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Railways: High Speed 2

Volume 738: debated on Wednesday 11 July 2012

Question for Short Debate

Asked By

To ask Her Majesty’s Government what progress they have made in reviewing the economic viability, value for money and benefit-cost ratio of the High Speed 2 London to Birmingham, and London to Leeds and Manchester, lines.

My Lords, HS2 is a controversial proposal designed to operate a high-speed rail link between London and Birmingham, and eventually onwards to Leeds and Manchester. It is controversial for a number of reasons.

The first is the route: a new line cutting through some of the most unspoilt countryside in England, where there are already two existing lines, one operated by Virgin Trains and the other by Chiltern Railways. Either line could be upgraded or the new line could follow one of the existing motorway routes—an option suggested by the Transport Select Committee—which would cause minimal disruption compared with HS2.

However, I want to concentrate on cost. The question is whether the cost of £33 billion is worth the benefits that might accrue. We all want better services from north to south, but I challenge the assumption that HS2 is the answer. The Government’s case rests on the assumption that rail travel is destined to grow at the rate projected by the Department for Transport, but one has to say that the department’s record in projecting future passenger numbers is not good.

In the words of the National Audit Office, the department used “hugely optimistic assumptions” about passenger numbers on HS1. Passenger numbers from 2007 to 2011 were only one-third of the original 1995 forecast and two-thirds of the 1998 forecast. The NAO went on to say that the costs had exceeded the savings from shorter journey times, and the Public Accounts Committee said that costs would eventually rise to £10 billion.

I am sure that the Minister will quote the support of the All-Party Parliamentary Group for High Speed Rail. However, it is a group set up specifically to support high-speed rail, so I would remind him of another report by the Public Accounts Committee, which came to the opposite conclusion and recommended:

“The Department must revisit its assumptions on HS2 and develop a full understanding of the benefits and costs of high speed travel compared to the alternatives”,

and that it should consider the alternatives, such as investment in more local train routes.

The department claims to have improved its forecasting, with better computer modelling and more computer power, but of course wrong assumptions in produces wrong statistics out, whatever the rise in computer power. What it has failed to take into account is that the projected benefits are largely dependent on business use, and business use is changing.

Why travel so often when Skype and internet conferencing are becoming the norm? Reductions to already short journey times are largely irrelevant to business efficiency as carriages are now linked to the internet and provide a good working environment. To assume that all time spent on trains is wasted is simply not credible. The department’s own report Productive Use of Rail Travel Time and the Valuation of Travel Time Savings for Rail Business Travellers asserts that a reduction of 10 minutes in journey time increases the amount of working time by only 0.75 of a minute.

HS2 does not deliver a step change in journey times. It connects to the centre of Birmingham but there is no onward connectivity and a change is required; nor does it connect to Heathrow, as promised in the Conservative Party manifesto. This connection is offered as a possibility, some time after phase 2, in 2033. What is more, a route via Heathrow would cause the least damage to the Chilterns, crossing through its narrowest part. HS2 will cut the journey time from London to the centre of Birmingham but only by barely half an hour, and much less if you want to make an onward connection.

By the Government’s own admission, the benefit-cost ratio for phase 1 declined from 2.4 in March 2010 to 1.4 in January 2012, and to just 1.2 in April 2012. However, even this overestimates the true position, as the DfT also admits that its assumptions are based on out-of-date gross domestic product figures. If one takes into account the latest GDP forecast and uses the later rail demand model, the benefit-cost ratio dips below 1—well below the Government’s own ratio for acceptable capital expenditure benefits.

In an earlier statement to the Transport Select Committee, the then Transport Secretary Philip Hammond agreed that below 1.5 he would need to seriously review the viability of the project. A full Y route to Manchester and Leeds produces only a modest increase to 1.4 in the benefit-cost ratio. It seems to me that the department is going to have to review the project.

We know that peak-time services from Euston in the evenings are only 56% full and that Manchester services are 45% full. We know that total journeys per person by all transport modes are declining, not increasing, so to justify the projected increases by 2032 there would have to be a large shift from road to rail. Looking ahead to 2032, we know that most cars will be electric and therefore very fuel-efficient. The Government accept that HS2 does not reduce CO2 emissions. There is no evidence that HS2 is going to cut road usage. By 2032, electric cars could easily be driving themselves on the main routes, as has already been tested in America.

