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

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Transport Committee

High Speed Rail

Tuesday 28 June 2011

Professor David Begg, David Frost and Jim Steer

Geoff Inskip, Stephen Clark, Kieran Preston oBE and Geoffrey Piper

COUNCIllOr Stephen Greenhalgh, John Dickie and Daniel Moylan

Evidence heard in Public Questions 95 - 183

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Oral Evidence

Taken before the Transport Committee

on Tuesday 28 June 2011

Members present:

Mrs Louise Ellman (Chair)

Steve Baker

Jim Dobbin

Mr John Leech

Paul Maynard

Iain Stewart

________________

Examination of Witnesses

Witnesses: Professor David Begg, Director, Campaign for High Speed Rail, David Frost, Director General, British Chambers of Commerce, and Jim Steer, Greengauge21, gave evidence.

Q95 Chair: Good morning, gentlemen, and welcome to the Transport Select Committee. Could you give us, please, your name and organisation?

Professor Begg: David Begg from Yes to High Speed Rail.

David Frost: David Frost, Director General of the British Chambers of Commerce.

Jim Steer: Jim Steer, Director of Greengauge21.

Q96 Chair: Thank you. What would you say are the strongest and weakest points in the case for high speed rail?

Jim Steer: High speed rail is needed to support a growing and more diverse economy, as the Government is now seeking, and to do so in a way that is a more environmentally sustainable approach than any other that has been looked at. That is its core strength: supporting economic growth. In terms of weakness of where we are at the moment, the key concern we would have in Greengauge21 is that there is talk, at high policy level, of a truly national high speed rail strategy. What we have is something that is a little shy of that. To my mind, a truly national strategy would, at least in outline terms, talk about Scotland and Wales, and indeed the English regions that are not covered by either HS2 or the Y network proposals. Simply put, we would say it does not quite go far enough, but obviously it is an excellent start.

David Frost: We consider the strength is that this country is running out of capacity. Rail travel continues to grow. In the first quarter of 2011, there were 316 million journeys, with longdistance journeys up by about 4.1%. That is the first point. Secondly, we are running out of capacity. The third point is that the population of this country continues to grow and we cannot continue to fiddle and essentially tinker with the existing network. We need a new national high speed network if we are to significantly improve the economic performance of this country. The weakness would be that we have an inability in this country, I believe, to deliver major infrastructure projects. We are fantastic at talking about it, but when it comes to delivery it takes an inordinate amount of time, if we ever get there.

Professor Begg: The main arguments "for" are capacity ones. It provides the best economic case for increasing railway capacity. One of the other key strengths is that it does help to bridge the gap between the north of England-indeed, the north of Britain-and the south. So I would argue for high speed rail on regeneration grounds as well. The potential argument "against" is that a project of this scale is costly. If it comes at the expense of other very important transport projects-railway projects-then I think that is a potential argument against it.

Q97 Chair: The Campaign for High Speed Rail launched a bus poster campaign, "Their lawns or our jobs?" Do you think that is the nub of the case against high speed rail?

Professor Begg: It is a creative poster campaign that a PR company have come up with. The PR company have done an excellent job so far in trying to highlight that there are millions of people in this country who have not got engaged in the high speed rail debate because it is so far off, but, potentially, it is important for their future economic jobs and livelihood. It was a good campaign in terms of highlighting that. A number of the protesters, while I can understand why they have been campaigning against it, and most people would if they felt their quality of life was going to suffer in any way, are in a very privileged position economically, and a number of the people who will benefit from this scheme are not in that same privileged position.

Q98 Chair: Are there any southern-based businesses or local authorities that are part of the campaign?

Professor Begg: Yes. We have businesses from all over the UK, predominantly in the north of England, but we have them in the south as well.

Q99 Chair: How do we know that the economic benefits that you speak about are going to happen? We have had evidence from people who are challenging whether the narrowing of the northsouth division and economic regeneration will take place.

Professor Begg: It must be really challenging for this Committee to weigh up all of the evidence that is before it, because the problem is that economics is not a science; it is incredibly subjective and you will get very different views. You will get views from people who say that shrinking journey times between cities would benefit the less prosperous areas. That is all the evidence we have come up with in the Northern Way. I would argue, with my Northern Way hat on, that, if you shrink journey times between the north of England and London, the benefits from the north of England proportionately are greater than the benefits from London. But the big challenge here is that, if you stick rigidly to cost-benefit analysis, which looks at welfare economics and puts all of the weight on journey time savings, then that does discriminate against railway schemes per se. If you stuck rigidly to traditional economic analysis, you probably would have built very few railways schemes in this country, including Cross Rail, the Jubilee line and even the Manchester Hub. If you just looked at traditional economic analysis without the wider economic benefits, the case would be flimsy.

Q100 Chair: Mr Steer, in the evidence we have had from Greengauge you talk about regeneration benefits and more jobs coming, but what is all that based on? Is it wishful thinking or is it based on any solid information?

Jim Steer: It is based on the best analysis that we have between us available to use. As David Begg has just said, this is not a perfect science, and, as your Committee concluded when you looked at the relationship between transport and the economy, it is one thing to invest in transport, but to get the benefits you also need a response from business. Obviously, it is not within the gift of those developing the transport project to provide that. David Frost may want to comment on that in a moment. Therefore, there are effects which are, in a sense, indeterminate.

The academic community, of course, wants to look at this question in a very clinical way and pose the question: if nothing else happened at all and you made this or, indeed, another transport investment, what would the economic reaction be? But the kinds of tools that are used to look at that deny the existence of, for instance, a rebalancing of the economy, say, from south to north. That is not permitted in the analysis, because it takes out the level playing field approach. So you have to look at the best evidence you have. We know that there are more trips with ends, as it were, in the north and the midlands, and we have to try to attribute the benefit of those more efficient journeys between the north and the south, which of course is what high speed rail is linking.

An awful lot of the research, of course, is looking at other countries, and one always wonders whether we are the same or different. The Chen and Hall research, looking at what has happened with improved journey times by rail in Britain over the last 30 or 40 years, concludes that it has had a good positive impact on employment levels and productivity in the cities that have been served by faster train services. I have to say that, even within that, there are some exceptions. You heard last week from Monsieur Messulam, who explained some of the complex set of effects on the city of Lyon, with perhaps some relocation of jobs to Paris, and then some promotion of local businesses seeing this as a city with excellent connectivity.

At the end of the day, that is what we think will happen. We think the opportunity for development in places which are currently simply excluded by the development community will change because they will see accessible centres dotted around Britain and not just concentrated in the south-east.

David Frost: I would make four brief points. First of all, the history of the railways is littered with arguments against development. If one goes back to the LiverpoolManchester railway in 1830, there were arguments against it, saying that it would be of no economic benefit and the canals were perfectly capable of shifting textiles between one centre and another. At every stage, there proves to be enormous economic benefits. The initial view was that the creation of HS1 would unlock about £500 million worth of investment. When the survey work was done in 2008, the figure they came up with was £20 billion-40 times greater than that.

The next point would be that, when we have surveyed businesses across the UK, the overwhelming view is that business would like to see a high speed rail network in this country. It will link them to their customers and their suppliers more efficiently, and to their work force as well.

The final point I would make is that, if one looks globally, there is an enormous expansion of high speed rail. Someone, somewhere, clearly gets the benefits. I was in China three times last year and, as part of that, saw the growth of the high speed network across the whole of China. Yesterday, we saw the opening of Shanghai to Beijing. Right across the globe, countries are waking up to the economic benefits that high speed rail will unlock for both the economy and business.

Q101 Iain Stewart: I would like, first, to return to "Their lawns or our jobs?" poster campaign. Don’t you think it is not just insulting to some of the opponents but unhelpful to polarise the debate in this way, given that there are many people who will support high speed rail as a concept but have real concerns about the validity and the business case for this particular project?

Professor Begg: The campaign was trying to highlight that nimbyism is a big barrier to infrastructure development in this country. There are a number of reasons why we have a transport infrastructure which is not nearly as good as most people and most businesses would like. Apart from funding, the other reason is that we do have much stronger local opposition to the schemes, which often outweighs what is in the national interest. The very fact that people are speaking about this campaign, hopefully, from our point of view, gets people focusing that high speed rail is right for the economy nationally, even though it might not be popular with some people locally.

Q102 Iain Stewart: I accept that there are local concerns, but not all the opponents are people along the line of the route. My personal view is that I would caution you not to polarise the debate in this way, because there are organisations, like Campaign for Better Transport and CPRE, who do back high speed rail in principle but not this particular scheme. They have concerns about some of the other points you were making about integration into the broader transport policy.

Professor Begg: The reason I got involved in this was because there was a very vociferous "no" campaign which was extremely well funded, in excess of £1 million, and coming up with what I thought were a lot of bogus arguments. The vast majority of funding for this, from individuals, has come from people who do live along the route. The purpose of our campaign is to engage all these people in the UK who will benefit from high speed rail, who are not vociferous and not registering their support for it at present.

Q103 Iain Stewart: Can I pick up on one of your other points and ask the other members of the panel to comment? You did express a concern that there could be a diversion of resources to fund High Speed 2 from other transport projects. Some of the evidence we have received suggests that the success of high speed rail is not just putting the line in itself but the connectivity to each of the termini on it.

Professor Begg: One of our big failures in transport and one of the reasons why we have underinvested in transport infrastructure compared with some of our international rivals is that, historically, we have not had as much commitment and engagement from the centre of Government, from No. 10 and No. 11 Downing Street. That is a view that you could attach to Governments of all colours, going back historically. What is different, it seems to me, about the high speed rail debate is the level of engagement that we have right from the centre of Government. That persuades me that, for the first time, we might see an increase in investment in transport that a number of us have been calling for.

Q104 Iain Stewart: Are the other members confident it will both be investment in high speed rail and other projects?

Jim Steer: The signs currently are good. After all, the Transport Secretary had to find the £750 million just to do this planning work in the current spending round last October, which was obviously a time of major cutbacks, and nearly all of the rail projects that were on the stocks, as it were, were approved for development at that stage as well. Currently, at least, we can say here is a Government that has put its hand in the Treasury pocket, the taxpayers’ pocket, to make the first stage of this project possible and has not cut back on the classic network.

I would also point to two other things. The first is the experience with the Channel Tunnel Rail Link as it was then known-High Speed 1-which was always regarded as a separate funding stream and kept separate from the rest of the Department for Transport accounts. There is a precedent there that might be followed. There is another interesting precedent that stems from HS1, and we learned at the weekend that the Secretary of State for Transport is thinking in similar terms for HS2. When you have built it and you are over the riskiest stage, you can let it through a 30-year concession on a commercial basis. A third of the capital outlay for HS1 was recouped that way. Greengauge has some work that we hope to publish very shortly that PwC are doing, and we will certainly make sure the Committee gets a copy, looking at what might be the value of a concession let on HS2 along similar lines to that for HS1. What I am trying to suggest is that, in Government accounting terms, there is a return, a cash payback, for these investments. Sure they are downstream; you do not get them back in the year you spend them; but they entitle Treasury to look at this in a rather different way from the routine transport expenditures.

David Frost: I would simply say that we cannot allow that money to be centrally diverted from existing infrastructure. You only have to look at the West Coast Main Line, which is creaking now and operating many times at capacity or over-capacity, to know that we need to continue to invest. I would suggest that, due to the chronic failure in this country to invest in infrastructure over a number of decades, we have a very poor infrastructure in this country. International survey after international survey highlights that. The World Economic Forum was one of those that shows that our quality of infrastructure was 33rd in the world. That is not good enough for a supposed 21st century leading global economy.

