believe that simply is not a sensible way of investing to create additional jobs. It is around £400,000 per job. It is enormous.

Q285 Steve Baker: What does this mean for the rest of the economy? What is the opportunity cost to the rest of the economy of diverting capital into high-speed rail?

Chris Stokes: I would not claim to be an expert on the rest of the economy but I would be strongly of the view, as a longstanding and extremely emotionally committed rail industry person, that both for the north and for the industry there would be a better bang for the country’s buck by improving the network in the north; for example, electrifying and speeding up the Liverpool-Manchester-Leeds-Newcastle core, which is very important. I had not thought of going the whole hog, as Professor Tomaney suggested, and making that a high-speed railway. I believe that would produce a better result for the north.

As has been previously discussed, InterCity services to London are quite good. Rail has a good modal share. Its modal share in the rest of the country away from London is very poor. If we want to achieve beneficial modal shift in environmental terms, the way to do that is away from London by speeding up poor links.

Q286 Steve Baker: May I ask Professor Tomaney or any others to reflect on the opportunity cost, please?

Professor Tomaney: We have not undertaken a study of the opportunity cost of this. 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. Transport is important, but as I have said, the evidence is much stronger on investment at the metropolitan level. Connecting metropolitan economies seems to be much stronger. Rail can be part of that, but so can buses and improving the ability of pedestrians to move around cities. These seem to me to be part of an opportunity cost. We have not measured it and I cannot put a number on it. It would be a very difficult task to do. It would be interesting to have a go. That would be my best response to your question.

Martin Tett: If I could just add to that, we are very concerned about this because the north-south divide issue keeps coming up and it is one of the major planks that the Government have emphasised. As has been said by Professor Tomaney, and even in your own Oxera report, the evidence base for this is extremely hazy and sketchy. Our emphasis would be on balanced investment both in road and rail across the country. We would like to see it regionally diverse so that it is not just emphasised in terms of one particular route. We desperately need investment in the south-west, Wales, Scotland, East Anglia and other parts of this country, which have been starved of investment and threaten to be starved of investment going forward if everything is put into this particular basket.

The other two aspects I would like to emphasise are that the manufacturing industry, which has to be the renaissance of the north of England in my opinion, really needs strong support. If there is an opportunity cost here, it is the opportunity cost of emphasising the importance of manufacturing industry to this country and giving it very strong support.

Q287 Kwasi Kwarteng: We heard anecdotal evidence from my colleague Julie Hilling in the last session that businessmen in the north-west are largely in favour of this proposal. I appreciate that the Committee is made up of academics and politicians, but none of you, with respect, runs a business in the regions that will be affected, as I understand it. I am willing to be corrected. Given those two facts-that you are composed of who you are and, if it is true, business people in the north-west want the line-how can you explain their desire for this? They are business owners and they are saying, "Being in the north-west, this is going to help my business and I want the line;" you are an academic saying, "This is purely illusory."

Professor Tomaney: Is that a question to me?

Kwasi Kwarteng: To the whole panel, whether you are an academic or politician or whatever.

Professor Tomaney: I am not a businessman so "Guilty." But I have looked carefully at the evidence, as much of it as we could find, and I present my conclusions. In the north-east, which is where I am from, you will certainly find business people who are in favour of it. Intuitively, it makes sense. If you improve the transport system between a small place like the north-east and a large market like London and the south-east it will benefit, but when you look carefully at the evidence it is very difficult to substantiate.

Q288 Kwasi Kwarteng: Their intuitions are wrong.

Professor Tomaney: Their intuitions are wrong, yes. I am not speaking for them; I am speaking for myself. I am saying that when you carefully examine the evidence it does not support the argument.

Q289 Kwasi Kwarteng: With respect to that point, my prejudice is usually on their side. They are the ones who live or die by the success of their businesses. That is what puts bread on the table. They are taking a view and you are saying that their calculations or their intuitions are wrong. That is interesting.

Professor Tomaney: I am an academic; I do not do prejudices. We do evidence and analysis, and we present the results. Other people can then try and resolve that evidence in relation to their prejudices.

Q290 Chair: But there are judgments involved at the end of that, are there not, Professor Tomaney, as we said before?

