‘We’ll squeeze every penny from high speed rail’

FURTHER changes could be made to the controversial plans for the high-speed HS2 rail network, Transport Secretary Patrick McLoughlin indicated as the Government launched a “fightback” over the £42.6 billion scheme - which will connect London with Birmingham, Manchester and Leeds.
A Stop HS2 sign at the road side in Drayton Bassett, Staffordshire.A Stop HS2 sign at the road side in Drayton Bassett, Staffordshire.
A Stop HS2 sign at the road side in Drayton Bassett, Staffordshire.

Mr McLoughlin promised to “squeeze every penny” of economic benefit out of the project as a new analysis concluded it would be worth £15 billion a year by 2037.

He said it would be “absurd” to claim the scheme was perfect and ministers promised to “adapt and improve” the plans in response to criticism of the project, which will create the high-speed link.

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He spoke as a new study predicted the proposed railway would pay for itself “within a few years” while adding £800m-a-year to the West and North Yorkshire economies.

A report by KPMG has concluded the regions will be “the big winners” from Britain’s biggest infrastructure project in a generation.

However, MPs on the Commons spending watchdog issued a scathing report on the scheme this week, warning that the apparent benefits were dwindling as the costs soared.

The case for the massive project was based on “fragile numbers, out-of-date data and assumptions which do not reflect real life”, with no evidence that it would aid regional economies rather than sucking even more activity into London, according to the Public Accounts Committee report.

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The scheme has also faced opposition from a number of Tory MPs, with seats in Conservative heartlands lying along the proposed route.

The persistent criticism of the scheme led David Cameron to launch a campaign to bolster support for the project, which the Government claims will reduce the north-south divide and help the UK compete against international competitors.

The Prime Minister said “the fightback begins on HS” with Mr McLoughlin’s speech, which said the increased capacity offered by HS2, rather than reduced journey times, were the main benefit.

Making a case for the scheme in a keynote speech in Westminster, Mr McLoughlin acknowledged that some of the criticism was “well-meant” but other attacks were “ill-informed and deliberately misleading”.

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He said all major infrastructure projects were controversial as he addressed the scheme’s detractors: “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 deserves - at the very least - 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 are still consulting. Parliament will have its say.

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“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 four 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.”

The new analysis by accountants KPMG concludes that productivity gains to the West Midlands as a result of HS2 will be worth between £1.5 billion and £3.1 billion a year by 2037. In Greater Manchester the benefits will be worth up to £1.3 billion and up to £2.2 billion in the East Midlands.

The study suggests that increased tax revenues as a result of the economic boost will result in a £5 billion annual return to the Exchequer, helping to pay for the scheme.

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The Transport Secretary said there was no point “patching up” existing infrastructure, saying it would not deliver the same benefits as a new high-speed line.

He added that the extra capacity was needed to give a “heart bypass” to the “clogged arteries” of the existing transport network, arguing that HS2 would free up existing lines for short-distance commuter and freight services, potentially saving half a million lorry journeys on the motorways.

Mr McLoughlin said: “We will squeeze every penny of economic advantage out of HS2 and Britain will be richer because of it.”

Mr McLoughlin insisted the scheme was “on course, under control and on the budget I set”.

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But he accepted there was “scepticism” about Government ministers’ promises on big projects.

The Transport Secretary acknowledged “you are not going to build 350 miles of new railway and not have criticism - it will affect some people”.

He added: “Part of my job has got to be to accept that and to understand that but to also say how actually, in engineering terms, we are much more aware of the environment.

“We are criticised in two ways: the Public Accounts Committee in one sense is criticising us for rushing this and going too fast; the Labour Party accuse us sometimes of going too slow and not getting it right.

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“These are huge projects and it is very important to listen and to make sure we get it right.

“But actually explaining the benefits to people does take some time. There is a scepticism with Government ministers promising a glorious future which is some way away down the line. But unless we take these decisions now we don’t get it.”

He said there would be private sector funding for stations and a concession to run the line once it is complete.

Mr McLoughlin insisted that ticket prices would be set at a level where there would be customer demand, but indicated that on similar lines in Europe fares could be “a lot of money” if they were not booked in advance.

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He said: “We are not going to build this train service, we are not going to spend £7 billion - with a contingency - on getting the rolling stock for this train service, to see it run empty.”

Looking at the way services operated in Europe, Mr McLoughlin said: “There is a different way of travelling on these trains - you pre-book your ticket. If you turn up at the last minute, you are going to be paying a lot of money”.