Professor Begg: I was asked by the Chair what the potential downsides are. It is a potential downside, but it is an argument against any big transport scheme, is it not? The level of spend on Crossrail of about £2 billion a year is equivalent to the level of spend that will be committed to high speed rail. For that argument outlined as a potential downside to be valid, you would not carry out any big transport scheme in this country.

Q105 Steve Baker: Professor Begg, I am slightly confused by what you have said because everybody has talked about the economic regeneration, but at one point you said that the case for high speed rail would be flimsy without the wider economic benefits. It feels to me as if we are saying the economics are complex and it is not a science, but it is all about the economics. Could you just clarify? Is it about the economics? Is it about regeneration? How certain can you be that the economics will work out?

Professor Begg: I was making the point that, if you go back historically and look at any big railway scheme, whether it is Crossrail or really successful schemes like the Jubilee Line, they have all had very flimsy cost-benefit analysis cases. That is because we focused on time savings. That focus on time savings means, invariably, you will find that, if you look at the large number of motorists who will benefit from improvement to a road, using that traditional welfare approach to economics, road schemes, traditionally, always come out much better than rail schemes. That might help to explain, if you look back over 50 to 60 years, why road always benefited much more than railways did and why previous Select Committees would have been quite critical of this. It is only now that we are starting to realise this is such a narrow way to assess the impacts of our transport scheme and what we have to try and assess is the impact on the true economy-what happens to GDP and gross value added-that the case for high speed rail is much more persuasive.

When I was chairing the Northern Way, we would argue that the benefits for high speed rail are three times greater than HS2 have estimated because they have taken a very narrow, traditional approach to high speed rail. We would also argue that, if you take a historic view of what impact rail schemes have had, the impact is two to three times greater than the Department for Transport ever estimated in the first place.

Q106 Steve Baker: I have to say I am hugely sceptical of terms like "the true economy", but that is perhaps for another day. Can I just pick you all up on this? We talked about the diversion of resources, for example, and I am reminded of a report from the TaxPayers’ Alliance where they suggested that, if you look at the capital that will be taken from elsewhere in the economy and put into high speed rail, four times as much capital will be behind every high speed rail job than is behind, on average, jobs elsewhere in the economy. Their suggestion was that high speed rail would destroy four jobs for every one it created. What would you say to that?

Jim Steer: It overlooks a whole set of things, but let us just concentrate on two. One is the question of how many jobs it will create, and what you have had in the formal assessments are estimates of new development around stations and assessment of sustainability. There are a few tens of thousands, and people have even criticised that and said most of them are in London. None of that analysis-and, fair enough, the TaxPayers’ Alliance did not have anything else to draw on-allows for the possibility that you will get a growing economy out of this. You will get more jobs and in places in which at the moment it is quite hard to stimulate jobs. We commissioned some work from KPMG which gave some evidence on this. Incidentally, that greater number of more productive jobs translates into tax incomes, and that is the second point. What is the net cost?

Q107 Chair: Could you tell us, Mr Steer, what the KPMG research showed?

Jim Steer: It showed that there would be several tens of thousands-I will look up the exact number-of additional jobs created by virtue of the improved productivity that businesses would experience from high speed rail. It is based on looking at the high speed rail network at a national level rather than the smaller HS2. But this also showed that those jobs would produce additional tax income. We are talking long term, but, by 2040, this was additional income of between £6 billion and £10 billion per annum to Treasury.

I do not think it is right just to look at the capital expenditure, and David has mentioned £2 billion a year for several years’ outlay, and not allow for the fact that you are going to create an asset that you can concession. With HS1, you got a third of that back within a year or two of opening. Also, you are going to improve the economy in a way that, as far as we can measure, and it is not an exact science, will produce additional tax incomes. I would say to the TaxPayers’ Alliance, "Look at the overall picture and the net effect on Treasury, and also look at the wider job creation," and those ratios will look much healthier than they have concluded.

Q108 Steve Baker: I am just trying to understand why this argument is advanced that slightly faster journey times will create jobs. It seems to me that jobs are created when capital is accumulated, by which I mean productive goods, and that is the source of real wealth. I would just like to put it to you that the reason the north-our industrial heartland-is in decline, which really matters, is because of very high taxes for a very long time, plus currency debasement, rather than the lack of a railway line. What would you say to that argument?

Jim Steer: I do not know that I share your view as to the tax base being the cause, but it does not really matter-

Chair: We need not go into overall economic theory except as far as it relates to this.

Jim Steer: When you create a really serious step change in the quality of the transport accessibility to a place, you change the ambition and desirability of that place for development. Businesses will say, "I can locate here," and enjoy what is, I hope you would agree, after all, a lower cost base in the north of England than in the over-congested south. This is just a waste at the moment, nationally, that we cannot exploit because our transport links are not good enough, and they are going to get worse over the next 15 years.

Q109 Steve Baker: I have one small followup to that. Is that not just a redistribution of wealth from a more dispersed area to areas closer to the end points of the railway line?

Jim Steer: I would say not "just," but you are right: there would be redistribution as well as the improvement of efficiency. There is a simple efficiency gain. If it only takes you an hour to get to your business meeting, first, you are more likely to make that meeting, and, secondly, it saves you time to do other things.

David Frost: Coming back to your initial question about the TaxPayers’ Alliance, it is an organisation for which I have a huge amount of respect, but I think in this case they are quite frankly wrong because it is an argument against any form of transport investment. If we are seriously questioning whether there are links between economic growth and faster transport links, you could argue did we ever need to progress beyond the horse and cart? I would suggest that, at every stage, when we have seriously shortened distance times, we have seen economic growth. The universal response from our membership, whether it be in Scotland, the north-east, the north-west, west or east midlands, is that businesses within those communities believe that shorter journey times will benefit their businesses and those regional economies, in terms of being able to get to their customers more efficiently and faster, therefore lowering prices, being able to get to their suppliers quicker and more efficiently, and also having better access to a talent pool for employees as well.

Q110 Chair: Professor Begg, you referred earlier to the benefit-cost analysis underlying the Government’s case. Were you saying there that that had missed out the issue of the economic development rather than it had miscalculated it? I just want to be clear what the point is you are making.

Professor Begg: The Department for Transport have always erred on the side of caution. High Speed 2, I would argue, have been particularly cautious and sometimes pessimistic on the benefits from high speed rail, because they have one eye on a judicial review. What they do not want to do is to be exposed in any way in a judicial review. There is a much more persuasive case-an economic case-for high speed rail than has been submitted so far, but I understand the reasons why it has not been tabled.

Q111 Paul Maynard: Clearly, the greater the detail we go into on the issue of High Speed 2, the easier it is for opponents and proponents to disprove the other side’s case by reference to detail, and we are left with a rather unsatisfactory mush of a debate over the philosophical desirability of high speed rail or not. I just wonder whether the panel regards high speed rail now as an inevitability, and, if not, what they think are the greatest risks to achieving what they hope to see?

Professor Begg: If I thought it was an inevitability point, I do not think I would be spending so much of my own time on the campaign for it and raising money for it. History tells us that political decision making can be quite fickle. It is especially challenging for a Conservative Government, a coalition Government, who have a number of big donors to the Conservative Party threatening to withdraw funding. This is particularly challenging for Conservative Members and Conservative Ministers who are pushing this scheme. I do not think it is a done deal by any means, and it is especially challenging in a difficult economic climate like this where there is a tendency to be much more short-sighted, not take the longterm, lose touch of vision and lack confidence in the economy.

My big concern is what signal this would send out to everyone in this country and the rest of the world if we say we are not doing this. Everyone else is doing it. Why is Britain not doing it? Do we lack confidence in this country? Do we not think we are capable of delivering a big project like this? Are we not prosperous enough as a nation to have a level of technology that our international rivals take for granted? It would just be such a slap in the face to this country.

David Frost: I certainly do not see it as inevitable. That is the very reason that I am here and putting evidence on behalf of our members. My concern is that, when you come back into the UK from an increasing number of countries in the world, you feel you are coming back to a country with very second rate infrastructure, infrastructure that has been patched and make do and mend, and increasingly overloaded. This country is crying out for some very significant investment which it has not had, as I said earlier, over many decades.

But there is the power of nimbyism. I am scarred by my experiences working in the west midlands in the 1980s and 1990s when I was heavily involved with the M6 toll. That was a programme that only took three years to build, but it took 21 years from someone saying we needed it to actually cutting the tape. It just got bogged down. We remember the Newbury bypass. What about the M40? These are projects that at the time generated enormous heat, but now it would be inconceivable to imagine this country without those projects. In some way we have to get over that and highlight how the economy of the UK is going to suffer if we do not invest in this network.

Jim Steer: There is a threat, clearly, to the project. Judicial reviews can delay and Ministers might lose heart. I personally think that we have not yet won the environmental argument, although the case is entirely winnable. That affects a lot of constituencies. A lot of people are very concerned about the carbon future of the country. The fact that this first stage scheme is only carbon neutral in the analysis has discouraged people. I do not think it should because the longer-term prospect is that it will make a big carbon contribution.

Q112 Paul Maynard: Given the threat to the project you have all identified, how then do you evaluate the quality of the Government’s arguments in favour of High Speed 2 so far? Do you think they are making the right arguments to achieve their goal? If they are not making the right arguments, how would you critique what they are saying?

Professor Begg: I do not think they are making the right arguments in terms of maximising the economic regeneration case for the scheme and engaging the north of the UK behind this scheme in particular, because it is the north of Britain that feels as though they are going to benefit the most, but it is not a talking point in any of the pubs or the high streets because it is just so far off.

Having said that, I can understand 100% why they have been so cautious and constrained in presenting the arguments, because once you are into judicial review everything is picked over. The last thing the Department for Transport will want to be accused of is overemphasising the case for high speed rail. For me, the key challenge here is how we make sure that so many people who will benefit from this scheme realise that they will benefit from it, not just people that are around the high speed route, but people who are not on the high speed route and will benefit because the capacity on their route is going to be freed up. A lot of them think, at present, that they are going to be losers.

David Frost: I have to say I am impressed by the commitment that this Government has shown, both from the Prime Minister and also from the Secretary of State for Transport. It has been absolutely clear and unambiguous support for this proposal. I personally think that the pro campaign has to up the game. Consistently, when we look at major infrastructure projects, it is the antis that make the running. We need a much more effective coordinated campaign that does not just link in business organisations but, importantly, recognises that those businesses are made up of employees and we should be looking at the future of those businesses, their employees and the communities across large swathes of the UK. I believe very strongly that we are going to have to put in more resource and a more cohesive effort if we are going to make significant progress in promoting this.

Jim Steer: I would make two points. When you see the business case that we are looking at which opponents criticise and so on, saying it is not strong enough, it is a business case that the Department and Ministers are directing towards the Treasury. They set the rules for how these are done and it is a public exposure of a spending Department versus Treasury debate. Just to remind ourselves, even though it has all those cautious elements about which David talked, it is a good business case and, as far as we can see, it is based on suitably cautious assumptions. I do not think it should be criticised for doing that; it has to do that. The Government has to back this, where it matters, with funding.

The second point to make is that there is a need, that I hope Government will recognise as it moves forward, to engage far more, and David just mentioned employees and businesses and so on. But we would like to see wider engagement with local bodies, including those, for instance, along the line of route affected, which does not seem to have happened in perhaps the way it might have done. Maybe local authorities are not quite as strong and robust as they are, but Kent county council, for instance, at the time of planning the Channel Tunnel Rail Link, concluded in favour of it. It was an ally of Government to get the planning right and to address local concerns. Although it may seem very late in the game to achieve that with authorities that have taken strong negative positions, I do think there are benefits for them as well, and getting a better relationship with those more local groups and authorities would still be helpful.

