How trains can derail economic development

Rhys David believes politicians and not the public have fallen in love with England’s high speed link

Rhys David is a trustee of the IWA and writes on business and economic affairs.

High Speed 3, the scheme for linking London and Birmingham and ultimately Manchester and Leeds in the north of England with a new railway line carrying the fastest trains, seems to be losing friends. And that is not just among the denizens of rich towns and villages in Buckinghamshire through which the trains will hurtle at speeds of up to 250 miles an hour.

Their opposition could from the very start be taken as a given. However, a more surprising thumbs down has come from The Economist, which might be expected to be generally in favour of anything that supposedly helps to promote free market growth in Britain. However, even before Philip Hammond, the Transport Secretary, confided earlier this week to the Commons transport committee that railways had become a rich man’s toy with some fares “eye-wateringly expensive”, The Economist questioned the economic rationale of the scheme.

Urging the UK Government to rethink its plans for a massive £32 billion link the newspaper argues that high speed rail rarely delivers the benefits that its boosters suggest, and even more importantly can exacerbate regional divides rather than reduce them. This is because of an effect which is well-known in Wales: better connections actually help the richer of two centres or areas being connected. This is because bigger and better equipped firms in the wealthier centre can reach a bigger market. High speed lines, like other regeneration projects, often displace economic activity rather than create it.

Hence, high speed lines in France have strengthened Paris, and in Spain Madrid, with companies moving their headquarters out of the provinces to the capitals. For all the much vaunted advantages claimed for Britain’s new high speed line, the likelihood is that Birmingham will also see business drift down to London because it will be easier to provide services there and travel up for meetings. The north, when it is connected, will see a similar effect.

This is of course before the impact on areas such as Wales which will be off the high speed route. As Mark Barry, author of the IWA’s report on electrification recently pointed out to another select committee, this will be considerable in itself. As London strengthens its grip  through its improved communication with the Midlands and North, businesses in Wales will not even have the consolation of being able to reach the British capital more speedily than at present.

While the main opposition to HS3 has, of course, come so far mainly from the English shires north of London, The Economist suggests other areas might soon wake up to some of the unintended consequences of building a brand new railway. Most British cities already have good to excellent connections with London, with relatively short journey times for the modest distances that need to be covered in Britain. Indeed, most British inter city services run faster than their non high speed counterparts on the Continent.

One of the consequences of introducing high speed trains into the structure could mean fewer and slower trains to cities off the new route such as, for example, Stoke-on Trent, already one of the UK’s most deprived places. At present Stoke is served by trains that then go on to Manchester and could not justify its current level of service other than as a stop on the way to other destinations. Crewe, Rugby and Coventry are other towns and cities that could lose out.

As people become more informed about the choices that will have to be made if the new line goes ahead, it is likely attention will be drawn to alternative schemes which for much smaller amounts of money could regenerate areas away from the capital. One such scheme currently being pushed quite hard is for a new line between Oxford, Aylesbury and Milton Keynes and Bedford.

This could ultimately be extended down to Reading and across to Cambridge, making it possible to travel across a wide region north of the Thames without the necessity to go into London. It would also offer travellers in that region new and different ways of getting into London, reducing pressure on the most heavily used underground stations. Once the line reached Reading there would of course be benefits for south Wales travellers who could reach the East of England more easily, with a change outside London.

There are strong and tangible economic benefits, too, and nothing like the  massive costs of HS3. Oxford Economics which has just produced a report on the economic case for the line claims it could generate more than £38m a year for the UK economy. The new line would run mainly on currently disused or mothballed sections of track and on sections currently only used for freight.

In response to yesterday’s very poor unemployment figures for May – July 2011 the Westminster Government has said it will bring forward key infrastructure investment schemes, including road and rail. Perhaps all those areas that feel they have important projects, like electrification of the Valleys lines or a Reading- Oxford-Cambridge link – that will better interconnect their own area or improve its links with neighbouring areas – should now re-submit their schemes to the Treasury and Department of Transport.

They should urge that these rather than the high speed rail link should receive funding. HS3 can if necessary be re-investigated decades from now when the whole country has recovered from recession and achieved more evenly-distributed growth. As The Economist concludes:

“A good infrastructure scheme has a long life but a bad one can derail both the public finances and a country’s development ambitions.”

The British Government, The Economist says, should think again. It would be surprising if  a growing body of opinion outside the areas directly affected by the proposed new line did not start to think along the same lines. In our case we should be arguing for greater priority to be given to electrifying the main line from London to Wales and the West of England.

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