What will increase in the future, as I think everybody agrees, is commuter use of the rail network, but HS2 does not solve that issue. I believe that the answer is an upgrade of the existing line, more frequent services, more carriages and longer platforms—which could all be achieved at a fraction of the cost for the same result.

The recent growth following the upgrade of the west coast main line led to huge improvements in service frequencies and journey times and shows what can be done by improvements to existing services. Upgrading is estimated to cost about £2 billion and the department says that it produces a benefit-cost ratio of over 5.0. That is real value for money. This would cater for all the future demand predicted by the department and provide the capacity much sooner so that any crowding problems were addressed much faster. It would also cause significantly less disruption to the existing network than what is proposed.

We are also told that 1 million jobs will be created, but the evidence to support this claim is questionable. Various comparisons are made concerning Europe and the TGV, but a close analysis of what has happened in Europe shows a very local movement in jobs and not necessarily a total increase in jobs in the wider area. Just 1,500 permanent jobs will be created by HS2, but the department admits that seven out of 10 jobs attributed to phase 1 will benefit London, not the regions. We could create a lot more jobs in the north by supporting industry there with direct investment, grants, help with bank finance and better local services.

We need to spend money upgrading our entire rail network. We need infrastructure spending that links the rail network to airports and then to city centres. Those in the north have been pressing for a northern hub that connects key northern cities by rail. East Anglia, for example, is desperate for better services and connections. The concern is that HS2 will inevitably drain funding away from the rest of the network and that desperately needed improvements will not get funding.

The commendable House of Commons Transport Committee report called for a proper transport strategy before HS2 phase 1 and phase 2 proceed. It also called for an explanation of how HS2 fits within an overall transport strategy and for the summary and assumptions of the financial case so they can be properly examined.

We need a rail strategy that will bring real benefits to northern businesses rather than just marginally faster journey times to London. The planned HS2 does not connect to HS1, which is not much help to passengers arriving from Europe. They will still have to get the Tube or the bus across London.

HS2 fails on the four key principles that even HS1 managed to pass: it does not follow existing noisy transport corridors; it does not follow the shortest route through areas of outstanding natural beauty; it is not proposed to be tunnelled through the most sensitive areas; and it does not provide benefits for local communities affected by the route or by access to the service.

I have done a quick canter through this about as fast as a train will go, because time is limited. I have given notice to the Minister of the questions I have asked this evening. I am sure he will be able to address the issues of cost and benefit and try to prove the Government’s case for HS2.

My Lords, the international rule of high-speed rail is that everyone wants the stations but no one wants the line. England is no exception, and the noble Viscount, Lord Astor, has been honest enough to admit that he certainly does not want the line anywhere near him. He wrote in the Spectator recently:

“I admit I am biased ... I have walked and ridden over the Chilterns all my life”.

I was not biased as the Secretary of State for Transport. The previous Government proposed HS2, and the present Government are carrying it through because it is the best decision for the infrastructure of the country. This is for two reasons. First, it is false to suggest that there is a choice between building HS2 or saving billions of pounds by not doing so. I fear that that is wishful thinking. The real choice is whether to build HS2, to treble inter-city capacity between London, Birmingham, Manchester, Sheffield and Leeds, or instead to carry out successive patch-and-mend upgrades of the four existing main lines from London to the north, ultimately spending more money for less capacity. The cost-benefit analyses show a strong business case for HS2. But it is equally important to consider the alternative. What would need to happen if there were no HS2? On this, Network Rail's assessment is clear:

“Even modest demand growth causes problems and significant rail enhancement is needed … train lengthening beyond 12-cars would have major implications for terminal stations and signalling systems. Further incremental enhancements at key locations may provide some capacity but not enough to be sustainable for the long-term and not where it is most needed”.

There is no need to gaze into the crystal ball. It is only four years since the last upgrade of the west coast main line referred to by the noble Viscount was completed. It cost £10 billion, and that £10 billion did not price the cost of a decade of chronic disruption to passengers as open heart surgery was performed on a Victorian railway operating at capacity.