Professor Tomaney: Sure; of course there are.

Q291 Kwasi Kwarteng: For clarification, I was saying that if I had to listen to your evidence or to a group of businessmen who lived in the area, who live and die by profit and loss every day and that is what their livelihood is, my prejudice and my inclination would be to listen to their advice ahead of yours. That is what I was clarifying, but I am interested in your views.

Martin Tett: I would like to say, as someone who has worked in private business for well over 25 years, that I have a certain feel for how the private sector reacts to these sorts of things. I also know Manchester very well having lived there for over four years. I understand many of the regional issues there as well.

It depends on the question you ask the business community. My instant reaction when I first heard about this was, "That sounds really good." It is when you get behind that and you start to say, "What is the evidence base for this?" As local authorities, we are always challenged by you to be evidence-based on everything we say and do. If you ask business people if they would put their own money into this, that is the real point when the rubber hits the road because you are asking taxpayers and businesses around this entire country to fork out what will probably, if we look into our hearts, be well in excess of £32 billion to pay for this. That is the point at which people have to make a decision.

I recently sat on a panel of the Thames Valley Chamber of Commerce which was heavily weighted towards Berkshire and Oxfordshire businesses. They are not along the route. The panel was myself and also a senior representative of HS2. The business audience started out very much saying, "This sounds like a great thing." When they heard the arguments, the costs and the alternatives, that swayed them completely and they came out 80% against. It is a question of giving them a balanced argument. I know that the Secretary of State and the pro HS2 groups have wooed northern businesses very heavily. I can completely understand when they hear only one side of the argument; indeed, they do not understand the costs that would accrue to them and the economy while they might intuitively come out in favour.

Chris Stokes: I think on this one I duck.

Q292 Kwasi Kwarteng: Do you have a view on this?

Sue Vincent: As a southerner I do have a view. It is very important that there is connectivity in the northern areas. Strategic investment is very important, if the north-west divide exists, to ensure that the most economic benefits are given to the north-west. In the south, we have been somewhat cushioned by the recent economic downturn.

Q293 Kwasi Kwarteng: I have one follow-up. To agree with you in terms of what I see, we have to make some heroic assumptions. We have to assume that the experience in France and Germany was wrong, that somehow it does not apply to Britain and that we are all right in terms of our rail position. We have to assume that the business interests who support this are also deluded inasmuch as they have not heard the evidence. You are swimming against a very strong tide. I was just wondering if any of you had anything to say about that.

Sue Vincent: The tide is very strong because it is a very large infrastructure project that has gathered substantial weight over a period of time. The evidence is strong. However, when you start to cut underneath the evidence on the surface, Councillor Tett has explained that if you do start to drill down, businesses are not perhaps quite so keen on what they see as the economic benefit. Also, our geography is not the same as other European countries. We have to take that into consideration as well. We already have a fast rail network in England and the UK.

Q294 Kwasi Kwarteng: You are of the view that things are so good that we do not need it.

Sue Vincent: Ninety-seven per cent of rail passengers are apparently satisfied, so that is not bad.

Kwasi Kwarteng: I just wanted to clarify that. That is fine.

Q295 Iain Stewart: Let us imagine that HS2 does not go ahead at this point and that we invest in the Northern Hub and increasing capacity in the West Coast Main Line and all the other types of transport infrastructure projects that have been mentioned. In your view, what is the danger that in 15 years’ time another Transport Select Committee-maybe us or our successors-will be having exactly the same arguments? The point I am making is this. As I see it, we do not have an either/or choice. We have to look at both. I am not saying that that means HS2 as the specified route and specification, but do we not need to grasp the nettle and look at having some form of additional high-speed rail capacity in this country alongside all the other types of transport infrastructure projects?

Chris Stokes: The problem we all face is that no one has a fully functioning crystal ball and we are talking about the long term into the future. The point I would make is that it is possible-I do not think this is fully understood yet-to produce an enormous increase in capacity in terms of seats by upgrading the existing route.