Chair: The consultation period has almost finished so it is rather late in the day.

Jim Steer: Sure.

Q113 Paul Maynard: Would you, therefore, not agree that it is probably very important, if not vital, that any campaign for high speed rail does not try to set north against south or imply that somehow any benefit to the north would be at the expense of the south, and that the benefits are nationwide, because I share Mr Stewart’s concern about the tone of some of the advertising we have seen so far?

Professor Begg: I agree it is important not to polarise anyone but to try to get maximum support for the campaign.

Q114 Jim Dobbin: Primarily, this evidence session is about high speed rail, but high speed rail is only part of a wider transport strategy. Where do you think it fits into all of that? What is its priority in the spending programme for transport?

Professor Begg: I would argue it would be really good if we had something as coherent, strategic, visionary and long term in other modes of transport as we have for rail. It is not quite "predict and provide" for rail, but we are seeing this is going to be the growth in demand. We have underestimated it historically. Intercity rail demand is growing at 5% per annum. We need to build the capacity to cater for it, otherwise we are going to congest or price people off the rail network. We do not have that same strategy for aviation or roads. We do not have that longterm visionary strategy for these other modes of transport. It is not rocket science.

If demand is growing, and it is, then it does not matter what new technology comes on board and how much we use the internet; we just seem to want to travel more and more. There are only three ways you deal with it. You either price people off the network, which is incredibly difficult for politicians to implement; you allow them to be congested off the network, which is what has happened to a lot of our road network; or you build the extra capacity. Interestingly enough, I think that is the right approach for rail. I would much prefer building the extra capacity to cope with the extra demand on rail than pricing people off the network or not allowing them on the train because it is too congested.

Q115 Jim Dobbin: On the aspect of pricing, do you think that the Government should have a proactive policy here, having some influence on the pricing for the consumer?

Professor Begg: Pricing of railway tickets?

Jim Dobbin: Yes.

Professor Begg: They have a big influence through the franchising process and the regulated fares. At present, the Government do have quite a big impact. In fact, a number of the train operators would argue that they need more flexibility. There is an ongoing debate here.

David Frost: We know that the population and the demand for travel continue to grow, and the economy will continue to grow. What the business community has consistently cried out for is a 30-year transport infrastructure plan for this country, rather than a piecemeal approach that looks at air, roads and rail. We believe that is much needed and long overdue.

Jim Steer: If I may just add, it is quite clear that to get the full benefits of high speed rail it needs to be very carefully integrated with local and regional transport systems. There is a start of that process happening, but it needs to be taken much further. Its interface with airports is also extremely important. These are hugely interesting challenges for the people planning these things, the like of which we have not really experienced before. It requires people to think in strategic terms as well as the definition of individual projects, as the latter can sometimes work against the achievement of coherent networks.

Q116 Jim Dobbin: It is interesting to compare transport strategies in this country with transport strategies in Europe, for example. How do you place the UK’s strategy?

Professor Begg: It is interesting because, when I was chairing the Commission for Integrated Transport, we were asked that very question by John Prescott. We were asked to explain why high speed rail was not on the agenda in the UK 12 years ago. It is an interesting question and I keep on looking back, because I was not promoting it 12 years ago. I have asked myself why and there are two reasons. One is that we did not think the growth in demand for rail travel was going to be permanent. We thought there was a temporary peak, but it has just been relentlessly consistent and it has just not gone away. That is one thing.

Another thing is that we were so focused on trying to make the railways safer following Hatfield and other things, but, when we looked at this international comparison, the conclusion was that we got ourselves tied in knots in this country on economic assessment. We just had report after report. We assessed things until we were blue in the face, whereas other countries had a strategic vision. It seems that the key challenge for this Committee and for Government is that, if you judge this just on whether there is a commercial case for this, then you would not do very much on the transport front. There is not a lot that makes commercial sense, certainly on the railways. Is there an economic case for this? You will find people in front of this Committee giving you arguments for and against and interpret the economics in different ways. But it seems to me the third category is strategic. Is this strategically right for the UK? I would argue a resounding yes; it has to be strategically right for the UK for reasons that we have outlined.

Q117 Steve Baker: It is refreshing to hear somebody say that railways do not make commercial sense. That is what you have just implied.

Professor Begg: If you take a very narrow investment appraisal, yes.

Q118 Chair: Can you clarify that, please?

Professor Begg: Railways do not make money, by their very nature. There are no railways in the world that do. It is not just Britain. There are very few; maybe the odd one in Japan might make a return.

Q119 Steve Baker: Mr Frost, you made a very passionate case for investment and, of course, it is a very sensible thing to call for, but I have to say I asked a private equity investor if he would like high speed rail. He said, "Yes, of course. It would be wonderful. You would arrive earlier and fresher," and all the rest of it. "Would you invest in it?" He said, "Oh no, that is a cruel question." Are there private investors queuing up to invest in high speed rail, and, if not, why not?

David Frost: My understanding of the view of the Secretary of State is that the intention is to lease this line once it has been constructed. We can point to HS1 where the figure for leasing was greater than that which was expected, if I can put it that way. Quite clearly, there is a view that there will be a substantial amount of interest in the leasing of this line.

Q120 Steve Baker: The other point is that we seem to have said that a 30-year plan for transport would be welcome, together with very careful planned local and regional integration. We know that, commercially, it is assessed in different terms from other investments. Why is it that this set of arguments is appropriate for transport when it is not appropriate for other aspects of the economy like food or clothing or whatever else?

Jim Steer: I think they are appropriate for other areas of the economy such as energy generation. This is not like a retail question. This is about how the country functions and how cities relate to each other. One can overstate the planning thing, and I have heard previous witnesses say that what we need is an overall master plan and all this kind of thing. I put my hand up; I am somebody involved in planning. I do not think you have to get all the detail right. You just need to clearly state what you are trying to do and be flexible about how you develop it. I do not think this is something we should be frightened of, and suddenly we have to adopt a totally different regime in this country in order to bring this about. We just have to be a bit brighter and a bit better at getting different organisations working together towards a shared goal. That is one of the things, to go back to Mr Dobbin’s earlier question, about the difference between us and European countries. It is being prepared to say, "Here is a shared goal." Really, if you are not prepared to do that, you do make things hard for yourself.

Q121 Iain Stewart: You have all expressed your wish that high speed rail forms part of a broader strategic transport plan for the United Kingdom. Are you confident that the other elements of that transport plan are being developed, and, from that, is therefore the strategic route of high speed rail-not the detailed route but the strategic opinions of the country it connects, including airports and High Speed 1-correct, or are we not able to make that call yet?

Professor Begg: There are two responses to that question. One is that I am hoping that the fact the coalition Government are rightly taking a longterm approach to railways and planning accordingly acts as a beacon for getting the policy decision right on the other modes of transport. The problem on the roads is that you can never take a "predict and provide" approach on those because cars are just such an inefficient user of road space, especially in our cities, that you could never do that. The reason why we do not have a coherent roads policy, and all political parties are now in the same box on this one, is that it involves the all- too-difficult decision made around road pricing, and unless you have road pricing, you cannot have a coherent roads policy that makes any sense in this country.

When it comes to the challenge on aviation, while I do think that there should be a much more coherent long-term strategy for aviation that is right for this economy, it is a bit more challenging than rail because of some of the environmental knockon effects.

David Frost: If the question is, "Is the route broadly the right one?" I would suggest it is. It links all the major centres of population and gives clear access from the north and midlands of the country down to the south. There will always be pressure for towns and cities to have a connection to it and expectations will have to be managed. Our view is that, broadly, that route is correct.

Jim Steer: The key links that cities have told us over the years we have been working on this are links to London, links between themselves-these cities are not moving around; they are still the same big cities they were 100 years ago-and links to the global gateways, as Rod Eddington called them in his transport study, which, in particular, are the main airports and, in particular, the airports with the biggest business connectivity. I would say HS2, with its plan to link the centres of London, Birmingham, Manchester and maybe in future Leeds, but also the Scottish cities, and Heathrow and the centre of London, and connect to the Channel Tunnel Rail Link, is undoubtedly the right concept. Yes, I do not think there is any particular issue around the route from that level.

Q122 Iain Stewart: Specifically on the aviation point, if one of the objectives of high speed rail is to achieve a modal shift from shorthaul aviation, both domestically within the United Kingdom and to the north of the continent, is the phasing of Heathrow on phase 2 correct and will there be sufficient capacity linking High Speed 2 to High Speed 1 to achieve that modal shift?

Jim Steer: You could make the case for bringing Heathrow forward, but in a practical sense to do that would delay seeking the powers for HS2, and, therefore, although it might be desirable, I do not see it as being a practically helpful step. But the link to Heathrow ought to be developed rapidly in our view and we have suggested how it might be done, partly because domestic flights to Heathrow are disappearing rapidly across to European hubs and the battle is going to be a rather different battle from the one that other countries have experienced between shorthaul domestic airlines and high speed rail. The shorthaul airlines will have gone by the time high speed rail is here. They will have gone from being domestic to international travel, which is even worse in environmental terms. That link to Heathrow opens up the prospect of reconnecting Britain to its major international hub. The HS1HS2 link is fine. There is an interface with the North London Line to be resolved, which might require some further attention. But, no, this is an excellent part of the scheme. The real worry was that in the rush to get it out these things would be forgotten. They have not been and I think that is very welcome.

Q123 Chair: Are there any other views on the strategy on having the London to Birmingham link first and then the Y-shaped Leeds and Manchester link? Is that the right way to go or are there any other views on the phasing of the Heathrow link as well?

Professor Begg: It has to be. If we were not starting high speed rail by connecting our two major cities, then we would be asking questions why that is the case. I think the route is right. The big challenge for any future Government is where they go from Birmingham first. At present, the line that has been taken by Government is that they are going to build the line from Birmingham up to Leeds at the same time as the line from Birmingham to Manchester. Hopefully that is right, but it will be challenging.

David Frost: In terms of the phasing, yes, I support it. The concern would be that it does not just stop at Birmingham but there is a real timetable to get the next phase of the Y developed. One argument that has been put forward is whether, if we are looking to link in Scotland, you could not at some stage start to build south from Scotland and then connect at a later stage in the middle.

Q124 Chair: Would you prefer that to be done?

David Frost: In our view, the prime aim is to follow the plan, get Birmingham and then get the Y built.

Q125 Chair: Are you satisfied with the way the Government wants to proceed with the Heathrow link?

David Frost: Yes.

Q126 Steve Baker: Mr Frost mentioned connecting services across to Europe. We have had a memorandum from Mr Jonathan Tyler of Passenger Transport Networks, talking about the capacity of HS2. I am afraid I just have to leap to the conclusion, but he says that his argument leads to the inescapable conclusion that the maximum capacity of 16 trains per hour will be fully utilised by London’s services. It follows, given present assumptions, that no capacity will be available for independent through services to HS1, the channel tunnel and Europe, or for direct services to Heathrow. Have any of you considered this notion that to deliver the capacity that is required there will be no capacity for Heathrow or for Europe?

