Speech

High Speed Two

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

Benefits of High Speed 2 to Britain and the economy.

The Rt Hon Sir Patrick McLoughlin MP

Introduction

Thank you for coming this morning. And thank you to the Institution of Civil Engineers for hosting us.

I can’t think of a more appropriate place to give a speech like this. Because this was the birthplace of modern infrastructure. As we have just seen in that fine film.

High Speed Two film.

Great engineers went out from here and changed Britain. They built railways. Later on, roads, airports, motorways. The scaffolding of our modern economy.

Now their names are famous. Men like Thomas Telford, Brunel and Stephenson. And now, their battles can seem straightforward. As if it was clear at the time that the doubters were wrong. As if the better future they shaped came into being easily.

But you – and I - know it wasn’t anything like that. These pioneers faced immense criticism. The defeat - for instance - of the first legislation to build a new rail line from London to Birmingham partly on the grounds that canals and turnpike roads were surely good enough for a growing economy. A line we still depend on today and call the West Coast mainline.

Much later on people questioned the M25. Or thought we didn’t need the Jubilee line to Canary Wharf whose cost-benefit ratio was even said to be negative.

And these lessons from history teach us something important. Big decisions about big infrastructure are always controversial. People have always argued about the unknowns that big infrastructure proposals must always involve.

But controversy needn’t be a sign you are getting things wrong. Often it is a sign that you are doing something that really matters.

Case for HS2

This takes me to our own age and choices we need to make.

I could fill a speech today simply listing our infrastructure investments. An essential part of this government’s plan to get our economy back to strength. Because to compete - we can’t stand still.

We need the right infrastructure to support jobs and ensure all parts of the country benefit. But we start from a difficult place.

Between 2000 and 2007 the UK was the lowest infrastructure investor of all OECD member states. And under the last government in the World Economic Forum rankings for infrastructure this country fell from 7th to 33rd. We’re turning that around.

On our roads:

  • £24 billion on investment in our strategic roads network including 400 miles of extra lanes on our motorways
  • 195 local pinchpoint schemes to bust jams
  • and £6 billion in this Parliament and £12 billion in the next to resurface roads and fix potholes

On our railways:

  • record investment
  • £37.5 billion by Network Rail between 2014 and 2019
  • Crossrail and Thameslink in London
  • a 850 mile national programme of rail electrification
  • new trains on the East Coast and Great Western mainlines and a new factory in the north-east to build them

And at our global gateways:

  • fantastic private sector investment in our ports with things like Dubai Ports World
  • a huge new terminal at Heathrow - about to open
  • and the Davies Commission on future airport capacity

All this is matched by a spending review settlement that will see more than £70 billion of further capital investment in transport in the next parliament. Including a tripling of the national roads budget.

So that’s the context. Huge sustained investment in all forms of transport, now, next year, and beyond. As part of our plan to strengthen the economy.

But it’s just one of those investments - High Speed Two – that I want to focus on today (11 September 2013).

The reason is obvious. The last few weeks have seen old criticisms return in new guises. About cost. About capacity. About the balance between north and south. And I don’t dismiss all such criticism. Some of it is well-meant. Some of it is well-informed. Some of it is ill-informed and deliberately misleading.

All of it - at the very least - deserves to be listened to respectfully. So where we can adapt and improve our plans my promise is that we will.

The new north-south railway is a project that will last over decades and no doubt over several governments too. We’re still consulting. Parliament will have its say.

It would be absurd to claim we have got every bit right. That not a single thing can be improved.

For instance we are working with environmental groups to landscape the line carefully. We will plant 4 million trees, build tunnels, protect footpaths, limit noise.

But in return I ask this. That people understand the seriousness of the choices we face as a country. And that they recognize that high-speed rail is not some untested fantasy but a reality in many of the world’s leading and fastest growing economies. And a reality in Britain too.

In Kent the critics turned out to be wrong. It was the right decision to go ahead with HS1. It is always controversial when things are built. But then it turns out to be even more controversial to take things away once they are working.

So I ask now: are we sure that the call for retreat amounts to anything more than a repetition of a national loss of nerve?

One that in the past has seen British governments cancel things like the Channel Tunnel, road and rail upgrades only to see them reinstated expensively many years later while our competitors race ahead?

The key challenge is this. Since 1970 the total distance we travel in Britain has more or less doubled. In coming decades that travel will go up again. Because there should be no doubt - the world is going to travel more.

Our competitors like China, like Germany are preparing for this. Leaping ahead with the best new technology. But in Britain we have built very little new infrastructure to support growth.

