High speed rail business debate

Speech about how HS2 will help rebalance and rebuild Britain’s economy.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Philip Hammond MP

Thank you for that introduction Patrick. It’s great to be here at the NEC today (29 November 2010) talking about our plans for high speed rail. Before we start our panel discussion, I want to talk to you about the bigger picture for HS2. And the political context of the project. The central role it plays in the coalition’s transport strategy. The huge benefits I believe it can bring to the West Midlands, this country as a whole, and British business in particular. How it fits into our wider agenda for rebalancing and rebuilding Britain’s economy. Why - even in a period of fiscal austerity - we are committed to pursuing such a huge investment. But, also the very strong opposition which will be articulated against the project and the importance of the business lobby in making the case for high speed rail.

Economic context

Let me first of all set the economic backdrop: As business people, you don’t need me to tell you that we faced an unprecedented fiscal crisis when we came to office. We were saddled with the biggest budget deficit in the G20 and had just limped out of the longest and deepest recession in our peacetime history. Every single day we were adding £400 million to our national debt. Had we kept to the spending plans we inherited, we would be paying out nearly £70 billion a year in interest alone by the end of the parliament - more than we spend on schooling our children and defending our country combined. If we’d let those debts go on rising, it would have led to higher interest rates, undermined confidence in Britain and put the recovery at risk. So we have had to take tough decisions to get the deficit under control. By cancelling £6 billion worth of planned public spending this year. By setting out, in our emergency budget in June, an ambitious four year plan to eliminate entirely our structural deficit and get debt falling as a percentage of GDP. And by delivering the conclusions of the spending review, with firm and fixed spending totals for each government department for the rest of this parliament, and far-reaching reforms to welfare and our public services. Our early action to balance Britain’s books is already paying dividends. Our AAA credit rating has been reconfirmed and we now have a clean bill of health from the IMF - who described our budget as ‘essential’ to securing the conditions for sustainable economic growth. But of course, that vital fiscal readjustment is only part of the story.

Growth and importance of infrastructure investment

The next challenge is to secure the growth, the jobs, the investment that will drive our prosperity in the future. We must now lay the foundations for building a strong, competitive, balanced economy for the longer term, while delivering on our climate change obligations. And infrastructure investment - as the chancellor has clearly spelt out - will be a key part of our approach. We will not repeat past mistakes where governments spent too much and invested too little. Or of indiscriminately cutting infrastructure investment - previously seen as the easy option behind which countless governments, of all persuasions, have sheltered from taking the tough decisions on current spending, and on welfare in particular. The settlement transport received in the spending review - £18 billion of rail investments; £4 billion in Highways Agency investment, and £6 billion on local transport investments - demonstrates the coalition’s commitment to prioritising the projects that will support economic growth and job creation. That settlement also included over £750 million to fund the development of our plans for a national high speed rail network over the spending review period, with the bulk of capital expenditure occurring after 2015 - when, on our plans, the public finances will be back in balance. And today I want to explain why I believe high speed rail can make a critical contribution to our economic future. And talk through the processes and the politics that lie ahead.

The government’s transport strategy

When I took over this brief, the challenge was clear: with limited resources to support economic growth and rebalancing, and deliver on the government’s climate change agenda. The need for a cross-modal approach was obvious. For instance, our decision to reject new runways at Heathrow, Gatwick and Stansted because of local environmental impacts and CO2 concerns, coupled with the need to ensure that the scarce capacity at our international airports is available for the medium- and long-haul routes that are vital to our economic success, inevitably points to modal shift on domestic and short-haul European travel. The success of high speed rail across Europe has shown how effectively such links can cater for journeys that had previously been dominated by aviation. That’s why our commitment to a high speed rail network has been a key factor in taking the difficult decisions we have taken on additional capacity at London’s airports. And that’s why we have said from the outset that a meaningful high speed rail network must include a link to our principal gateway airport and to the HS1 line to the Channel Tunnel. But high speed rail isn’t just about modal shift. It’s also about addressing the rail capacity challenges that are facing our most congested inter-urban routes. Reducing crowding, improving reliability, speeding up journeys, and catering for the increased demand that comes from continued economic growth. And, of course, it is not only inter-city journeys that would benefit from a new high speed line. As long distance point to point services transfer to the new line, valuable capacity is released to meet the growing demand for longer-distance commuter travel, for services to intermediate towns and for freight on the East and West Coast mainlines. High speed rail will be an unbeatable option for inter-urban travel. With none of the hassle of short-haul flying. And even the greatest petrol-head could not realistically contemplate a 49 minute London to Birmingham journey - and if he did, he’d probably need another 49 minutes to find somewhere to park!