There is a second compelling argument for HS2. By using 21st century technology, rather than trying to squeeze yet more out of what by the 2030s will be a 200 year-old railway, you get a transformation of capacity, speed, reliability and passenger service all in one. That is why most advanced European and Asian countries, with an economic and physical geography similar to ours, have already built high-speed lines to link their major cities. The claim that London to Birmingham, Manchester and Glasgow are distances too short for high-speed rail is quite unfounded. The world's most successful high-speed lines are between Paris and Lyons, Frankfurt and Hamburg, Tokyo and Osaka, Rome and Milan, distances comparable to those between Britain's major conurbations. Britain is right to be following suit.

The noble Lord, Lord Adonis, will remember when I came over with his noble friend, Lord Berkeley, to contest the use of COBA, the system for cost-benefit analysis which is used. This was invented in 1960—at least it entered transport in 1960—and it was used to create a case for the Treasury about the building of the Victoria line. It is based on the theory that one can add up all the small time savings of everybody, multiply them, and then end up with a big sum of money. However, it is not real money, it is imaginary money. I ask the Minister to go back to the department again and challenge the use of COBA, because it is wrong. It is a great industry among the consultants and the department, but it does not lay a single piece of track and it does not properly justify itself.

There is a very strong case that the noble Lord, Lord Adonis, has just referred to, for providing more capacity. However, in the figures he has quoted, the noble Viscount has ignored the fact that the freight industry will double or treble its demand in the timescale of the building of HS2. In so doing, it will wipe out any extra capacity, together with the better train services which will be available at most of the intermediate stations on the west coast main line. I was talking to a newly elected MP from Kent. I asked him how many complaints he received about the HS1 which runs through his constituency, and he said, “None”. He said that people have accepted it, that it is quiet and efficient, and that it does not have any of the things that clutter up motorways like lights and places for people to rest. The noble Viscount, Lord Astor, should take some of his friends to Kent and see the actual effect, because many people are talking up the effects in the hope of compensation.

Lastly, there are huge cost reductions available for HS2. I believe that it should run from Old Oak Common through to HS1 and probably connect at Ebbsfleet. Old Oak Common should be developed in a way in which it becomes the main terminus. We should try not to inflict more people on Euston, which is already full.

My Lords, I am grateful to my noble friend Lord Astor for bringing this highly important, and for some of us, hypersensitive matter before the House this evening. First, I wish to declare my interest as the President of the Kenilworth and Southam Conservative Association. The constituency lies in the heart of magnificent rolling country of fields, trees and hedges. It comprises glorious productive farming land where at present the residents live with the constant threat of monstrous wind turbines. Now a blight has been added to their fears, with the further threat of high-speed trains ripping through their homes and farms.

I know that many of your Lordships have studied the project in detail. I am not in that category but, as a commuter who has heard innumerable local views, I feel I should express my position. If the fearsome amount of £33 billion has been identified, it should be used for the maximum benefit of us all, not for the few rich northern commuters who would save minutes from a journey at the expense of the long-suffering travelling public and the whole network.

Turning to the chosen route of HS2 Ltd, I am saddened that the company has refused to meet community forums. It has also refused to allow bilateral meetings at which specific counterproposals would have been suggested, which denies local people the chance to give their views. I can imagine that when HS2 Ltd finalises the route in November, there will be considerable irritation.

Lastly, I turn to blight. The planned consultation on a long-term compensation scheme is yet to begin, despite being expected in the spring. The delay is obviously causing anguish. The exceptional hardship scheme allows compensation only when your reason for sale is included on the Government’s list. That is not acceptable so I hope that great care is being taken to produce a system that people can live with. If we have to live with this scheme, I plead that someone who needs to downsize for income or medical reasons, for instance, but is able to sell only at a discount price, should be listened to with understanding and compassion.

Altogether, this is a bad scheme and a huge waste of money which should be dropped. I know that the Minister is fair and sensible and will take our message to his colleagues. I look forward to his reply.

My Lords, I congratulate the noble Viscount, Lord Astor, on securing this all-too-short debate this evening. I can only imagine the frosty reception around the family dinner table when he announced that this debate was taking place tonight, particularly after the revelations in “Mrs Cameron’s Diary” in this morning’s Guardian.

I declare an interest in that my family and I live in Little Missenden, which is only a few hundred metres from the proposed line. It runs through the very heart of the AONB designed to protect the Chilterns. It may be said that, as a result of my living so close, my comments should be discounted. However, it is the very fact that the line runs so close to our village that made me take a close interest in the woeful economic case and the very sketchy consultations carried out to date. I put on record that had there been an overwhelming case in the national interest for proceeding with the line, we would have accepted the situation. However, this is the wrong solution to the perceived lack of future passenger rail capacity, it is in the wrong place, and the project is unaffordable now and will be in the immediate future.