To illustrate that, currently, the Pendolinos are nine-car trains: four first and five standard. Overcrowding is absolutely a standard-class issue. Standard class is 294 seats. With 12-car Pendolinos, three first and 12 standard, there will be 594 seats. So simply by reconfiguring and lengthening the trains it is possible to double the standard-class capacity on the route. It is also possible-it has been talked about earlier today with regard to Ledburn Junction-to make infrastructure investments that would enable the peak commuter capacity to Milton Keynes and Northampton to be doubled. Those are both towns with rapidly growing populations. With further investment in that specific bottleneck, it is possible to separate the remaining bottlenecks where freight and InterCity trains have to use the same track between London and Crewe pretty much the whole way. Not only would you then be able to run one or two more InterCity trains at peak periods, you would also have a step change in capacity for freight on the route.

The problem that you face going further north, say, from Crewe to Glasgow, or with the full Y from York to Newcastle, is that you have two-track sections of railway with mixed InterCity passenger and freight trains that are full now and HS2 does nothing for them, so they remain full after 2033. The incremental approach can deliver major benefits much sooner, at less risk, with less disruption and at much less cost.

Martin Tett: Let me give Mr Stewart a very straight answer to his question. Yes, you are absolutely right. You could be sitting here in 30 years’ time-hopefully, many of you will be-making that point. History is littered with predict and provide schemes. Some of them turn out to be correct; many turn out to be incorrect. I put to you that a gamble of £32 billion of taxpayers’ and businesses’ money is a big roll of the dice on the basis that it may happen.

The issue here is, are there better alternatives that can be rolled out quicker, incrementally and that effectively spread that cost? There are, and I think Mr Stokes has outlined some of those. We can meet the demand incrementally as it materialises over the next 30 years. We are very confident about that. More importantly, we can deliver improvements on the commuter services down from Northampton and Milton Keynes much more quickly than HS2 would do. If eventually that demand does materialise you will be right, but we do not believe it will because the world in 30 to 40 years’ time will be radically different from the one in which predict and provide today is being judged.

If you look at what is happening in terms of the roll-out of high-speed broadband around the Far East in places like Korea-I am sure Members are very familiar with that-I think that will radically change the business geography of this country. It would be reckless to gamble £32 billion at a time when, quite frankly, in four years’ time I am not convinced we are going to be out of the economic wilderness and I think we are still going to be deeply mired in debt. I welcome the scrutiny that this Transport Committee is giving it.

Q296 Iain Stewart: Can I come back on both your comments? Yes, we do not proceed with HS2 at the minute and we upgrade the West Coast Main Line, as you suggest. In 15 years’ time, for the sake of argument, there is still a big capacity demand to meet. Surely, there will not be any further upgrades that could be done to the West Coast Main Line. It will have reached its finite point. We would then still have a 15-year gap between starting the discussion about HS2 and its eventual delivery.

Martin Tett: To be honest, I thought I had answered that question but I will try it again. You may be right. I am being very straight about it.

Q297 Iain Stewart: But what would you do for those 15 years when the West Coast Main Line is utterly full and nothing else can be done to it? You would still have 15 years of construction time.

Martin Tett: But you have to remember that today we are talking about delivery in 2026. A lot of the delivery in terms of the Y would be well beyond that as well. The immediate need, particularly in places like Milton Keynes and Northampton, is relief on those commuter services today. HS2 will not do that.

Q298 Iain Stewart: That is why I am saying we need to do both now.

Martin Tett: I am sorry if I am not answering your question as bluntly as you want me to. I am trying to be very straight. We can deliver an incremental increase over the next 15 years that will meet what we believe will be the very likely and probable increases in demand. If demand really does keep going exponentially and is not capped until 2043, which is the assumption in the business case, which I have to say I find very dubious, then you may well be right. But I think that is an enormous gamble for the sake of £32 billion, which this country can ill afford at this time.

Chris Stokes: Can I offer a different and perhaps a rail industry perspective which I hope may be helpful? I am old enough to remember the original electrification of the West Coast Main Line in the 1960s. The passenger volumes on that route went up very dramatically over four or five years and, indeed, as a repeat of now, there was massive modal shift from the air service to rail and volumes on the West Coast then effectively plateaued and started to decline as the quality of service declined until the recent upgrade, which I would regard as historically quite parallel to the upgrade in the 1960s. Again, there has been a massive shift from plane to rail on Manchester to London, but that has now largely happened. Rail has grown very rapidly because the service has been transformed. There was a step change. I do not think that there will be continued growth.