The role of high-speed rail in delivering the government’s growth strategy

But high speed rail isn’t just a central plank of our transport strategy. It is also vital to our wider plans for securing sustainable economic growth.

In the short-term it has the potential to create thousands of jobs planning, constructing and operating the proposed line. A fifteen to twenty year programme to roll-out new high speed rail lines, on which construction would begin as Crossrail is completed, would also form part of a predictable pipeline of major rail infrastructure projects. Allowing the UK supply chain to plan for the long term, reducing costs and building a skills base for the future.

In the medium term, the proposals put forward by HS2 Ltd would lead to huge regeneration opportunities here in Birmingham, in London and in due course in Manchester, Leeds and South Yorkshire. For example, the major regeneration area of Eastside would find itself right at the heart of Britain’s national transport infrastructure. But in the longer term, I firmly believe high speed rail would deliver a transformational change to the way Britain works and competes in the 21st century. As profound a change, perhaps, as the coming of the original railways delivered in the 19th century and the advent of motorways did in the 20th. It would slash journey times between major urban centres and international gateways. It would free up capacity on the conventional mainline network to enable the continuing shift of freight from roads and onto rail, reducing carbon emissions and cutting congestion.

It would allow the economies of the Midlands and the North to benefit directly from the global magnetic effect of London, tackling the north-south divide in economic growth rates more effectively than half a century of regional policy has done as we expand labour markets and merge the travel to work areas of our major conurbations. West Midlands firms will be able more readily to access the markets and customers in London, while faster links from London to this region will make it more attractive to investors.The proposed Birmingham Interchange Station also would bring huge advantages in terms of connectivity to the wider West Midlands, with links to the motorway network, the airport, Birmingham International Station and the National Exhibition Centre where we meet today. And our commitment to extend the network beyond Birmingham has the potential to bring greater benefits still. By connecting the West Midlands with Manchester, Sheffield and Leeds, as well as the East Midlands, high speed rail can merge them more and more into a single economic area, with the capability to compete not just with London, but with the other economic centres across Europe.

I submit that, reducing the journey time between two cities to 40 minutes represents not merely a quantitive reduction in travel time, but a qualitative change in the way they interact together. High speed rail will merge our great population centres into a single economic hinterland. In short it will provide us with a railway for the 21st century.

Recent route developments

It was the transformational potential of high speed rail that captured the imagination of David Cameron back in 2008. And since we have been in government, we have lost no time in pressing ahead with this exciting project. We’re continuing to develop and refine our proposals for the route from London to Birmingham, which will cut the journey time to just 49 minutes, even allowing for stops at Old Oak Common and Birmingham Interchange. Possibly 40 minutes on a non-stop service. And we’re working on plans to build a truly national high speed network as set out in the coalition agreement.

At the beginning of October, following work by HS2 Ltd, I announced that our preferred option for high speed rail north of Birmingham was for two separate corridors. One direct to Manchester, and then connecting onto the West Coast main line, and the other to Leeds via the East Midlands and South Yorkshire - with stations in both areas - before connecting onto the East Coast Main Line south of York. This would reduce journey times to Manchester and Leeds to around 80 minutes - only slightly longer than many journeys across the capital. Meanwhile, the trip from Birmingham to Leeds would be almost halved - dropping from around 2 hours today to just an hour and 5 minutes. And we’ve commissioned and received advice from HS2 Ltd on the options for the link to Heathrow, and for connecting to the wider European high speed network via the HS1 line.

Addressing the critics

Now, I know that our plans for high speed rail are not universally popular. If I didn’t know it before, I found out doing a series of meetings in the communities through which the proposed route will run between London and Birmingham. People are worried about the impact on the countryside. Some say the business case doesn’t stack up and that the demand projections are fanciful. And some say that we won’t get this through parliament in a million years. Let me take each of those challenges in turn.

Environment I fully understand that the national benefits of high speed rail have to be balanced against the impact on local environments. That’s why, in recent months, I have been visiting communities that will be affected by the proposed route. Listening to them. And why I, personally, have been over every mile of the route with HS2 engineers, looking at the stress points; challenging the alignment; exploring different approaches to mitigating the most intrusive local impacts. I am a great lover of our English countryside. And I do not take the decisions on the HS2 lightly. We will do everything we practically can to mitigate the acoustic and visual impacts of the proposed line and deliver a solution that far exceeds the expectations of those who will be affected by it and who are understandably apprehensive of the impact of HS2. I will personally monitor the mitigation proposals - visual and acoustic - of every mile of this railway. And where we can’t hide it, we will make every effort to make it an object of architectural beauty. Just as Brunel’s structures, once resisted as desecrating the countryside, are now accepted as enhancing it. We have launched an Exceptional Hardship scheme for homeowners who need to relocate urgently, and whose property values have been affected by the published route proposal. And we’ve committed to consulting on a further scheme to help those whose property values are significantly eroded by the construction of a high speed line.