In his excellent speech, the noble Viscount, Lord Astor, gave a withering assessment of the economic viability, value for money and benefit-to-cost ratio of the High Speed 2 line. I agree completely with his comments and conclusions. To strengthen the point made at the end of his speech, I suggest not only that the Major Projects Authority—the MPA—should be asked to report on the HS2 project and publish its results, but that the OBR should take a look at the overall economic impact of the scheme.

Despite my antipathy to the present scheme, I am not against investing in our rail network. I could support a high-speed rail network, but only if it had the following characteristics. The whole high-speed network should be planned coherently from the start and include east and west coast links to Scotland, Wales and the south-west. Greater priority should be given to the need to switch passenger traffic from air to rail, and to linking directly with HS1 and the Channel Tunnel. This would imply routing the line through Heathrow and considering a second hub at Stratford, as recently suggested by the Labour Party.

Serious attempts need to be made to limit the damage done by a new rail line by respecting our heritage and countryside, whether designated or not, by sticking to existing major transport corridors and being prepared to spend what is necessary to provide proper twin tunnels. For example, in the Chilterns, it is an outrage that the current plans do not provide for such a deep tunnel. I urge Ministers to look very carefully at the proposals put forward by groups such as the Conserve the Chilterns campaign group. The Government need to come up with a proper compensation package that reflects the real costs borne now and in the future by those with property blighted by the plans and whose lives will be adversely affected by the construction and operational phases for 20 or more years.

My Lords, in my short contribution I shall try to agree with my noble friend Lord Astor and the noble Lord, Lord Adonis, about the benefits of HS2. I speak from the perspective of the north-east of England. In doing so, I declare an interest as a weekly traveller on the east coast main line to Newcastle. The journey of three hours and six minutes is the most pleasurable part of my week and probably the most productive. The idea of people cutting it short does not exactly fill me with joy. If they wanted to extend it, I would probably be quite happy and even more productive in that time. However, I accept that I am unusual in that.

My question is: what will the way in which HS2 has been phased do for disparities between the north and south? The south-east has benefited enormously from significant infrastructure investment, starting with the Channel Tunnel, which received £11 billion in current money. Then there was HS1 and the Olympics, which brought £10 billion into the south-east. There is talk of a potential third runway at Heathrow. Crossrail received around £15 billion. Significant infrastructure investment is taking place in the south-east. If HS2 is added to it in its current proposed phasing, it will simply draw more and more business to the south-east of England and cause overheating so that Birmingham becomes simply part of the commuter belt for Greater London. That holds some dangers.

I propose that we solve the problem by starting the high-speed rail network in the north and working south. There are some strategic benefits to so doing. As a northerner, I am also slightly suspicious of 20-year infrastructure contracts. Ten years in, when the first bit has been built as far as Birmingham, will we find that the money has run out? High Speed 2 Ltd will say, “We’re terribly sorry”, and we will not see it completed. If people think that is a bit far fetched, we live with the unmotorised part of the A1 to this day. Starting in the north and moving to Birmingham would allow people time to see how Crossrail is working out, sort out what they will do with Heathrow Airport and assess whether it is needed.

My Lords, I thank my noble friend Lord Astor for initiating this debate. I declare my interest as a board member of the Countryside Alliance, which has expressed concerns about HS2.

HS2 is not without controversy. One of the most contentious elements is the fact that the line will run through the heart of the Chilterns, a designated area of outstanding natural beauty. I know the Chilterns and the route north of Aylesbury well. I have a profound respect for the communities there and know many people who will be directly affected. If we are to desecrate some of our finest countryside and place such a heavy and lasting burden on communities, we need to be clear that it is in the national interest.

Under this Government, all infrastructure projects are to include the value of natural capital, as set out in the natural environment White Paper. This approach is commendable. It is illogical, therefore, that the current business case for HS2 does not include a proper account of natural capital. The Transport Select Committee’s recommendation that the revised business plan for HS2 should take account of this is entirely in keeping with the Government’s overall approach.