Jim Steer: Jonathan Tyler took a particular view on the capacity limit of HS2. HS2 Limited themselves defined that as being 18 trains an hour and, when asked, explained that this is going to require a new form of train control system to manage headway safely. There is still debate about this. Again, you heard evidence from Monsieur Messulam of SNCF, who said that is beyond where anybody has reached yet. First of all, there is a debate about the capacity, but I disagree with his idea that, somehow willy-nilly, the route will be filled with trains to London which would block the opportunity to run services across London and, incidentally, calling at London. There is a station at Stratford designed for this kind of service that is unused. There is wasted expenditure to date that can be brought into use and on to the continent.

What I would say is that, in the longer term, there is a case for a second northsouth high speed line. Ministers may say, "We have enough on our hands with the first one," but there is quite clearly a case for doing that in the longer term.

Chair: Perhaps that is for another day. Thank you very much, gentlemen, for answering our questions.

Examination of Witnesses

Witnesses: Geoff Inskip, Chief Executive, Centro, Stephen Clark, Core Cities Group, Kieran Preston OBE, Leeds City Region, and Geoffrey Piper, Chief Executive, North West Business Leadership Team, gave evidence.

Q127 Chair: Good morning, gentlemen, and welcome to the Transport Select Committee. Could you, please, give your name and organisation?

Geoffrey Piper: I am Geoffrey Piper. I am the Chief Executive of the North West Business Leadership Team.

Kieran Preston: I am Kieran Preston, Director General of West Yorkshire Passenger Transport Executive, representing Leeds City Region.

Geoff Inskip: Geoff Inskip, Chief Executive at Centro.

Stephen Clark: Stephen Clark, Transport for Greater Manchester, representing the eight core cities of the English Core Cities Group.

Q128 Chair: Where does High Speed 2 fit into your transport priorities and, in particular, rail priorities? Is it at the top, the middle somewhere, or where does it come?

Geoffrey Piper: Thank you for that question. It comes top if we look at a long-term strategy. As a representative of a consortium of major companies which have to look over decades in terms of their strategic planning, this clearly comes top. It comes top equal with some shorter term but equally essential investments: for example, the Northern Hub, which, we argue-and our members, again, are unanimous on this-is essential if the north-west is going to compete to its full potential in the years to come. It is not an "either/or". It is a "both": Northern Hub and high speed rail.

Q129 Chair: Mr Preston, where does High Speed 2 come in your scale of priorities?

Kieran Preston: It figures very highly indeed, because it is about offering very significant opportunities for economic growth in the north and the Leeds City Region and, indeed, rebalancing the economy. One of David Cameron’s first comments on becoming Prime Minister, when he visited Yorkshire, was to say that for too long the economy has relied on London and the south-east and it is just too narrow a base to deliver the kind of growth that we need to deliver.

On the point that capacity will be constrained on the East Coast Main Line and the West Coast Main Line by 2020, it is just unacceptable that opportunities to travel to London and have that connectivity with London and the other big cities are constrained. I have seen previous witness statements that almost suggest an option is to manage demand, but that would be disastrous for our ambition to rebalance the economy. It would also be disastrous in terms of our ability to compete internationally. The other dimension, apart from capacity, is the importance of high speed. By shrinking the distance between London and other big cities, we get the opportunity for those productivity benefits, which are estimated to be round about £6 billion.

Q130 Chair: We are going to come back to some of these points, but at this stage I want to establish how important you think that this project is.

Geoff Inskip: Very, very important indeed. In 2008 the west midlands region determined that the high speed rail network was one of the key priorities for the region in terms of its competitiveness going forward and also in terms of securing the local rail capacity we need for those local connections. The capacity work we had done at that time indicated that we needed something akin to High Speed 2, because we were already being squeezed off the intercity networks. Our local rail services were being squeezed off in the December 2008 timetable. This was real and it was now, and that is one of the reasons why we have made it a very high priority indeed.

Q131 Chair: Mr Clark, you represent the core cities. How high a priority is high speed rail?

Stephen Clark: I would say that in the long term it is the top priority. In the short and medium term, there are other priorities that are important for rail in the core cities, in particular the pressures on the commuter flows into the core cities that themselves echo the changing economic structures of those cities. In particular, that is about lengthening trains and it is about doing schemes like the Northern Hub, electrification of the main lines, for example, to Sheffield and Leeds. In the long term, it is key and it is top of the list, but there is a lot to be done in the short and medium term as well.

Q132 Chair: Do you see these short and medium term and long-term priorities as being in competition in any way?

Stephen Clark: No. They are very much complementary. Both reflect the changing structure of English cities; both are about sustaining their economies; and both are about the long-term development of their economies vis-à-vis the south-east of England.

Q133 Mr Leech : Mr Inskip, just going back to the point you made earlier about why it is important for the midlands, is capacity the most important or is shaving off a relatively small amount of time with the journey between the west midlands and London more important?

Geoff Inskip: We would start off by arguing the case for local rail capacity: i.e. the release on the classic network of the capacity so that we can then enhance our local rail services. That is extremely important to us, but so is the importance not just of the connectivity to London particularly, as we see it, but connectivity on the Y network. We argued very strongly that we must see the Y network built because it is connectivity to Manchester, Leeds and Scotland, as well as the connectivity into London, that will allow the west midlands region to thrive as a region and be competitive across its European counterparts. It is not about being competitive vis-à-vis London particularly but also about making the west midlands, Birmingham, etc., competitive vis-à-vis our European counterparts, where we need to have a very good transport infrastructure around the west midlands to do that.

Q134 Mr Leech : In your view, is there no alternative that could increase the capacity for local and interregional services and provide that network and connectivity to the north and the south and Europe?

Geoff Inskip: We have looked at a number of options to try and see whether there was a better way of doing it, and there is lots of discussion, certainly in the west midlands, as no doubt the Committee will be aware, in terms of Rail Package 2. We have looked at Rail Package 2. It enhances some of the intercity network by, say, three train paths an hour or something like that. Okay, fine, if you want that you can have it, but it is not going to solve the longterm problem we have. The longterm problem is, as has been mentioned before, that in December 2008 we were squeezed on our local rail services. That is going to get even worse as there is a preference for intercity and cross-country services to go in at the expense of local services. This is about a package of measures, and the only thing that really does it in a big way is by building a new line. Once you start thinking about building a new line, it has to be current technology, it has to be good technology and you might as well make it high speed.

Q135 Mr Leech : Has any assessment been done on the impact that it will have on Birmingham airport?

Geoff Inskip: We think it is going to be a good thing for Birmingham airport, frankly.

Q136 Mr Leech : It will not become a London Birmingham airport.

Geoff Inskip: There is a great opportunity we see in the west midlands, because it is about positioning the west midlands, if I may say so, in a way that connects into Europe via Birmingham airport. It will have a connection into Heathrow as well. We will have a connection into central Europe; we will have connections into Manchester and Leeds, and into Scotland. Basically, the west midlands and Birmingham becomes a thriving hub of the UK. We believe that will generate a lot of jobs and that is why we feel passionate about it, because this is about the west midlands in the long term; it is about our children and our children’s children.

Q137 Iain Stewart: What sort of businesses and job creation do you think High Speed 2 would bring to each of your regions?

Geoffrey Piper: Across the board, for example, in the north-west, we have a burgeoning creative and digital industries sector. We are also the largest manufacturing region of the UK. We have a big pharmaceuticals industry, a big visitor economy, and many other industries. The consortium which I lead has senior representatives from each of these sectors and others, and they all continue to speak unanimously about the advantages of investing in high speed rail. It is important to recognise that high speed rail can and should be more than just a considerably enhanced passenger service. It will open up capacity and provide greater flexibility for freight as well.

Going back to the first of the sectors that I mentioned, the digital and creative and media sector, the MediaCity centre, just in the process of opening in Salford, has already attracted the major departments of the BBC. It is clear that that is going to become a very major hub for international media services. That in itself will create, inevitably, huge growth in demand for passenger travel between Manchester and London, of course, but also other European centres. If we are going to have the opportunity for that travel to be environmentally friendly and not all conducted by air, then that will be an essential addition. It is cross- sectoral. We have, as I say, a very broad-based economy in the north-west, and I am not aware of any particular sector which is against high speed rail.

Q138 Iain Stewart: Before, perhaps, the other panellists comment, last week we heard evidence from one of the directors of SNCF, who, from the evidence of the Paris to Lyon high speed line, found that some companies that have headquarters or regional quarters in Lyon moved back to Paris, because it was easier for them to commute up and down. Do you see any downsides to transferring away from the region into the south-east?

Geoffrey Piper: As I have just said, I have not heard of any expected downsides. It would be very surprising if there were not some. I would like to make the point that we see improved links, faster links and greater links between two cities as almost always leading to benefits at both ends. We would not expect this investment, when it comes fully on stream, to be anything other than good for London as well as the north-west.

Q139 Iain Stewart: Is that a view shared by everyone?

Kieran Preston: The City Region has a population of about 3 million and 100,000 businesses, but it has a very high concentration of financial business services, which I believe the research shows are better placed to benefit from investments such as high speed rail. Didn’t the SNCF guy also say that there was then subsequently movement in the other direction? I agree with Geoffrey that it is a symbiotic relationship.

Iain Stewart: Yes, cross-traffic. I would make the point that it is not all positive. There are some disadvantages and downsides.

Geoff Inskip: In the west midlands, we see great opportunities to get the investment in from India and China, in particular. You have seen the recent visit around Longbridge and that type of thing. We are actively engaged with our colleagues in India about bringing investment in to the west midlands right now. But we do recognise that those investment decisions are made based on connectivity generally of a region. It is not an easy thing and these companies can go elsewhere. They can go to Europe and invest in other places, and so we are in a very highly competitive marked to attract jobs here.

Directly in relation to your point, the argument is essentially for Birmingham and the west midlands to make its position pretty clear and start extolling the virtues of its connectivity to attract in that regional investment.

Stephen Clark: If you take the English core cities, they represent about 27% of UK GDP and it is about 16 million people. It is a huge area of importance, or the urban centres are, for the economy of the UK. With regard to your question about which particular sectors might benefit from high speed rail, to my mind it is a cross-sectoral thing. Business location decisions, of course, are affected by transport. They are hugely affected by transport, but they are also affected by other things as well. Sometimes, if you can reduce the importance of the transport, some of those other things can come to the fore. For example, in many of the English cities there are very strong university centres around which sciencebased businesses grow. But look at those businesses. London does some special things. London is the area in the country where a lot of capital allocation decisions are made, be it in the private sector or the public sector. Those businesses locating, say, around universities need access to that capital in order to foster their businesses. The more you can bring the cities closer together with those sorts of decision makers in London and the more you can bring to those cities the advantages of global connectivity that London has that is unrivalled with anywhere else in Europe, the better it is for all sectors in the economies of the English cities.

Geoffrey Piper: Another sector which we see benefiting hugely is the transport sector itself. Two of our members who are particularly strongly in favour of high speed rail and HS2 are the Manchester Airport Group and Peel Holdings. Manchester Airport Group might not immediately be thought of as being a strong advocate of high speed rail, but they have been one of our strongest. They have written regularly in support of high speed rail, which they see as an opportunity to bring greater scope and capacity for international travel from Manchester and focusing on domestic travel involving switching to the rail mode much more.

Peel Holdings are the very major private company which hold major land holdings in the north-west, including the Port of Liverpool. They are currently working on a £10 billion investment which has had the go-ahead and planning thus far in Liverpool and Wirral; and they are looking forward to a revival of the Port of Liverpool with the widening of the Panama Canal, on the other side of the world, which is expected to create quite a shift in terms of international shipping patterns. So there are two other transport sectors which themselves strongly support high speed rail. In the case of Peel in the Port of Liverpool, there is a strong lobby for at least a spur from HS2 to be planned to go towards Liverpool.