The evidence that you have already had is quite interesting, both from Eurostar and from SNCF. Eurostar acknowledged that the market from London to Paris is close to saturation. Rail is an extraordinarily good product from London to Paris. Personally I believe it would be pretty perverse to travel from London to Paris by any other means, but the total travel market is not growing. It is close to saturation and at a much lower level than the original forecasts for the channel tunnel rail link.

Similarly, Monsieur Messulam said that they had experienced growth in line with their predictions broadly very strongly for several years after opening the high-speed line and then it had plateaued. I may be wrong and, as I said, we do not have crystal balls, but it is taking an enormous bet to say that the growth will just carry on and that the doubling of capacity you can get by train lengthening and train reconfiguration is not going to be sufficient, particularly, if I may say so, in a position where many of the peak trains are actually peak trains by price and not peak trains by volume. The earnings that Virgin get from the 17:03 from Euston to Birmingham are very high because they do not have cheap fares on it, but that train is not full. I counted it last night; it is only half full. We should not run away with the idea that all the peak trains are full. The trains that are full are the ones at 19:00 where there is this complete cliff and suddenly very cheap fares are available. There must be more rational ways of dealing with that than spending £30 billion on a high-speed railway.

Q299 Kwasi Kwarteng: I have a couple of questions. One is a specific question. Do you have an interest? Do you live in a place where the proposed route is?

Chris Stokes: I live on the West Coast Main Line but not near HS2, so I do not have a direct interest at all.

Q300 Kwasi Kwarteng: Mr Tett, my understanding is that you are a councillor in Buckinghamshire through which the line is going to go.

Martin Tett: But I do not live along the route.

Q301 Kwasi Kwarteng: No, but you are representing the interests of people who do.

Martin Tett: Can I be absolutely clear on that? Yes, I live in Buckinghamshire. The line passes through Buckinghamshire and many of the local authorities I represent lie along the line of the route, but as I said at the beginning, we are very used to taking some very tough decisions. Our challenge is an objective one.

Q302 Kwasi Kwarteng: I just wanted to establish these facts first. I am not impugning your motives.

Martin Tett: No. But it is very easy and the Secretary of State does try very hard-I understand entirely why as a politician he would try and do it-to paint anyone who opposes this purely as a nimby. That is not the case.

Q303 Kwasi Kwarteng: My understanding is that you represent a ward around Euston; is that right?

Sue Vincent: It is Holborn and Covent Garden ward that I represent but I am a Cabinet member for environment and deputy leader of Camden.

Q304 Kwasi Kwarteng: And that is going to affect your borough.

Sue Vincent: Yes, it is going to affect Camden.

Q305 Kwasi Kwarteng: What do you say to people like the Secretary of State? We are rehearsing the question that the Chair asked in a previous session. I will try to put it as clearly as I can. What do you say to people who say that, yes, there is a sophisticated opposition to this, but it comes from highly educated and relatively affluent people, who essentially are nimbys, who essentially have an emotive hostility to the project and are clever enough and well-resourced enough to come up with myriad sophisticated arguments against the project, some of which we have listened to, but essentially they just do not want it in their backyard? What do you say to people who say that?

Chair: Councillor Vincent, what do you say to that? You are representing people who are clearly going to be inconvenienced, or more than that. Is there any way you could possibly be saying anything other than what you are saying?

Sue Vincent: Yes, we will be inconvenienced, but obviously this Committee knows that there is a gamut of communities that will be inconvenienced. Some are very articulate and knowledgeable about these things, but there are also many people who are not. Regent’s Park Estate, which is the main impact zone for High Speed 2 rail coming into Euston, will be impacted enormously and that is 40% black and minority ethnic communities. In Regent’s Park Estate, the potential demolition is of 190 to 260 homes, and that is just within the impact zone. With homes outside the impact zone, the figure goes up to about 450. They are a very different community. They are in an economically deprived area.