The justification for HS2 has changed since its inception. First, it was championed as green but that claim is now discredited as it will not lead to any significant reduction in emissions. Then there was speed, but HS2 will cut journey times from London to outside Birmingham by barely 20 minutes. On capacity, many experts say that future commuter demand can be fulfilled by upgrading existing lines. Many groups have pointed out that predicted demand for HS2 is extremely high. Now we hear that addressing the north/south divide is used as validation. However, this is far from certain and many people fear that HS2 could funnel resources and growth towards London and the south-east.

What strikes me most is the lack of consensus around this project. If we are to spend £33 billion of taxpayers’ money on it, does there not need to be more certainty and transparency? The claim is that HS2 will offer genuine value for money, foster growth, improve the transport network and be an investment that benefits the whole nation rather than the few. In its current form, HS2 is a long way off that.

My Lords, this is the second time this week that I have found myself engaged in the parliamentary equivalent of speed dating—but here we go. High Speed 2 is not about shaving a few moments off the journey time between Birmingham and London. To really appreciate its true economic value, it has to be seen in the context of a national plan with links to both local schemes and European networks. Despite a highly disruptive £10 billion upgrade, the west coast main line has little room for additional trains while demand on the route has grown over 50% in the last decade and is forecast to keep growing. The challenge of operating long-distance commuter and freight services on the same line is almost insurmountable without further expensive and disruptive work.

Capacity released by HS2 will improve services to many West Midlands towns and into Wales. The east-west rail link for which I have campaigned for 15 years could become a reality. Phase 2 could relieve pressure on the east coast main line and avoid work, for example, on the Welwyn viaduct. With the amount of freight coming into UK ports increasing at 6% per annum, extra rail capacity is needed to prevent more HGVs on our roads. HS2 can be co-ordinated with local transport schemes and housing growth—for example, the new HSR station at Birmingham Moor Street as part of a local regeneration scheme, or the new station at London Old Oak Common providing a link into the City and east London. Experience from the Jubilee line extension shows that these benefits have traditionally been underestimated in conventional BCR analysis.

There is a growing network of European cities connected by high-speed rail, from which the UK outside London and the south-east is currently excluded. This is despite the growing evidence that it is successful at reducing journeys by air. High-speed rail can form an important part of our aviation policy in other ways. For example, Heathrow should be linked to places outside London via high-speed rail. Accessibility to Manchester in phase 2 could make a huge difference to its viability. Indeed, under phase 1, Birmingham Airport will be closer in time to London than will Stansted. The Government need better ways of capturing these benefits and of quantifying the cost of inaction. Applying expensive and disruptive sticking plasters to the west coast main line is not a viable option. We need to create a coherent vision for transport which extends 30 years into the future, as our European neighbours have done. Only then will we have a transport system that will deliver a dynamic economy. Everyone says we need to invest in infrastructure for growth. Let us not talk ourselves out of delivering it.

My Lords, like the noble Baroness, this is the second high-speed debate this week in which I have taken part. I am delighted to be able to support my noble friend Lord Astor, who introduced the debate with a powerful, cogent speech, the figures carefully marshalled. For all the eloquence of the noble Lord, Lord Adonis, whom I admire very much indeed, I do not think that he adequately refuted the points made and the figures advanced by my noble friend.

I approach this from a slightly different point of view. The interest that I have to declare is a passionate love of the English countryside—the British countryside, too. Nearly 35 years ago, I wrote a book called Heritage in Danger, in which I pointed to some of the dangers to our very finite countryside. This is not a great, enormous country in geographical terms like France or Germany but one of finite beauty and size. The march of the wind farms and the driving of this link through some of the most glorious countryside in England would remove for ever something that should be imperishable and is of absolutely priceless worth. If you are going to do that, you have to demonstrate that there really is a case for it. I do not think that that has been done.

I have much sympathy with the points made by my noble friend Lord Bates in his speech. I agree with him about the work that one could do on trains. If there is a case for a high-speed rail link of this sort, then start in the north. We are far too London-centric. If we have got this money to spend—we have not; we are always being reminded of the economic stringencies of the time—then let us go back to Beeching and reinstate some of the lines that were so unnecessarily taken up. Communities were deprived of vital links. That would be a better way of reviving the economic fortunes of many parts of this country. Give Lincoln, where I live now, more than one direct train a day from London. Bring to the people a system that really benefits the people.