Q140 Chair: You all talk about the benefits that you want to see and that companies are convinced will come, but how do you know this is going to happen? We have received evidence which says it is not necessarily the case that the benefits would come in the way that you are all anticipating them. It has been put to us that, where there is greater connectivity, the stronger regions or cities will benefit at the expense of the less strong. How do you know that these aspirations will become real?

Geoff Inskip: It is a combination of a number of things. Let us start with Eddington and look at Rod Eddington’s report. He made a very good case about connectivity and the value of connectivity bringing in economic wealth.

Q141 Chair: But that is to do with assumptions and somebody’s ideas. What actual evidence is there that these changes will come in the way that you are all hoping? Is there any basic evidence it will happen in the way that you want to see it?

Geoff Inskip: It is an economics argument, as the Committee is pretty much well aware. If you look at Lyon and Lille, you can see what they say about themselves in terms of what has happened in those cities. If we look at High Speed 1, we can say it is 100,000 jobs and we can say it is about £20 billion of economic activity through High Speed 1. Those are evidencebased things and you can point to those.

In addition to that, though, we had a look at an equivalent viewpoint from some consultants, KPMG, who did some work for us, looking at the value of High Speed 2 connectivity to London and also the increase in the local connectivity that we could get. That showed that through that improved connectivity we could draw in something like 22,000 jobs into the west midlands and increase GDP by about £1.5 billion a year. It is an economics report, but it is based very much on generating that better connectivity, which then drives economic activity.

Q142 Chair: Is this the report that is due to be published shortly or is this a different one?

Geoff Inskip: We published our report some time ago. It is on our website. We are very happy to send it through to you.

Q143 Chair: In your evidence you refer to a report that is due to be published. Is that something else? That is a report on economic impact, I understand.

Geoff Inskip: We have done a number of reports. The one that we are talking about in there that is due to be published shortly is a further report, which we will let you have as well.

Q144 Chair: When is that due?

Geoff Inskip: That is due very shortly now, about the end of the month. It is days away.

Chair: Thank you. We would like to see that.

Stephen Clark: I should say as well it is a very important question and that Core Cities Group commissioned some work in this earlier in the year in order to look at exactly that question, to try and assemble and bring together all the evidence around the economic impacts of transport investment, first, and then high speed rail on cities across the world. That work is due by the end of the month, and we will be very glad to furnish that to the Committee.

Chair: We would like to have that, please.

Kieran Preston: Just to add, Chair, I believe there is some work done post-ANT the Jubilee line, where the economic case did not stack up initially. It was basically a political commitment, but the post-ANT work that was done on that did in fact demonstrate that the benefits were there. The real problem is that you cannot have a separate universe while you try and attribute growth and benefits, whether it is to a transport investment or to other factors in the economy.

Q145 Paul Maynard: While obviously one of the great issues of contention is whether the benefits will flow down into London or up into the regions on the construction of high speed rail, is there not a more fundamental question? What will happen within the regions, whether constructing a high speed line to Manchester will be of disbenefit or benefit to Liverpool, similarly Birmingham and Coventry, Leeds and Bradford, and I am sure you can pair them up? What research have any of you done or what thinking has gone into how you ensure that the secondary cities in a region that is not connected directly to the high speed line will none the less benefit and maybe benefit disproportionately, perhaps?

Stephen Clark: It is absolutely vital that the strategy for developing high speed rail considers exactly that question because it cannot go everywhere. The high speed line will clearly be limited in the extent the high speed trains can go on to other places. It is very important that in the planning for high speed rail those linkages are developed as part of the plan. That is why, in the point I made at the very beginning, the investment in the local transport systems that distributes people from the high speed rail to surrounding towns and cities is absolutely an essential part of what needs to be done to prepare for high speed rail.

Kieran Preston: It is absolutely right that we need to look at how we disperse those benefits of high speed across the City Region and, indeed, how we feed the high speed line. Similarly in Leeds City Region, we have had an initial look at what kinds of improvements we would need to make to the local network. As you would expect, there is a combination of electrification, possibly tram and train. In Leeds, we have a project called NGT Trolleybus, which offers a fairly flexible ability to respond to wherever the line eventually is, with articulated vehicles with significant capacity. It is hugely important that you can disperse those benefits.

We have a slight problem and that is the problem you mentioned about Leeds versus Manchester or Liverpool versus Manchester. There is a concern in the Leeds City Region that we do not start to see any benefits at all from HS2 until maybe seven years after its completion, whereas to the north-west high speed trains will be able to join the classic railway and reduce journey times to Manchester. It is quite unsettling, and certainly business feels strongly in the Leeds City Region that something needs to be done and can be done to ensure that the region benefits, not just Leeds but beyond Leeds and through to north Yorkshire and the north-east. There is an ability to link the Midland Mainline to HS2, electrify it and deliver very significant benefits much earlier. It makes economic sense to do that because you start to capture some of those very important transport and productivity benefits much earlier than you otherwise would do.

Geoffrey Piper: I agree entirely with what Kieran has said. It is interesting to look at different places in the north of England. I have attended a lot of debates and conferences of one kind or another on the case for high speed rail over the last four or five years. There is always a clamour from all the different cities, Glasgow and Edinburgh as well, "Can it please come to us?" There is competition and that, in itself, implies a pretty strong feeling among those who are professionally involved, at any rate, in a strong case for high speed rail.

The other thing is that it is about confidence in investment in our various regions. We believe that, as soon as there is a clear Government commitment that this is going to happen, we will see considerable growth in investment and business expansion long before we see any high speed track. It is obviously chicken and egg to an extent, but there is definitely a clamour from a lot of different towns and cities who want to be able to benefit.

Q146 Chair: What about the point that Mr Maynard was putting to all of you-that one part of the region might benefit to the detriment of another? He mentioned that, if there is a link to Manchester first, does Liverpool lose out?

Geoffrey Piper: I personally think that when you consider distance-Liverpool and Manchester are 36 miles apart-certainly in the case of that sort of local geography, provided the local services are adequate, capacity-wise as well as quality-wise, it has to be a plus; it has to be a benefit. Where one region benefits from high speed rail but maybe 150 miles away there are city regions which are not so benefiting, I can well see, and I am sure we can all see, that that would be seen as a negative. For example, if high speed rail went as far as Manchester and Leeds and never beyond, one can imagine Newcastle missing out and losing out.

Q147 Paul Maynard: Where I am trying to lead you all, perhaps unfairly, is to suggest that we need to start to see proposals like the Northern Hub as being not merely parallel to HS2, but the essential precursor component of a high speed network, because HS2 without a Northern Hub or without many of the other transport interventions that are being planned would lead, I believe, to the disproportionate benefits flowing to Manchester and to Leeds, but not to other key cities. Would you agree with that?

Stephen Clark: Absolutely. I also recall your first question where you asked for evidence as well. I can give you some evidence. There is some good work that Northern Way did looking at Manchester and Leeds connectivity. It was not done from a transport point of view or with a view as to what the answer was, but to try and understand how those two economies work together. The conclusion it came to is that they would perform hugely better if the connectivity-it did not specify how-between the two centres was improved.

The second piece of evidence was some work that I think Centre for Cities did-I will check the reference for you-that looked at towns in the north-west of England and their economic prosperity when set against their connectedness. It looked at places like Burnley, Warrington and Blackburn; I think it looked at the Calder Valley. It came up with some quite stark conclusions around the connectedness of places and their prosperity. I completely agree with what you say about the Northern Hub, for example, paving the way for high speed rail so that the benefits spread.

Geoff Inskip: What you can see from the work we have done in terms of the connectivity for places like Coventry, for example, is this. You mentioned Coventry in particular because it is one of the things that exercises our minds, particularly in the west midlands, as you know. While high speed rail will have a step change in economic geography, it means that people will have to think very differently from how they currently think about the economics of this country and how it works. That will mean that we need the improved local connectivity which goes hand in glove with the High Speed 2 network. If you look through the evidence, you will see in the report we have said that with just high speed rail there are about 10,000 jobs and about £600 million of GDP, but with that local rail connectivity added in to it, with the local improvements we can get, that doubles those numbers, broadly. That is why you are right in saying that we do not just have to look at High Speed 2 on its own but with the local rail capacity that is also needed. Of course, the Northern Hub is also part of that solution.

Geoffrey Piper: This emphasises, does it not, the importance of the context in which high speed rail is considered and the need for the rail strategy being agreed for the long term so that these decisions are taken together and not separately?

Q148 Jim Dobbin: I have a couple of points now on the building process, because there is going to be disruption in the system while this is happening, particularly affecting Euston. My experience of new projects, particularly in motorways, is not very good, quite honestly, because the new M60, which joins the M63 and the M6 at Mere village, seems to have been lined with cones ever since it was opened, reducing the traffic from three lanes to one lane. That is the way it is at the moment. There are concerns that this whole process is not all going to be rosy and there will be cost implications to this. Does that not concern you?

The other cost that is in the pipeline is the need for regional rail enhancements that follow this. Will these be fully funded? Will the Government come forward with the money? It is a very broadbased issue about disruption, getting it right and the joined-up thinking.

Geoff Inskip: You are right, of course, that the construction is a big challenge and we have to get it right. There will be disruption. We are going to have to say-and we will have to look at the longer term-is this disruption worth it in the long run? The answer to that question is an undoubted yes, from my perspective. But we do need to make sure that we minimise the impact of that disruption as best as we possibly can. I am pretty sure that we have some very good railway engineers in this country who can do that, and I have some confidence in them being able to do that.

On the wider point about funding, we should definitely have reference to the McNulty report. The McNulty report talks about how we can possibly double our capacity on our rail network, or that is the vision anyway within it. But it is saying we are not going to be able to do that unless we are efficient at what we do. If we can start delivering the sorts of savings that we are talking about through McNulty, 30% savings, etc., then that gives real scope to improve our local rail services, which is much needed. If you combine that, then, with the funding that is being used currently to deliver Crossrail and assume that continues to come through but funding instead High Speed 2, you have a nice little funding package there that makes sense for everybody.

Kieran Preston: One of the reasons why, certainly, the City Region and the Core Cities are so keen on this oneoff opportunity is about the transformational benefits beyond the traditional transport and productivity benefits. If we get our planning right and plan land use issues and spatial planning and take account of the potential impact of HS2, then there is a huge opportunity to achieve those transformational benefits. They have been estimated at perhaps as much as three times the £44 billion benefits that are being claimed for HS2. It is crucial that, certainly beyond Birmingham, we need a lot more information as soon as possible to start doing this planning. But, also, the sooner we can get the statement from the Department as to what the dowry is to spend on our regional rail networks, then we can plan with confidence, because there are certainly local concerns. When you have the average age of trains of 30 years in the north and it takes 35 minutes to get from Halifax to Leeds on a two-car Pacer, there is a degree of cynicism. Unless there is that kind of announcement that there will be money to deliver the kind of regional network to support HS2, then that is a challenge that has to be accepted.

Geoffrey Piper: In terms of Mr Dobbin’s question about disruption and cost, which are obviously extremely important questions, we experience disruption every day. Travelling between Manchester or Liverpool and Birmingham, unless you go at a ridiculously early hour, on the motorway it is not unusual to take three hours. You see all the lorries, one after another, chugging along-probably stationary, not even chugging. If you think of the cost of that to the economy and the cost to the environment of what we have at the moment, yes, I and, I am sure, all our members would willingly swap that daily, hourly disruption for a period of disruption and cost to get it sorted for a generation and more.