In Britain we try to patch up what we have already got. We haven’t built a new main rail line north of London for almost 120 years. But there is a point when patching up isn’t enough. You just don’t get the capacity.

We’re reaching that point on links between our cities - and into them. Which is why HS2 is part and I stress just part of the investments we need to make.

The sort of investment which has wide political backing from city council leaders in places like Manchester, Birmingham, Leeds and Nottingham.

So in the rest of this speech today (11 September 2013) I want to do two things. I want to set out in clear terms the reason I believe high speed rail is a better answer to the capacity challenge than any other.

And then I want to debunk some of the falsehoods and myths about costs and benefits.

But before that I also want to say something about myself. I’m from the Midlands - not London. I represent a Derbyshire constituency.

In my time in politics I want to do my bit to leave behind a nation that is more united. That is why I’m totally committed to high speed rail. Or “passionate”, as my friend the Chancellor says. Not because it might win - or lose some votes. Not because I’m doing this job in the hope it’s a stepping stone to something else.

But because we have an important task to complete. A task that’s part of what I came into politics for.

Capacity

So first, the capacity challenge. The reason we need HS2 isn’t for its speed. Though speed is an obvious benefit.

HS2 will allow you to get from Birmingham to Leeds in 57 minutes and from Manchester to London in 68.

The benefits of faster journey times are easy to explain. But the main reason we need HS2 is as a heart bypass for the clogged arteries of our transport system.

It will lift the burden from our overcrowded system. Because the point about High Speed Two is that you won’t have to travel on it to gain from the better transport system and economic growth it will support.

People who may never use the new line will still gain from more services for towns and cities up and down Britain. More room for local trains. More space for direct services to London from places that can’t get them today. More space for freight trains – to free up our motorways.

But people ask: Do we really need a new line to get the capacity benefit? It’s a sensible question. We asked it too - before deciding HS2 was right. Independent studies have looked at the alternatives. Yet another upgrade to the West Coast line. Or new motorways through the countryside. Or more air travel. None of them stack up in terms of cost or capacity or environmental impact.

We’ve already spent £9 billion on the last West Coast upgrade north of Rugby but that didn’t finish the job. The overhead wiring is getting on for 50 years old. The bridges and tunnels are Victorian monuments and I’ve been out with the track workers to see them.

Pouring billions more in widening it and accelerating it would be like trying to run the M1 up the Old Kent Road. Already the line is operating close to its limit. That’s why when Virgin wanted to run new direct trains this year to Shrewsbury and Blackpool, Network Rail said point blank: no there isn’t the space.

That’s why commuter trains into London from places like Milton Keynes are some of the most crowded in Britain we can’t fit enough in. That’s why trucks have to use the M1 and M6 because we need more room for freight trains. In fact one estimate says HS2 will mean half a million fewer lorry trips a year on our main motorways.

Without the capacity provided by HS2 the main road and rail lines linking eight of our 10 largest cities will quite simply be overwhelmed. And by the way to those who won’t accept this we really do deserve better than anecdotes about spare capacity at off-peak hours.

You might as well argue that Britain doesn’t need new power stations because we’ve got more electricity than we can use at one am. Or that Heathrow isn’t full because planes land there every day with empty seats.

But this isn’t the only question that’s asked about capacity. There’s another. Are you sure growth will continue?

Yes, they say - ok, maybe rail travel has doubled in just over a decade - but how do you know it will go up again? Maybe new kinds of IT will make us all stay at home and HS2 will be out of date.

Those people are plain wrong. History shows it. The invention of the telegram didn’t stop the railway revolution. The invention of the telephone didn’t stop the car or the airplane.

And the invention of the smartphone has been accompanied by a doubling of rail travel in Britain in just over a decade. They are indisputable facts. As our economy changes and strengthens people will move more - not less.

All our competitors around the world are preparing for this. We must too. But of course our growth forecasts for HS2 must be realistic.

They are.

Over the past decade including the recession demand for long-distance rail travel increased in Britain by around 5% a year.

Our demand forecasts for HS2 which are deliberately very cautious assume growth over the next two decades of just half that.

Even so despite these cautious assumptions trains will be far busier than today.

Just imagine. Passengers standing for journeys lasting hours, not minutes. A brake on our economy just as we need to be pushing hard on the accelerator.

Costs and benefits

But I know that capacity isn’t the only thing that matters about HS2. We need to build it within or under budget. We will.

Let me spell it out. The budget for HS2 is £42.6 billion. Not £70 billion. Not £80 billion. Not the scare stories from opponents. £42.6 billion. Spent carefully over several decades.