Many have cast doubt on this scheme and I quote but two. My former colleague Archie Norman, who sat for some few years in the other place and who is the chairman of one of the great companies of this country, believes that the economic case has not been made. Andrew Tyrie—he has been much in the news recently, is to chair this very important committee and has a real knowledge of economic affairs—questions the economic viability. The case has not been made. If we have money to plan for spending money of this sort over the next 20 years, there are far more deserving cases that can bring far more benefit to far more people and preserve our glorious countryside in the process.

My Lords, I will say a word or two in the gap in support of all those who have criticised this HS2 train proposal. I draw attention to the report produced by Mott MacDonald’s consortium, commissioned by and on behalf of the Department for Transport, investigating the economic consequences of the proposed train. In particular, the consortium’s report deals with the supposed economic benefits of the time to be saved by businessmen travelling on the train from London to Birmingham or, later, from Birmingham onwards. I am sure that the Minister will be familiar with this report. He may not agree with me that the information I have about it—I have been unable so far to obtain a copy; it runs to 170 pages—indicates that the supposed economic benefits of the journey in the new train saving businessmen’s time will be at best trivial and at worst spurious. I suggest that this particular report deserves a bit of attention before the Government decide to commit themselves irrevocably to this scheme.

My Lords, I thank the noble Viscount, Lord Astor, for securing this debate. Our position is that we strongly support the transformation of our rail network to provide greater capacity and reduce journey times. This will require a combination of both new high-speed lines alongside upgrading the existing network through a programme of electrification and a new generation of high-speed intercity trains. We delivered Britain’s first new high-speed rail line, High Speed 1, and before the last election we set out plans for a second high-speed line, HS2, connecting London to Birmingham, Manchester, Sheffield and Leeds. The Government have backed this project and it should continue to be taken forward on a cross-party basis.

We have some concerns over the way the Government are planning to deliver the new high-speed line. We support creating a major transport hub near Heathrow which would improve connections between our largest airport, Crossrail and the Great Western main line. Since that would mean some change in alignment, it might enable better protection of the Chilterns. If the Government are determined to reject this sensible alternative, we will accept their decision but will expect credible alternatives to be brought forward to address the issue.

We disagree with the Government’s decision to legislate only for the first phase of the high-speed rail line in this Parliament. By splitting the route between two pieces of legislation, the Government are risking national support for the scheme and raising unnecessary concerns about the cross-party commitment that exists to complete the entire Y-shaped route. We also believe that high-speed rail should be a service that is affordable for the population as a whole and not just certain sections of the community, as envisaged by the previous Secretary of State in evidence to the Commons Transport Select Committee in September last year.

All noble Lords who have spoken will want to hear from the Minister whether the Government’s position on High Speed 2 remains as set out in the Written Statement by the Secretary of State for Transport on 10 January 2012. I, too, would like the Minister to answer that question. I would also like the Minister to say whether any subsequent developments have significantly changed the figures to the extent of appreciably weakening the case contained in Command Paper 8247 on high-speed rail, presented to Parliament in January 2012, the Atkins paper of January 2012—the High Speed Rail Strategic Alternatives Study—and the two January 2012 HS2 Ltd/Department for Transport papers on the economic case for HS2.

Will the Minister also say, assuming that the Government’s position on HS2 has not changed since the Written Statement of January 2012, whether the Government’s main—but certainly not only—argument for HS2 is the saving in time for those travelling by rail between London, Birmingham, Manchester and Leeds, or whether it is the need to address the projected serious capacity problems arising from continuing significant projected growth in passenger demand on the west coast and east coast main lines between London and Birmingham, London and Manchester and London and Leeds as well as growth in freight traffic?

My Lords, I congratulate my noble friend Lord Astor for securing this debate on a very important subject. I also thank noble Lords for their typically well informed contributions. It is certainly not a matter of nimbyism. It is important and right to raise questions about a project as significant as HS2 and I am happy to try to address such questions this evening. Large scale infrastructure projects are not new or unusual. They have been going on for many years and they have been controversial. For instance, the Jubilee line extension was controversial at the time of its conception, but where would we be without it now?