Q149 Jim Dobbin: I agree entirely with what you have just said because the M62 goes right through the middle of my constituency, so I see that every day. I have a specific question for Geoff. Can you tell us the cost of the regional rail enhancements you envisage?

Geoff Inskip: We are looking at a number of studies at the moment. Broadly, we need to spend round about £300 million to £400 million on our local rail enhancements to get that set up. I should say that we are not expecting that suddenly to be delivered in one fell swoop. This is going to have to be done over a period of time, and the fortunate thing, I guess, is that time is at least on our side a little bit. We have from now until 2025 to get this thing put in place nicely. It is one of the reasons why we are suggesting, again, that we take control of our local rail networks. It is beyond the remit of this Committee, but it is quite an important aspect that we take control of our local rail networks as PTEs, so that we can start making that investment.

Q150 Steve Baker: I am sure we would like to see the north regenerated as soon as possible, but I am just trying to get my head round why so many hopes are planted in high speed rail. Would you agree with me that the West Coast Main Line sees most of its congestion in standard class and, therefore, there is a case to be made that you could have capacity quicker by converting first class to standard?

Geoff Inskip: I have seen congested standard class. I have seen the railway when we have declassified first-class carriages to accommodate for that. The issue for us is that, even if you did all of that, and I am pretty sure first class is pretty outmoded and outdated now and I am not sure we should have anything like that going forward, nevertheless, what we have shown through the demand forecasts is that even that gets full up. We will end up with full trains by 2025. The Network Rail study is pretty robust. Our own view about it is that it undersells the case.

We are looking, at the moment, at traffic growing at 5% plus on our rail network and the forecast within High Speed 2’s forecast and the Y network is about 3.5% or 3.4%. So it will very quickly catch up to the fact that the danger, for me, is more about pricing people off the network. That is about the only way the demands can be managed, frankly, until we build a High Speed 2 network.

Q151 Steve Baker: Within what you have just said there is an assumption that high speed rail will not, in itself, price people off the network.

Geoff Inskip: No, I do not think it will.

Q152 Steve Baker: Why do you think it will not end up charging premium prices?

Geoff Inskip: Because the 16 train paths that we get out of it will be sufficient for that demand. I listened very carefully to what Jim Steer was saying as well, and I half agree that, if you take us to the extent of our arguments, we say we need more than just the high speed rail network. We need more high speed rail network than is currently planned. Our point at the moment is let’s at least get there first and then we will have to think about it then. I know this is not something that High Speed 2 particularly want to hear, but it is an issue about whether you do and should you forward track now high speed.

Q153 Steve Baker: I think that came up before. Does anybody else have any comments on why it is that high speed rail is a particular trigger rather than capacity increases through other means?

Kieran Preston: The business case-the work by HS2-is pretty robust. Incremental change to the existing railway will only take you so far. You will reach the stage where you do need that additional capacity. Once you follow that line of thinking it leads very quickly to a new line. As Geoff said, the benefits you then have through utilising the classic railway, whether it is for freight, intercity or more local journeys, mean that you just get that step change in capacity. I am not sure that the exercise has fully captured the benefits of releasing the additional capacity on the classic railway.

Q154 Chair: Does anybody on the panel think that the same effects could be achieved by improvements on the existing line?

Geoff Inskip: Quite the opposite actually.

Stephen Clark: In terms of the work that has been done on the existing line, my understanding is that it has not properly looked at the peak versus off-peak issue, taking your original question about standard class versus first class. It is clearly important that the peak is planned for in any provision of capacity. That is the first thing.

The second thing is that it is not quite clear where the Rail Package 2 will get you. After 20 years, would you want to do the same thing again? Are we looking back now on the West Coast upgrade that was authored in 1990 and saying perhaps we should have done that differently? I think we are. It is something which requires imagination as to how we want the transport system to evolve in the country. You take the Jubilee Line, which Kieran mentioned. There was a time when Docklands got by on the Docklands Light Railway and the Jubilee Line had a poor business case. But the decision was taken, yes, this is something that is important. It is inconceivable to have London Docklands without the Jubilee Line at the moment. These great transport changes require some imagination.

I will give you another example of things that you do not expect. In Greater Manchester, the tram system took eight trains an hour off the busiest section of track in Greater Manchester about 15 years ago. Nobody at the time even imagined that that would lead to an expansion of services across the north-west of England and from the north-west of England to Scotland. Nobody imagined it. Sometimes, with these big transport changes, you cannot imagine quite what is going to come at the end of it.

Geoffrey Piper: I was simply going to say that, although our belief is that this is more about capacity than it is about journey times, I have had to spend over the last 10 or 20 years-quite a bit of time-supporting inward investment agencies. There is no doubt about it that, if you have projects looking at possible locations around Britain and Europe, journey times between the locations that you are offering and the capital are clearly a factor.

We are convinced that to bring Manchester within an hour and a quarter of London, and Liverpool within about an hour and 35 minutes of London, whereas currently it is over two hours, is going to make a major shift in terms of how people perceive those major centres. Given that they have the other advantages of a manufacturing capability, of universities and other advantages, we think that removal of one of the major obstacles which we have in terms of distance and time from London can make a very big difference.

I also spend quite a bit of time with young people, and I have to say that, when talking with young people of school age or whatever, it really comes home when you think about the job prospects that young people have in places like Liverpool, Manchester and Sheffield. When you start looking at them and sitting down and discussing their future, the importance of this kind of prospective investment-high speed rail-really does come home. That, at the end of the day, is what drives us. We see it being a major boost to inward investment, the creation of jobs and business expansion, and without this kind of step change the alternative is not very happy at all.

Q155 Mr Leech : Mr Piper, what is the tipping point when a shorter journey becomes so much more attractive? For instance, billions of pounds are being spent on the West Coast Main Line upgrade. The journey time from Manchester went down from a minimum of two hours and 36 minutes to about two hours and four minutes, which is the quickest time. I do not think most passengers see a massive difference between those two; it is still over two hours. Is it that it suddenly drops below two hours, or if it was one hour 55 minutes would that make a difference? Where do you draw the line that it makes a significant difference?

Geoffrey Piper: It is a percentage drop. Going from two hours five minutes to one hour 55 minutes might be psychological for some people, but I do not think it is a tipping point. When you start getting it down to one hour five minutes or one hour 10 minutes, or whatever it is, bringing Manchester as close to London as Birmingham is currently, that is what I call a step change; we have moved a northern city to being one which almost sees itself as a satellite of London. That will be transformational.

Mr Leech : Apart from disagreeing that I would not want Manchester to be a satellite of London-

Chair: We mustn’t get diverted, but it must be recorded that we do not all accept that the north will ever be a satellite of London.

Q156 Mr Leech : In other terms or in footballing terms they already miss out, but is there a danger that Manchester gets a massive competitive advantage over Liverpool, if Manchester’s time is an hour and 15 minutes and Liverpool is still over two hours?

Geoffrey Piper: We see it as all one place. I live west of Liverpool and work most of my time in Manchester.

Chair: We are getting very controversial now.

Q157 Steve Baker: Mr Piper, you made a very passionate case about young people’s futures and we all share that concern. The problem for me when we are talking about high speed rail is that we seem to be pinning our hopes on a particular state-subsidised technical solution to turn around young people’s lives. Earlier in the day, we discussed the allocation of capital, 30-year plans and so on. Is there not a fundamental question at stake here about how society operates? Should we be dependent on the state providing these massive grand schemes or is there something about a more dynamic society which would offer a more hopeful future?

Chair: Members can answer if they wish to. I think we are getting a little away from transport.

Steve Baker: Forgive me. I realise it is slightly off high speed, but it just seems to me that that is the motivation for everyone. Everyone wants to see the north turned around, but at the heart of it is this reallocation of capital from everywhere else in the country to these particular places. Really, I am asking if you genuinely believe that that is key to your young people’s future.

Geoffrey Piper: Yes, I do. The supply of one of the most basic essentials of doing business, getting a job and living your life needs to be adequate. I do not think it is for the state to tell people how to live their lives, but it is beginning to look as if there are plenty of people in this world who are very interested in investing in this kind of additional facility in this country, whether it is from Canada or China, and I do think that, where there is that strong business case and every prospect of it being a commercial success as well as an economic success, then that should be welcomed by those of us carrying some responsibility for the future generations. I think there is a very strong case.

Q158 Chair: Does anybody else want to come in?

Geoff Inskip: Without doubt, the Government have to intervene to provide transport infrastructure like this. It has to be provided in the first place by Government because I do not see any alternative. There is an opportunity at a later time to talk about £13 billion worth of revenue, £6 billion of operating costs, to sell that out as a concession, for example, to raise further money, maybe to build further high speed rail after that. But I cannot see any alternative and we do need to provide the transport infrastructure. That can only be done by Government.

Kieran Preston: Just to add to that, the benefits are too widely dispersed to expect the private sector to capture them. It is the Government’s responsibility, in my view, to do that. If you look at David Begg’s work with CFED, as he was saying earlier, comparing investment in the UK with other European countries, we are about half the level of the average of 14 European countries. Some recent work by the OECD showed that we are bottom of 20 in terms of the percentage of GVA that we invest in transport. We just need to get our act together and start capturing these benefits.

Q159 Chair: I have two points I would like to put to you before we end. First, Mr Inskip, do you support the choice of the Birmingham terminals and can you see any way of mitigating the connectional problems?

Geoff Inskip: We do support the Birmingham terminals. The first one, the interchange at Airport NEC, is very well located and that is fine. The other one is Moor Street, essentially, or Curzon Street, as some people call it. I prefer to call it Moor Street because it is adjacent to Moor Street and it is almost at the back of Marks & Spencer, frankly, within Birmingham. We are looking at a tram connection between New Street and Moor Street. That will help that connectivity, but it is a stone’s throw away from the two. In airport terms, the terminals are extremely close together and much closer together than some airport terminals. That connectivity is important. We are certainly not complacent about it and we need the right levels of investment to go in to ensure that that connectivity to New Street and Moor Street takes place.

Q160 Chair: Do you think there is a case for an intermediate station in, say, Warwickshire or Milton Keynes so that more people in the west midlands can benefit? Do you have any view on that?

Geoff Inskip: The difficulty we have with putting in intermediate stations is the more intermediary stations we get the more everybody wants one. This whole debate about high speed rail fascinates me because everybody wants a station. Therefore, it has to be a good thing because everybody knows in their heart of hearts that is exactly what they want. They want a high speed rail station in every single city, every single town, and then they will all be happy. The truth of the matter is it would not be high speed rail in those circumstances. So we have to make some choices and those are difficult choices to make. What High Speed 2 have come up with is a pretty good way of balancing that between the connectivity at Old Oak Common, which we support, Heathrow connections and Euston connections. The Greengauge21 work showed city centre to city centre really worked for connectivity and for intercity travel. That is it: Birmingham city centre to Euston, to Manchester, to Leeds. We are quite happy with the proposals that are on the table.

Q161 Chair: To Mr Clark and to Mr Preston, we had some evidence at a previous session on freight, about congestion on the line north of Lichfield before the Y link was completed. Is that something that concerns you?

Stephen Clark: Yes, it is. We have not mentioned freight today, but movement of goods by freight is an important component of the rail system. One of the advantages of high speed rail is to provide more capacity for freight on the existing routes. That is really important for the way the UK economy works. There are some issues about how you accommodate the projected train service north of Lichfield, when that phase of the new line is created. There is a need for a bit more work to look at that and understand that and fit in freight and all the other additional uses that can be made of that released capacity.