For a full network to Leeds and Manchester. More than 300 miles of new track. With links onto the East and West Coast mainlines beyond to serve Scotland. Newcastle. And the north-west.

And that is an upper limit with a contingency - £14.4 billion in reserve which we are determined to bear down on.

We are commissioning work by the world’s leading project managers at the Saïd Business School at Oxford University into the scope for reducing contingency.

The head of Network Rail said in July he expects the final cost of construction to be significantly less than £42.6 billion.

Last week the chiefs of 8 of Britain’s largest engineering companies wrote to the Daily Telegraph to say:

Building it on time and within budget is well within the capabilities and ambition of the British construction industry.

On top of that we will secure private sector funding. For stations. And - as with HS1 - for a concession once the line is complete.

High Speed Two will also pay for itself in the jobs and prosperity it will create. Just as High Speed One is supporting the wonderful rebirth of St Pancras and Kings Cross. Where Google is building its European HQ.

Indeed the economist Bridget Rosewell calculates that if just 10% of the jobs growth along the route of HS1 is linked to the line it would have paid for itself.

And this takes me to an important point I want to make today. There is much more we need to do to explain and assess the economic benefits better transport can provide.

Opponents of the scheme have focussed on a debate about the value of time business people spend working on trains. That’s madness. Some people work on trains. Some sleep - like me, at times. The numbers we use reflect this. And either way it doesn’t decide whether HS2 is a good idea or not.

So yes, later this year we will publish a new cost benefit analysis as part of the wider Strategic Case - and it will be positive. But don’t think the cost benefit analysis is the whole case for the line or captures the whole benefit for the country. It is a narrow estimate on a narrow range of factors.

For instance the current cost benefit ratio caps growth in demand for High Speed Two after 2036. It assumes - for the sake of calculation because that’s how the standard model of assessment works that the line won’t get any busier after that. But of course it will.

And if – instead - in the model we capped the number of passengers using HS2 in 2059 which would be perfectly reasonable the benefit cost ratio would effectively double.

The model also more or less omits because of the way its rules are written the broader gain from infrastructure investment. As if growth happens by default. As if there’s no economic difference between a good modern rail service and a horse and cart. But the real world just isn’t like that.

The big choices we make about infrastructure today have a big effect on economic output tomorrow. And that is the benefit we will see from HS2. Of course we need to support this with hard evidence.

So today (11 September 2013) I am pleased to publish the findings of a new report from economists at KPMG. It addresses that vital question: will HS2 create jobs and growth in the North and Midlands, where they are needed most?

The answer is absolutely clear. Yes. High Speed Two will make Liverpool stronger. Leeds stronger. Sheffield stronger. Birmingham stronger. Manchester stronger. Britain stronger. A £15 billion annual boost to the economy. With the North and Midlands gaining at least double the benefit of the South.

To borrow a phrase, we are better together and this investment will make sure of it.

Already the Growth Taskforce is at work to maximize the benefits. I am delighted that it is chaired by Lord Deighton who helped make the Olympics such a success.

And it has excellent members such as Sir John Rose who made Rolls Royce one of our greatest exporters.

We will squeeze every penny of economic advantage out of HS2 and Britain will be richer because of it.

And of course HS2 will also create jobs long before it is built.

One estimate says just building the line will create more than 22,000 jobs within the next five years.

Conclusion

Between now and then there’s a lot more to do. But this project is on course, under control and on the budget I set.

We have been successful at judicial review. In June with support from all sides of the House 330 MPs voted in favour of the paving bill giving financial powers to high speed rail. Only 27 voted against on second reading and I understand why some people with constituency interests will be against this project.

Next month the paving bill will return to parliament. Before Christmas, the Hybrid Bill to allow the first stage of the route will be in parliament too.

Of course we will face challenges. The Public Accounts Committee, like any set of good accountants will, hold our feet to the fire. The Transport Select Committee, too. That’s their job.

But remember this - you can’t count the cost of a lost future. Of the jobs that didn’t happen. Of the cities and regions that found themselves left behind. Of the divided nation that could have been brought together.

Today you can get a reliable high speed train from London to Brussels - but not Birmingham. Or to Lille - but not Leeds. That’s go to change.

I am proud of what our country is today and I want to be prouder still of what it can be tomorrow. Not in decline. Or afraid of ambition. But investing and building and growing.

HS2 is our chance to level the playing field between north and south. Which takes me back to where I began this speech. To that great Victorian spirit which gave us the infrastructure we still depend on today. We haven’t lost the ambition. We haven’t lost our nerve. We can still do it.

And with High Speed Two we will.

Note: This speech was amended from the original text to correct original incorrect data.

Published 11 September 2013