In his opening speech, my noble friend questioned the benefits that we expect HS2 to deliver. I want to reassure him on this point. I believe passionately in a successful Britain, a country that can compete and thrive in a global economy. To achieve this we need infrastructure fit for the 21st century and beyond. We cannot just make do and mend. Good transport equals good economics. One of the best ways to support British business, power up the recovery and put people back to work is to invest in, and modernise, our transport networks. HS2 will revolutionise travel in our country, transforming connectivity between London, the Midlands and the North, and, as the noble Lord, Lord Adonis, said, it is the best decision. It will provide a step change in the capacity of the rail network to accommodate the growing demand for long-distance travel, providing up to 18 trains an hour, each with up to 1,100 seats. Without it, our main north-south rail arteries will become increasingly disrupted and overcrowded, damaging both our economy and our way of life.

HS2 will slash journey times for passengers between our key cities and regions. It will be a truly national network benefiting the whole country. While the high-speed line itself runs to Birmingham, Manchester and Leeds, the new trains will be designed to continue onto the current network, providing direct services to destinations further afield, such as Liverpool, Newcastle and Glasgow. It will help rebalance the economic geography of the country, supporting thousands of jobs and unlocking growth and opportunity for generations to come. It will be a truly transformative project.

Some noble Lords have questioned whether a new high-speed network is the best way to provide the additional north-south capacity our country needs, suggesting instead a programme of enhancements to the existing network, but this would provide only a short-term answer to the demand challenges addressed by HS2, and even then, only at the cost of significant disruption to passengers on affected lines, all the while sacrificing the connectivity benefits high-speed rail will bring.

Several questions related to the approach taken to assessing the economic viability of the project. In January, when my right honourable friend the Secretary of State for Transport announced her decision on HS2, she set out the economic case underpinning this project and the department will shortly be publishing further updated economic analysis. However, the benefit-cost ratio analysis forms only one part of the decision-making process for this strategically important project. There are wider strategic considerations as well, which I outlined a moment ago. I will try hard to answer as many supplementary questions as I can and when I fail I will, of course, write.

The noble Lord, Lord Rosser, asked about the two hybrid Bills. He will know that each hybrid Bill requires a very considerable amount of work to determine what powers are needed. Several noble Lords, including my noble friend Lord Astor and the noble Lord, Lord Stevenson of Balmacara, claimed that there is no economic case for HS2. I beg to disagree. HS2 continues to have a good economic case. The Government have always been clear that as well as offering good value for money in itself, there are wider social and economic benefits associated with improving connectivity and supporting regeneration in our major cities.

My noble friend Lord Bates was concerned that HS2 will not rebalance the economy. He talked about the north-south divide and the unintended benefit for London at the expense of the regions. The Government’s position has the support of businesses and their representative organisations across the country, which express their belief in the importance of improving our transport network, and specifically our intercity rail network, in order to enable higher economic productivity.

The noble Lord, Lord Stevenson, asked about the release of the Major Projects Authority report. The Cabinet Office has a policy of not releasing the reports for two years, but they will be released at the appropriate point. Noble Lords asked me about the DfT’s record in forecasting and modelling transport demand and they suggested that it is poor. The Department for Transport has significantly improved its passenger forecast modelling in recent years. As acknowledged by my noble friend Lord Astor, we have a better understanding of what drives passenger demand, better computer modelling and our approach to risk analysis has improved.

The position of HS1 and HS2 are very different. Eurostar was accessing a completely new market for intercapital rail travel in competition, it transpired, with a burgeoning short-haul deregulated aviation market. HS2 will relieve a seriously congested existing railway between the two largest conurbations in the country—a long-existing market where demand is well understood and predicted to grow. My noble friend Lord Bradshaw suggested that our appraisal is based on the over-inflated value put on business travellers’ time. The analysis underpinning HS2 has been based on the Department for Transport’s well established approach to appraisal, one that is recognised across the transport industry and conforms to the highest standards of evidence. I know that my noble friend is very concerned about this point, especially in connection with the appraisal of road transport schemes.

Many noble Lords talked about route selection. In terms of the London to West Midlands alignment, HS2 Ltd considered more than 90 options for stations and sections of the route. There are obvious benefits to staying close to existing transport corridors where possible, which is why HS2 Ltd’s recommended route crosses part of the Chilterns close to the A413 and the Chiltern line and, indeed, uses part of the Great Central line. Overall, an M40 route would be an inferior option. It would be longer, have lower maximum speeds, impact on more population centres, resulting in unacceptable impacts on communities and it would be more expensive. In answer to one noble Lord—I think it was my noble friend Lord Bates—since the main capacity constraint is in the south, HS2 will start in the south.