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

Examination of Witnesses

Witnesses: Councillor Stephen Greenhalgh, Leader, Hammersmith & Fulham Council, John Dickie, Director of Strategy & Policy, London First, and Daniel Moylan, Deputy Chairman, Transport for London, gave evidence.

Q162 Chair: Good afternoon, gentlemen, and welcome to the Transport Select Committee. Could I ask you to identify yourselves, please, with your name and organisation?

John Dickie: John Dickie. I am the Director of Strategy and Policy at London First.

Daniel Moylan: Daniel Moylan, Deputy Chairman of Transport for London. I am speaking for the Mayor.

Stephen Greenhalgh: Councillor Stephen Greenhalgh, the Leader of Hammersmith & Fulham Council.

Q163 Chair: What would you say are the strongest and weakest points in the case for high speed rail?

Stephen Greenhalgh: I would start off by saying that one of the strongest points is the economic regeneration potential within my borough. The previous witness talked about the connectivity at Old Oak. Old Oak is one of the forgotten parts of Hammersmith & Fulham. It is landlocked railway sidings. In fact, I only got a site visit for the first time last week. I pass it every day virtually in the train but, yet, you do not notice it. It has the economic potential to create a new city for London, bigger than Canary Wharf, to unlock thousands of jobs and 11,000 homes. What excites me is the economic impact to transform one of the most deprived communities in the country.

Q164 Chair: Are there any weaknesses in the case?

Stephen Greenhalgh: None at all.

Daniel Moylan: The Mayor and Transport for London support High Speed 2 in principle, but there are some important consequences that need to be better addressed than has been the case so far. If I could mention those very briefly, the first is the necessity for mitigation of the adverse environmental effects of the route within Greater London. Ideally, the Mayor would like to place this in tunnel all the way, but it does run close to many houses along the route and there needs to be a better attempt to mitigate the environmental impacts and as it crosses the Colne Valley if it is to be acceptable.

The second one is that our figures show that, as the line goes beyond Birmingham, it will need a new tube line in London, passing through Euston, to disperse the passengers arriving there. Our figures will be developed in our response to the consultation due at the end of this month, but at the moment that does not figure as part of the proposals. We believe it is not only necessary but it is necessary for it to be phased in to the proposal so that, as the line develops to Scotland, that new tube line is already in place.

The third concern relates to the proposal, slightly tangential, to run High Speed 2 through London on to High Speed 1 lines. The proposal at the moment, as I understand it, is that this is to be done using the North London Line, which is a commuter line of some significance in which TfL has invested, which has seen very dramatic growth as a consequence of that investment. I am assured by the High Speed 2 company that I do not need to worry my little head about this, but our view is that we need cast iron guarantees and possibly an alternative route to connect the two lines together.

Finally, supporting in some ways what Councillor Greenhalgh has just said, the very fact that the Old Oak Common site is inaccessible at the moment by surface transport, other than by rail, needs to be properly addressed if that site is to be developed and is to be a major rail hub. Quite apart from the prospect of building 11,000 homes and a new city on top of it, which is a very worthy aspiration for Hammersmith & Fulham, there needs to be a way of getting in and out of it, and that is not properly addressed at the moment in the plans.

Q165 Chair: We did not receive any written evidence from Transport for London. Is there any particular reason for that?

Daniel Moylan: I am very sorry about that. We have been focusing on developing our response to the consultation. We want that to be as robust and as properly examined as possible. We intend to have that ready to that timetable. We did not have material we felt we could submit in writing at this stage. I do apologise if that has inconvenienced you.

Chair: That is all right. That is why we called you today so that you can tell us directly what your views are.

John Dickie: The greatest benefit that high speed rail has the potential to offer is the one that has been set out by some of your earlier witnesses. It is, as the Northern Way put it, the once-in-a-generation potential to transform the economy of northern Britain. That must be, by a mile, the central potential benefit that high speed rail can bring.

There are two ancillary benefits that matter to us at London First. One is the increase in capacity for commuter lines into London that would be freed up by creating a new high speed line. The other is that the cross-party consensus around the principle at least, if not necessarily the route, of making a step change investment in infrastructure is very welcome against the context of Britain not being good at making long-term infrastructure decisions, especially ones which span general elections.

In terms of the weaknesses around the case, I would cite two. One is the package of points Daniel has just made about the importance of having interconnectivity within London for high speed rail. People will not thank any Government if they can get from Birmingham to Euston in half an hour, but it takes them half an hour to get off a holding pen at Euston on to a congested Victoria Line. So we do need to make sure we have the capacity to move people on when they arrive in London, whether at Euston or Old Oak Common.

The other is that this is not a substitute for a proper aviation policy. The potential for high speed rail to take some of the pressure off Heathrow by reducing intra-UK flights is real enough, but the number of slots that would be freed up by all of the current traffic flying from cities such as Manchester to London by high speed rail is about 4% in total. It is worth having but pretty marginal. At the same time, you would put lots of great cities in Britain in closer contact with our hub airport, which will of course increase demand on that airport. So we do need to have a proper, integrated approach to transport policy that looks at how you dovetail increasing south-east airport capacity with the provision of high speed rail.

Q166 Chair: Do you think that that has been addressed at the moment?

John Dickie: Not sufficiently.

Q167 Chair: C ounci ll o r Greenhalgh, you spoke about the regeneration impacts of High Speed 2. Are you convinced that that will happen?

Stephen Greenhalgh: High speed rail is critical to this happening. There is still a case for an interchange station at Old Oak and, effectively, it becomes the Clapham Junction of the north. If we think in national and international terms, at Old Oak Common, right next to Park Royal, which was created about 100 years ago and is now still the largest small to medium- sized business park in Europe, we can get connectivity to five airports. Ironically, from Old Oak Common today, you would get to Birmingham City more quickly than you would to Gatwick. But you can get to five airports very quickly. You connect to seven national rail lines, in theory anyway, which will require some planning, and six UK metropolitan railway lines, if you get the planning right. The connectivity is essential because cities are built for people, but they are also built around transportation systems. It requires planning. That is why my very impoverished local authority is paying a lot of money for expertise to try and develop those plans so that we can work with national and also regional Government to land the plan. I believe it can be done, but it is certainly something that requires lots of work and certainly a lot of money to plan it.

Q168 Chair: Do you feel confident you are going to get enough support to make it a reality rather than-

Stephen Greenhalgh: Daniel is going to support me all the way at TfL. I have got Boris behind him.

Q169 Chair: Is that the case, Mr Moylan? Let us ask him while he is here. Is that correct?

Stephen Greenhalgh: Get it out of him. That’s a good idea.

Chair: Are you going to be supporting Councillor Greenhalgh?

Daniel Moylan: The Mayor is obviously very committed to regeneration where it can take place. The Old Oak Common site could be part of an opportunity area, which might include Park Royal, so the Mayor would be very supportive of that. Sometimes one has to get a map out, an A to Z, and just look at the Old Oak Common site, which is very constrained. It has Kensal Green cemetery to one side of it, which is full of Grade I listed monuments. I do not think we can expand into that. It has Wormwood Scrubs to the south, which is protected by its own Act of Parliament in an area on which I am sure nobody would suggest developing. So it is to some extent quite cut off from the rest of Hammersmith & Fulham. It is closer in some ways to Brent, and it is pretty inaccessible, as we have agreed, by road. Quite a lot of the land will be required, given that there is to be a Crossrail station here, as well as a High Speed 2 station, and the interchange between them is crucial. If I may, I will come back to that if you ask me any questions about what I have said about Euston and the need for relief there. But a great deal of the land that exists will be taken for that. The laudable development, which I am sure the Mayor would support, would need to be above the land that was taken for all the rail purposes necessary at Old Oak Common. I am sure that can be done with the right planning and the right investment, but it will be a costly, if very desirable, exercise. I hope that constitutes the level of support that-

Q170 Chair: It did sound promising, but there was a "could", a "might" and an "if" in there. Do you think you could make those a bit more positive?

Daniel Moylan: It is a wonderful thing to do. At this stage, it clearly needs to be demonstrated that it is doable at an appropriate cost. I have every confidence that Councillor Greenhalgh will be able to show that with his expert witnesses and evidence.

Q171 Chair: That sounds very promising. Councillor Greenhalgh, is that good enough?

Stephen Greenhalgh: Daniel is right that it is not an easy thing to land, but the truth is that the site area today is made up of not just old railway sidings that are vast, but light industry warehousing, car breakers and also waste recycling. There is the land around Old Oak Common and the railway sidings, and that is some 50 hectares. That is bigger than Canary Wharf, which is 39 hectares. With some planning around the development and also looking at oversight development and planning that in, it is possible to unlock the potential and create this as a major economic base as well as all the new homes that I talked about. We have a world class master planner in the room, Sir Terry Farrell, who is working on this as we speak to put forward that, and we will be making submissions to high speed rail that show that this can be done.

Daniel Moylan: I absolutely agree with one thing, that-

Stephen Greenhalgh: Only one thing.

Daniel Moylan: Well, everything really-of course, with nearly everything. I absolutely agree that, if the potential of Old Oak Common is to be unlocked, it needs to be planned and baked into the project from the beginning. This cannot be an addon which is thought of later, because too much will be happening on the ground to allow the development to be captured if it is not thought of and planned right at the outset. I am absolutely clear about that.

Stephen Greenhalgh: Correct.

Q172 Iain Stewart: My question follows neatly on from that and your comments about Euston and the transfer of passengers once you get into London. Before looking at the specific points, in general, do you think High Speed 2 and Crossrail are being planned with sufficient integration, or is there a disconnect between the two projects?

Daniel Moylan: I do not think there is a disconnect between the two projects. Old Oak Common or somewhere to the west of London is a point at which they must interchange. They cannot interchange more than once on their two lines. They are going to meet once and cross once, and Old Oak Common is probably as good a place as any to do that.

May I develop the point on Euston? The Government has published figures for arrivals at Euston on the assumption that the line goes to Birmingham. That shows that, at that point, you do not need an extra tube line at Euston. The TfL planning department would accept that. The Government have not yet produced the figures-I believe they might produce them in September-which show the consequences for London termini of traffic coming all the way from Leeds, Manchester and Scotland and so forth. We have had to extrapolate those figures. It is crucial to this case that a large number of passengers, as many as a third, are going to transfer at Old Oak Common, from High Speed 2, on to Crossrail. That is part of the case that Atkins has put forward on behalf of the Government-they are the firm working for the Government on this-to show that you do not need additional dispersal at Euston.

While we accept that as far as Birmingham is concerned, and while we are prepared to accept that a third of the passengers will get off at Old Oak Common and transfer to Crossrail, we none the less believe that, once the line is extended, we will need an additional tube line to serve Euston. This is even with a rebuilt Euston station and one that is going to connect the Circle and Hammersmith and City Line platforms at Euston Square station. They will be connected to Euston station at below ground level. At the moment, you have to come up to surface to transfer. The platforms themselves, however, will not move. It will still be a walk below ground and there will be no additional capacity per se on those lines as a result of this development. Even with an expanded Euston station that reaches out and integrates Euston Square station below ground, we believe a new tube line will be needed.

The important point of this is the phasing because we believe this will be needed as HS2 progresses north. In other words, it is no good building it to Scotland and then saying, "Let’s build a tube line later." I am agreeing broadly with what London First are saying on that-that this needs to be given very serious consideration. Of course, when the figures of the Government or Atkins are produced, which I believe might be September, that will give us the evidence to take this argument further. But at the moment, we are working on our own figures which have been extrapolated by professional planners from what we know, and that would appear to us to be the case.