Camden is very short on open space, for example. We obviously have huge housing issues, but we are incredibly proud of being the third largest economic driver in London. We are also used to taking tough decisions with King’s Cross and St Pancras International Station, both on the north of Euston Road. If you look at the area and take the area of Euston Station in context, there are myriad communities, one of which is the business community who are already feeling the impacts of blight.

Q306 Kwasi Kwarteng: What would you say to that, Councillor Tett?

Martin Tett: You have a very good point. Are there communities along the track who are opposed to this because it goes close to where they live? Absolutely, and that is, quite frankly, perfectly legitimate. They have an absolute right to be concerned about their environment.

Q307 Kwasi Kwarteng: But I would add that the Secretary of State is perfectly right to say that they are nimbys because that is what they are.

Martin Tett: It is the derogatory nature to which people take some offence. Quite frankly, I find it offensive to coin a phrase that characterises black and ethnic minority communities in Camden, people living in west London and in very deprived parts of Aylesbury in a very derogatory tone because it tries to stereotype the debate. We have tried to make this a facts-based debate. It is quite interesting that some of the proponents of HS2 try and revert to stereotypes rather than debating the facts.

If you look at the business case and then the opposition to it, what you find in virtually all the opinion polls-there have been four very recently that have been national or regional polls-is that each and every one of them has come out very consistently strongly opposed. I will not quote the exact numbers, but the YouGov and Telegraph poll, the Birmingham Post, and indeed the Railway Gazette, all came out with well in excess of 50 and quite often into the high 80s or 90s against. They are not the people on the railway line.

Professor Tomaney: At the risk of sounding a little bit academic and philosophical about this-I stress that I am an agnostic academic from Newcastle so HS2 has nothing to do with my life-this is an argument between affluent people. The prejudiced businessmen you listen to are affluent people. They are in favour of it. The people who are against are affluent people. One of the points about high-speed rail is that it is for and about affluent people. The highest income quintile group are the group which are most likely to use high-speed rail. This is not a policy proposal that is inherently about meeting the needs of the poor.

We may make a very sophisticated argument that it will have development impacts down the line at the second, third or fourth order which will improve the lives of the poor, but inherently that is not what it is about. To set up this argument of it being about nimbys versus sensible, rational, ordinary people who are going to benefit I do not think helps advance the argument at all. That is my observation.

Q308 Jim Dobbin: What is your view or overall impression of transport systems across Europe in comparison to this country?

Martin Tett: Sorry, who is the question aimed at?

Chair: Would anyone like to comment about this?

Jim Dobbin: Anybody?

Chris Stokes: In terms of rail, we are like the curate’s egg: we are good in parts. I believe that the InterCity services to and from London are pretty good on the whole. The services and the development of the services in Scotland will end up as good as anywhere else in Europe. When they have electrified the main route between Edinburgh and Glasgow, the Scots will have 12 trains an hour between those cities by four different routes. But then you take, say, the north of England and I am afraid is "Eat your heart out." There are parts of the services in the north of England such as the line from Leeds to Skipton and Ilkley which have been modernised, are good and provide a service that people can feel proud to use, and are a really attractive alternative to the car. There are parts of the network around Manchester which, frankly, I perceive as being close to a distressed purchase.

Q309 Jim Dobbin: Would you say that the transport systems in Europe are better integrated?

Chris Stokes: In some cases, yes. In the case of Switzerland, for example, very much so. In the case of France, I think probably not. Indeed, one of the problems in France is that they have demonstrated the truth of the opportunity cost hypothesis because they have consistently invested massively in high speed, and the standard of the classic network-the conventional network-has declined. That is recognised by the president of SNCF, for example. Yes, I am very attracted by the Swiss model. If I had a £30 billion pot in my gift, I would want to spend a sizeable chunk of it replicating that across the country as a whole instead of in pockets like London, Scotland and spots elsewhere but not consistently across the country.