The noble Lord, Lord Stevenson of Balmacara, suggested that the nation could not afford it. The nation cannot afford not to invest in HS2. Investment in HS2, and our wider rail network, can help us overcome the economic challenges we face and secure the country’s economic future. The construction costs will be spread over two decades and on this basis will involve an average level of annual spending of less than £2 billion a year at 2011 prices.

My noble friend Lord Astor suggested that a new railway is not needed to solve the railway capacity problem. By the mid-2020s forecasts show that without HS2, our main north-south rail arteries will be becoming increasingly disrupted and overcrowded, damaging our economy and our way of life, as pointed out by my noble friend Lady Scott of Needham Market. The Government have carefully considered the option of providing additional rail capacity, including upgrading existing lines. These might provide a short-term fix, but not a long-term solution. While alternatives may offer a good benefit-cost ratio, none is able to offer the scale of benefits or change that HS2 offers and would not deliver the increase in capacity that we require. Even the best alternative proposed would lead to decades of disruption on the existing network and lead to unreliable and overcrowded services and more freight on our roads. In answer to the question from the noble Lord, Lord Rosser, the capacity constraints make HS2 essential. The value of time saved is taken into account in the BCR.

My noble friend Lady Seccombe talked about community engagement. The Government and HS2 looked long and hard at possible changes to the route. However, the final design of the route is not yet set. The final design will be developed in consultation with local communities as part of the environmental impact assessment. Once that is complete, we expect to consult on the environmental statement in spring 2013. I encourage everyone with an interest to participate in that consultation. We want local communities to get engaged in the design through their local forums. I do not understand how the problem described by my noble friend arose. I hope that she will brief me later after the debate.

My Lords, as we have 10 minutes, may I ask my noble friend to address one issue? Does he accept that the benefit/cost ratio has fallen below 1.5? I will quite understand if he is unable to give a detailed answer, but perhaps he would be kind enough to write to me and other noble Lords who have spoken today.

My Lords, I have already undertaken to write where I have not answered. I am endeavouring to get through all my Box notes as fast as possible.

I know that there is no easy way of building a railway in our country but the concerns of local residents are an important priority for the Government and HS2 Ltd will ensure that local views are fed into the design process and that local communities are aware of what progress has been made with the railway.

My noble friend Lady Seccombe asked what the Government are doing to address blight. The Government recognise that HS2 is already having an impact on communities along the line of route. That is why the exceptional hardship scheme was introduced. When the Secretary of State for Transport announced the decision to proceed with HS2 in January 2012, the Government also committed to introducing a generous compensation package for the long term that goes beyond what was required in law. Developing the right property compensation package for HS2 is complex, as it must be fair to those affected by HS2 proposals while also recognising our broader responsibilities to the taxpayer. The Government will shortly be consulting on the detailed proposals to help affected property owners, with the aim of introducing long-term compensation measures as soon as possible.

My noble friend Lord Astor asked about the HS2/HS1 link, a point raised previously by the noble Lord, Lord Berkeley. I can assure my noble friend that the Government intend to connect HS2 to HS1 through a link built in the first phase. This will enable trains to run directly between HS2 and HS1 without the need for passengers to change trains. There are clear strategic advantages from integrating Britain’s new high-speed rail network with the only existing high-speed line in this country and thence to the growing high-speed rail network on the continent.

My noble friend Lord Astor talked about the demand for HS2 in a digital age. Some have questioned the demand projections underpinning the case for HS2, positing a world in which improved digital communication replaces the handshake and the face-to-face conversation and thus the train journeys that make them happen. If we turn to history, it is clear that the advent of the telegraph, the telephone and now the tweet have not lead to reductions in travel demand—far from it. I reassure the House that the Government will continue to keep the economic case and indeed the wider business case under review throughout the life of the project to ensure that it reflects the latest research, evidence and understanding of the project.

HS2 is much more than just a BCR. It is about a step change in capacity and connectivity for passengers. It is about unlocking the potential of our major cities and regions, supporting jobs and driving growth. It is about building a dynamic society, a thriving economy and a successful Britain. HS2 is not just viable; it is a vital part of our future prosperity.

Sitting suspended.