Q173 Iain Stewart: The reason behind my questioning as to whether Crossrail and High Speed 2 were being planned together is this. I have heard one option for Crossrail is that the commuter services from Northampton, Milton Keynes and Watford would not terminate at Euston any more but go into Crossrail, which would free up capacity at Euston. Is that strategic level of thinking happening in planning the two projects together, or could we be doing better on that?

Daniel Moylan: I have not heard of that. That is the first thing I would say. At the moment, TfL and its subsidiary, Crossrail Limited, are focusing on constructing the line and particularly constructing the tunnel. Questions can be addressed, therefore, in the future about what it is we run through that tunnel, but it is fair to say it is intended that there will be up to 24 trains per hour in the central section work serving the existing and predicted demand already. Whether one can get additional trains through the tunnel from other places I do not know. I would have to take advice on that.

The short answer is, yes, in principle, one could think strategically at any stage about what you put through the tunnel, but I am not entirely sure that it is going to have the sort of capacity that will allow great relief on main line stations. I am speaking there unbriefed on that. It is a general response on a point I have not heard before, so forgive me if I have to correct myself later, but I think that is correct.

Q174 Iain Stewart: May I ask one further question to Mr Dickie, picking up your point about aviation strategy? To what extent do you believe that, if High Speed 2 is connected to Birmingham airport, that could relieve capacity pressure on Heathrow by making Birmingham airport effectively a Zone 6 part of London?

John Dickie: The challenge London has in the short and medium term over airport capacity is not simply the raw availability of flights; it is the location of those flights. The pressure, as you will know, is acute at the moment and was acute throughout the recession at Heathrow where there is no spare capacity and where the two runways are operating at over 99% of theoretical capacity, which means that when anything goes wrong the airport is incapable of meeting its schedule. There has been, and is, spare capacity at the moment-for example, at Stansted. Simply improving connectivity with the runway at Birmingham will create greater choice, no doubt, for people taking shorthaul trips in particular, but it will not create the capacity where we need it most, which is at our hub airport, where, for a variety of reasons to do with the way in which transport traffic works, you can have the maximum range of longhaul destinations served. I do not think giving greater access to Birmingham will solve the problems about the need for increased capacity at a hub airport in the south-east.

Daniel Moylan: If I could briefly add to that, you may be aware that the Mayor has quite strong views about airport provision in London and the south-east. I entirely agree with what Mr Dickie is saying. No major city or country is surviving at the moment without at least one major hub airport, because the consequences of allowing for that transfer traffic in one airport is that the airlines are able to provide more flights, more frequently, to long- distance destinations. Those are the destinations we need to address if we are to continue to attract international investment into London and to the UK generally. It is very difficult, for example, from London to get a flight directly to an emerging Chinese city. It is much easier if you go to Frankfurt or Paris. Those are the markets in which we have to compete. It is possible that Birmingham will compete better with Luton for the north London leisure market as a result of high speed rail. I can certainly see that happening. People would go to Birmingham, just as many of them go to Luton at the moment, in order to do shorthaul leisure travel. That is fine; there is no problem with that. But it is not creating what the economy needs, which is a major international airport. That cannot be provided at Heathrow any more because it cannot expand, so we need to think afresh about that and we need to think also about the connectivity.

Can I just briefly draw your attention to a comment in this morning’s Times where a lady from Greenpeace, I think, or Friends of the Earth pointed out-and this is supporting what you said earlier-that, if you abolished all domestic flights at Heathrow, it would allow you to eliminate stacking? As flights approach, they have to be stacked. It would allow you to eliminate stacking. It would not create any more capacity as such so small is its effect. You could just use the whole of that additional room in eliminating stacking that takes place at the moment. Our figures at TfL show that that is a very plausible statement.

Q175 Steve Baker: Could you just confirm that the costs of improving London’s infrastructure to work with high speed rail are not yet in any business plans?

John Dickie: Yes.

Daniel Moylan: Except for the rebuilding of Euston station, that is correct.

Q176 Steve Baker: There is a substantial element of cost which is not in the current cost-benefit analysis.

Daniel Moylan: We believe so, yes, because we believe that there needs to be a more thorough and better dispersal method from Euston, which would involve a new tube line.

Q177 Steve Baker: Just as an indication, could you put some sort of order of magnitude on those costs? Are we talking tens of billions or hundreds?

Daniel Moylan: No. I am groping a little bit here, but I think the figure we would be looking at in current prices would be in the order of between £6 billion and £9 billion for the tube line we are talking about. It would be under £10 billion.

John Dickie: There are different ways that you can go about providing this relief, and, of course, the argument for what is often referred to as Crossrail 2, the Chelsea to Hackney line and running that through Euston, is not simply to provide relief at Euston. There is a demand case within London that would justify the construction of such a line anyway. Quite how you would calculate the intra-London case for doing this with any marginal costs required to deal with high speed rail would be quite a difficult exercise.

Q178 Steve Baker: For the sake of estimation, it feels like the cost of high speed rail is at least a quarter more than currently estimated, simply to enable London to deal with the-

Daniel Moylan: As John says, how you would apportion the costs of that new tube line between what is necessary to service High Speed 2 and what will eventually be necessary to service London’s population growth, which is projected at 1 million over the next 20 years, is a question you would have to look at.

Q179 Chair: Has that been worked out at this stage?

Daniel Moylan: No. That will be a judgment.

Q180 Chair: That would have to be addressed if we wanted to have that.

Daniel Moylan: Yes. To do a business case, you would have to address that and decide how much you would apportion to the cost of High Speed 2.

Stephen Greenhalgh: Obviously, Daniel is a transport expert and it is always very risky to take on experts, but I am not sure that the only answer on dispersal is that you take off a third of passengers where HS2 meets Crossrail. If you look at integrating the tube network in another way at Old Oak Common, particularly with the Bakerloo Line, and possibly the Central Line, then maybe the cost is not an extra £6 billion to £9 billion. It is really important, from a transport perspective, to maximise the interchange to the west as well as providing that economic hub. That needs to be looked at before we say the answer must be a new tube line.

Daniel Moylan: That is true, but I am not sure it brings the costs down tremendously. As a rule of thumb, we are looking at adding two new stops to the Northern Line, to service the Vauxhall area as it redevelops. The estimate for that is in the order of £500 million to £600 million for an extension there. While I agree that it is absolutely right to look at alternatives, including Old Oak Common, I am not sure that it necessarily is going to be a cheap alternative.

Stephen Greenhalgh: It might be cheaper.

Q181 Chair: Are you saying that these things have not yet been addressed or worked out in detail?

Daniel Moylan: The work TfL has done is largely related to a new tube line through Euston because there is already an existing case for a new tube line running, as it has been known in the past, from Chelsea to Hackney, sometimes referred to as Crossrail 2. So there is a case for that in any event. There is no case at the moment, obviously, for extending the Bakerloo Line to Old Oak Common because there is nothing there. That would be purely an HS2 exercise if you were to do that. The work we have been doing would bring in benefits that are greater than simply the dispersal of passengers from Euston, as John said, but we are very happy to look at any proposal that Stephen has for alternatives that could help address that.

Chair: I just wanted to clarify that.

Stephen Greenhalgh: Daniel is saying there is a business case anyway for that new tube line and so it would be wrong to say that is the cost of doing HS2. I would say that, potentially, we can make the economic case that you can create something that will provide the economic might of something like the city of Manchester or the city of Birmingham, based at Old Oak. It is not there yet-you cannot see it-but you can potentially create it if you plan it properly. That can provide a gross value added and a contribution in the billions to the UK economy that makes the case for high speed rail in and of itself.

Daniel Moylan: Could I just respond because I just had something put in my mouth which is not what I am saying? What I am saying is, irrespective of how the business case is made and how costs are allocated, on the figures that we have developed at the moment, there will be serious congestion problems at Euston when the line goes beyond Birmingham which need to be dealt with in a practical sense. Our view is that the best way of dealing with them is to bring into play this Crossrail 2 line but divert it via Euston so as to get the benefit. It is something we would want to do anyway in due course, but it is something that would help deal with these dispersal problems. We are willing to look at that argument again in the light of the Government’s figures when they publish them, but at the moment our figures show that there is a practical issue that needs to be addressed, and this is the best way, we think, of doing it.

Q182 Chair: Do you agree with the Government’s general strategic approach on HS2, in particular the direct link to Heathrow coming in the second phase?

Stephen Greenhalgh: It is 11 minutes from Old Oak Common, so in that sense it is very hard to say what connectivity to Heathrow means, but 11 minutes is not a long time. Certainly, the right thing to do in the first phase is to get the interchange right at Old Oak because you deliver the connectivity to Heathrow, effectively.

Daniel Moylan: Could I just speak on this Heathrow matter for a moment? I do not want to sound negative in any way because I am sure that is the right thing to do, but I would just like to say, first of all, from the Mayor’s point of view, that Heathrow is not the airport of the future. Heathrow is an airport which cannot grow any more and, therefore, there is a question about what the alternatives to that ought to be. We could address those perhaps on another occasion.

But there is an issue at the moment, which is where, at Heathrow, this loop is going to stop, because Heathrow has dispersed terminals: three major terminals-one in the centre, terminal 5 and terminal 4. As this train, this loop, comes down and through Old Oak Common, which terminal is it going to serve, because it is not straightforward or apparent to me that the whole airport can be served by one stop on this line? Then the next question is: how many trains does the Government envisage using this loop? As I understand it, they will come down from Birmingham. Most trains will continue to Old Oak Common directly; others will take a loop through Heathrow and come back to Old Oak Common that way. That is as I understand what is proposed, but I understand the number of trains doing that is likely to be quite small. In terms of the number of passengers carried I am not sure that it is necessarily the highest value part of the project, which, as I say, the Mayor supports, but that is not necessarily the highest value part of it. I am sure you would want to look into those issues more closely.

Finally, there is the point, as already made, that, even if all of the people arriving at Heathrow by air from regional cities were to come on this train, the reduction in flights and the capacity created thereby would be very small.

John Dickie: You are not doing an inquiry into the future of Heathrow.

Q183 Chair: No, we do not want to go further into dealing with airport capacity. It is high speed rail, the links and the link to Heathrow.

John Dickie: I shall keep off that, but I should just say that we do not entirely share the Mayor’s views on the future of Heathrow. The first stage position seems to me a sensible, pragmatic arrangement, which will provide, as Stephen said, potentially very good connectivity between high speed rail and Heathrow with a journey time of 11 minutes. The key practical way of making sure this works is to get the interchange at the station between the high speed rail platforms and the Crossrail platforms right so that it is smooth and effortless. As Daniel said, even if you have a station within the Heathrow curtilage or adjacent to Heathrow, because there are five terminals, that can still involve quite a bit of chopping and changing to get from the high speed rail terminus to the actual gate or terminal from which you are going to be taking off. The practical way in which this is designed is what will be critical to making it work.

Stephen Greenhalgh: You have to get a lot of expertise, but, just to finish, Old Oak bisects where Heathrow Express goes today, so you effectively integrate what currently serves the airport in terms of fast rail from Paddington. That is how you will be able to serve the airport in the first instance. I do not doubt we need to look at more definitive solutions in the future if Heathrow does remain the hub international airport. That is for the future, but in the first phase, to have connectivity, 11 minutes away is no bad thing for high speed rail.

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

Prepared 1st July 2011