Business case

Of course, it’s not only the route and the environmental impact that have come under scrutiny. There are also many people who have questioned the business case for the project and, indeed, whether a line of this kind is needed at all. Our interurban railways undoubtedly face a major capacity challenge.

Rail journeys within the West Midlands have increased by almost 40 per cent over the last 5 years - with crippling capacity pressures forecast in the coming decades. So the real question is not whether demand will increase, but what are the options for dealing with it. Some people have argued that upgrading the existing West Coast Main Line is the best way to meet demand increases. But I am unconvinced that that is a credible option. First, because reliability would undoubtedly deteriorate through trying to squeeze ever more capacity out of existing, mixed-use, railway lines. In contrast, a new, dedicated high speed passenger line could improve reliability by creating increasing segregation between different service types. And the released capacity created by HS2 would provide relief for the some of the worst pressures on the local and regional rail network in the West Midlands. More frequent and new services, improved timetabling, and greater resilience. Attracting more travelers from the roads, relieving congestion and improving journey reliability.

Second, trying to deliver such a massive capacity upgrade on working lines would try the patience of the hardiest of rail passengers. Not to mention the occupiers of the thousands of homes that would need to be demolished. We all remember the last West Coast main line upgrade. [Lew Grade’s “Raising the Titanic” quip]. And finally, because no upgrade of existing infrastructure can deliver the huge improvements in journey times, and step-change transformation of our economic geography, that a new high speed network would bring.

Political consensus

And as for getting the bill through Parliament - well, don’t think I underestimate the scale of the challenge. I’ve heard enough war stories over the years from colleagues who have served on hybrid bill committees to know just how challenging it is to get them onto the statute book. The key to the success of a project like this, one that will be delivered over many parliaments, is cross-party consensus. Because this is not a plan for a parliament. It is a plan for many generations and parliaments to come. And we can only invest in it if we are clear that it will proceed over four or five parliaments, whatever the political weather. So I’m grateful for the supportive position adopted so far by opposition transport spokesmen - and of my predecessor. I will maintain an open and constructive dialogue with them as we move forward with this exciting project. On high speed rail, if on nothing else, I believe they will agree that “we are all in this together.”

What happens next?

Before I conclude, let me briefly set out what will happen next. We intend to announce the package for consultation, including a preferred route between London and the West Midlands, a corridor preference to Leeds and Manchester, and detailed plans for links to Heathrow and HS1 before Xmas. The consultation we will be launching in the New Year will be as comprehensive, inclusive and wide ranging as possible… an opportunity for everyone to make their views clear. It will cover both the government’s overall high speed rail strategy and the route of the initial London-Birmingham phase of HS2. We will analyse the no doubt numerous responses, and publish our response, setting out our proposed way forward, in December 2011, with the aim of getting the first hybrid bill for the London to Birmingham route to royal assent by the end of this parliament. But one thing is clear: the opponents of the high speed railway are organised, determined and well-financed. They will make the case against the project - in spades. It is essential that those who see the power of high speed rail to deliver the economic change and those who benefit from the transformation it will bring to our economy, speak up and speak out - loudly and clearly - in favour of this project. If they do not, the argument could be lost by default.


So there is still much that needs to be done. And I do not for one minute underestimate the challenges involved in making high speed rail a reality.

I first looked at this project through the sceptical eyes of a shadow chief secretary to the treasury. And to those who ask how Britain can afford to invest in a project of this scale, I reply that we cannot afford not to invest in our future. And that if we are to prosper as a nation, every part of that nation has to prosper. It is a project that could transform the social and economic geography of Britain, and transform the role of cities like Birmingham. By delivering greater mobility and connectivity; slashing journey times; and becoming the mode of choice for intercity travel. The potential to reduce our carbon footprint, shift demand from air to rail and to transform the way we use our existing railway. Above all, the potential to tackle the north-south gap in economic growth rates, a prize that has eluded all modern governments, boosting economic growth across the whole UK, supporting a re-balancing our economy and helping to secure our competitiveness. In short, a vital part of our plan to secure Britain’s place in the 21st century global economy.

Thank you.

(This speech represented existing departmental policy but the words may not have been the same as those used by the minister.)

Published 29 November 2010