Oral answer (Lords) on HS2 - May 20

To ask Her Majesty’s Government what assumptions were used in the business case for HS2 for (1) the number of passengers, and (2) the average fare, between London and Birmingham.

My Lords, the Answer to this Question is in two parts. First, on the number of passengers, the Government estimate that there will be more than 300,000 passengers per day on HS2 services once the full network opens. Secondly, on average fares, the business case assumes fares on HS2 to be the same as the average for comparable services on the existing network. HS2 can bring benefits without charging a premium.

I am grateful to the Minister for that Answer, because this is the first time we have had an answer on this for about eight years. According to the Midlands Economic Forum, the average yearly household income will be £60,000 for business travellers and £45,000 for leisure travellers at 2010 prices,

“meaning the average commuter using HS2 will be in the top 10% of household incomes”.

That is quite heroic for the West Midlands. It adds:

“At 60% capacity, HS2 are proposing that daily passenger transport movements will be approximately equivalent to 10% of the entire West Midlands regional labour market”.

Can the Minister perhaps give us some more updates on this when we come to debate it more fully? The Government have promised a cost-benefit estimate and a new cost estimate for HS2 phase 1, but only on the day on which the construction contract is allowed to go ahead. We have had lots of critical reports, including an excellent one last week from the House of Lords Economic Affairs Committee chaired by the noble Lord, Lord Forsyth. Is it really acceptable for a Government preaching austerity to go ahead with a project costing £150 billion without parliamentary scrutiny?

My Lords, there were many questions there; I will perhaps answer a couple of them. On 10% of the West Midlands labour force being on the trains, I do not recognise those figures at all. In any event, when the entire network is built, it will take passengers from all over the country—that is the point of it. On the second point about the business case, works are currently under way and HS2 is reaching agreement with its suppliers in order that a full business case can be published later this year. It is important to understand that a full business case includes costs and benefits, but also—just as importantly—the disruption, or lack thereof, that the construction would have.

My Lords, I declare an interest as an adviser to Japanese high-speed rail. Is the Minister aware that the Japanese have long argued that these figures are interesting for the southern section of HS2 but that it would have been much wiser to have started with the big expenditure in the north and worked downwards? This is exactly the pattern they followed in Japan. Does she accept that this point is wisely made in the very good Lords report published last week, and that any funds that now are meant to be used on the north should not be drained away by the very large expenditure that looks to be developing on the southern section?

My Lords, I join my noble friend in welcoming the report of the House of Lords Economic Affairs Committee. We will respond to that in detail, before the Summer Recess, once we have had a chance to consider all the issues therein. As for whether we should have started in the north, obviously we recognise that the infrastructure in the north needs investment; that is why we are investing a total of £48 billion across the network, which is a record amount. The northern powerhouse rail project in particular will be very much welcomed. However, it is in a much earlier stage of development. Our intention is to crack on with HS2 phase 1 and phase 2a, and then phase 2b will link into the northern powerhouse rail, thereby connecting the entire country.

My Lords, demanding the cancellation of HS2 has become the new virility test for would-be Tory leadership candidates, and I fear that it might be the next economically damaging decision made by the Government solely to please Conservative Party members. I believe that HS2 is needed, but obviously costs need to be brought under control. The easiest way to do that is to make Old Oak Common the terminus in London, rather than Euston. I ask the Minister: will the Government take seriously that aspect of the committee’s report and act upon it, please?

My Lords, we have heard the request that HS2 terminate at Old Oak Common. We are not minded to agree to that, but we will of course read the report and respond in due course.

My Lords, will the Minister return to the question asked by the noble Lord, Lord Howell of Guildford, and accept that most northerners would prefer to see prioritised east-west travel and the upgrading of infrastructure, which is dismal in the north of England? Will she respond specifically to the statement in the excellent report of the Economic Affairs Select Committee that the evidence suggests that northern powerhouse rail is required more urgently than High Speed 2, and that London, already the city expected to gain most from the project, will receive the benefits of the new railway long before the northern cities?

As I have already explained, we will respond to all the issues raised in the report in detail before the Summer Recess, and so I am not willing to go further on them right now. However, I will respond to the noble Lord’s question about investment in the north. It is absolutely critical. That is why we are investing £2.9 billion in the upgrade of trans-Pennine rail. The noble Lord also mentioned infrastructure. We intend to replace every single train operating in the north. We agree that the infrastructure needs an upgrade, and therefore we are replacing the trains.

My Lords, will the Minister give me an assessment of the impact on the West Midlands and Birmingham economies—on investment, jobs and the well-being of the region—should HS2 be cancelled?

I completely agree with the noble Lord that there would be a significant impact on the future economic growth of Birmingham if HS2 were to be cancelled—and I certainly do not support the cancellation of HS2. I have lost track of the number of letters that have been published and that we have received from organisations in the east and west Midlands, and from the north, stating that HS2 is hugely beneficial to their economies—there was one in the past 24 hours from representatives of Birmingham, Leeds, Manchester, Liverpool, Newcastle, Durham and more. It is very important for Westminster politicians and think tanks to listen to what those in the north and the Midlands are saying.