Professor Tomaney: On the point about how well integrated the systems are, particularly the existing systems and the high-speed rail system, the story varies quite a lot around Europe. For instance, a recent study I read was looking at Spain and France; we did not cite it in our evidence because we only came across it after the event but it broadly supports what we say. It makes the point that in Nord-Pas de Calais there are certain towns that now have worse connections to Paris as a result of the introduction of TGV than was the case beforehand. Arras is a good example because it is not connected to the TGV station. It takes longer to get to Paris from Arras than it did before the TGV system was introduced. So there are these anomalies.

In the German case, the levels of integration between the existing system and the high-speed system are better in that respect, but as I understand it, that is a decision the Germans made central to their approach. In terms of the German system, you can point to more productive regional development impact as a result of taking that approach than you can, say, in France where all the attention is focused on Euralille. I was there last week and it is fantastic. It is a great TGV, a great piece of kit and looks fantastic, but you have to take the picture at a much wider level and understand what is happening in places like Roubaix, Tourcoing and towns round about which have not benefited at all from that investment. In fact their relative position has declined.

Q310 Jim Dobbin: The point I was trying to reach really was that you do not think there is any need for us to catch up.

Chair: Is there anything for us to learn?

Professor Tomaney: Of course there are things to learn. 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.

Q311 Steve Baker: Councillor Tett, in a couple of places in your evidence you seem to be suggesting that this scheme is not being subjected to the same scrutiny as like schemes. For example, you say the timetable for environmental surveys and assessments is unrealistic and seems to have been driven by political expediency to meet parliamentary time scales rather than an adequate evaluation timetable. Is it the case that you are saying that HS2 has not been properly scrutinised in the manner you would expect?

Martin Tett: That is absolutely correct. The business case has not been compared on a like for like basis. There are many examples and I could give you a few in terms of the starting point. A lot of the costs for developing the network are included in the evaluation of their examination of Rail Package 2 but they are not included in the examination of High Speed 2. The wider economic impact is put into High Speed 2 but not into the Rail Package 2 analysis. There are many cases where there has not been a like for like examination, particularly with regard to what we regard as the next best alternative.

It is very important to stress that the way they have done their analysis is to compare it against two options which, quite frankly, no one is really supporting. They compare against the do-minimum, their option B, and against Rail Package 2. No one is really putting those forward as options. What we are proposing is something called Rail Package 2 plus, which includes extra increments to that. As I have said earlier, we believe it can be delivered at a substantially reduced cost-we are talking about between £2 billion and £3 billion rather than £32 billion plus-much more quickly and, importantly, incrementally in line with demand.

Just on the environmental piece, something we found seriously deficient in this is the consideration of the environmental issues. The green agenda is very poorly covered in this. There is no thorough environmental impact assessment. As local authorities, we would be required to produce a full environmental impact assessment to justify our choice of particular routes and examination of options. Nothing like that has been done. There is only a desk-based appraisal of sustainability that is extremely high level. That is a serious weakness in the argument.

Q312 Steve Baker: In relation to the timetable, what would have been your expectation for full scrutiny?

Martin Tett: I am not sure I fully understand the question, but in terms of undertaking a full environmental impact analysis, that would probably have taken about an extra year, I would guess. That would have carried out a thorough ground-based examination of the route all the way from Camden, my colleague Councillor Vincent’s area, right the way along the route. That would have revealed a great deal more information.

The current proposal has very little evidence base in terms of the environmental impact. Indeed, your own Oxera report points repeatedly to the very poor evidence base, for example, in terms of narrowing the north-south divide, the regional inequalities issue and particularly the economics of the Y. You have to remember that this business case is absolutely predicated on the Y. It does not stand up on London to Birmingham alone. It relies on the Y route north of Birmingham, yet the cost base and the evidence base for those numbers is very superficial.

Q313 Iain Stewart: I have two route-specific questions. The first is to Councillor Tett and the second is to Councillor Vincent. Councillor Tett, if you lose your argument and High Speed 2 goes ahead on its planned route, one of the very valid arguments that people in Buckinghamshire have is that they will have all the pain of the route going through but no access to the line. If it does go ahead, do you believe there should be some form of intermediate stop along the line so that at least people in Buckinghamshire could gain access to it?

My second question is to Councillor Vincent. You have expressed understandable concer ns about the impact round Euston. Previous witnesses have expressed concerns about the lack of capacity at Euston and the underground network to disperse arriving passengers. Do you think there is a case for not having Eusto n as the terminus but basing i t at Old Oak Common or somewhere close by where it would interchange with Crossrail? They are two very different questions.

Chair: Councillor Tett, can we ask you first? Should you lose the argument, would the people of Buckinghamshire like a stop?

Martin Tett: I always hope, Madam Chairman, not to lose the argument, but let us accept the premise. Suppose it does go ahead. Would there be a stop somewhere like Aylesbury, which is a growth town? The Secretary of State, when he was asked that question by us directly, ruled it out completely. He has said that there is no chance whatsoever of a stop at an intermediate place such as Aylesbury.

The reason for that is quite straightforward. If you look at the speed advantage, which was the Government’s original premise for this particular routeing, by the time you have ramped up the speed coming out of London and reached a high speed, you have to jam on the brakes to stop at Aylesbury. Then you accelerate again, and lo and behold you are in Birmingham. You lose the speed argument completely. All you have really done is just add capacity to a route rather than delivering the business case on which this whole justification for £32 billion is predicated.

Q314 Chair: Do you accept the Secretary of State’s argument that it would not be practical?

Martin Tett: Do I believe that if you want a business case based on a speed argument, i.e. that every minute spent by a businessman or an individual on a train is wasted, you could not have an intermediate stop? Of course, I do not accept that argument.

Chair: Don’t worry; we are not trying to incriminate you in any way. It will all be put down very clearly.

Q315 Iain Stewart: The reason I asked that question was because when we visited Germany and we looked at, and indeed travelled on, the Frankfurt-Cologne line there are two intermediate stops. They have configured the train pattern in such a way that there is one express that does not stop and a second stopping one, which, by all accounts, is quite a useful fare generator for Deutsche Bahn. That is the reason why I asked that question.

Martin Tett: I think Mr Stokes can amplify that.

Chris Stokes: There is a technical rail issue in that if you had a stop at Aylesbury, unless you stopped all the trains there, which might be beyond Councillor Tett’s wildest imaginings, you would reduce the capacity of the route. There has already been discussion today about whether 18 trains an hour is feasible. I am fairly convinced it is not. A stop at Aylesbury would reduce the capacity very significantly and dramatically undercut the business case. I think the Secretary of State is dead right that if the line is to be built, it should not have an intermediate stop between Old Oak Common and Birmingham. I shall now get kicked under the table.

Q316 Chair: Thank you for clarifying that. Councillor Vincent, when you respond to Mr Stewart’s points could you also tell us your concerns about the disruption you fear at Euston under the current plans?

Sue Vincent: Yes. First of all, the case for Old Oak Common, like Euston, has not particularly been made yet. That is one of our basic premises. We have not seen any evidence base or analysis of the assessment why Euston and/or even why Old Oak Common. A terminus at Old Oak Common would certainly reduce the impact and disruption at Euston. To lead into the disruption at Euston, obviously it is a very tight urban and dense city. It is surrounded on three sides by a conservation area. The impact on the local community and local economy is substantial in terms of traffic movements, demolition and the resultant noise and nuisance.

We have obviously had experience with King’s Cross and St Pancras International and experience of mitigating factors. Nevertheless, to take one small health factor into consideration, the people in the ward closest to the stations live 10 years less than those living in Hampstead. They are also slightly richer in Hampstead but I do not think that has much to do with it.

The concern we have about High Speed 2 coming into Euston is on the access and egress-the dispersal of passengers coming in. We have the Victoria line at very full capacity heading south to Victoria. We have the Northern line heading into the City and to Bank. It would certainly seem that a terminus at Old Oak Common, where it could be connected to Crossrail and Heathrow, would make very good economic sense as well as shaving off quite a substantial amount of money for tunnelling under London.

The concern we have about transport dispersal at Euston as well is that from the figures and evidence we have seen, we would need to commit to Crossrail 2 if High Speed 2 came into Euston. That is obviously a huge concern because that is an additional expenditure, but it does seem from the experts I have spoken to that the figures would stack up.

Chair: Thank you very much for coming and answering our questions.

Prepared 15th July 2011