HS2 regeneration claims are economic quackery

High Speed 2 is not the first transport project to have ambitious aims. Back in the 19th century the US government subsidised vast transcontinental railroads to bridge the east-west divide, rebalance the country’s economy and unify the nation.

But the situation on the ground presented challenges for this grand vision. Harsh conditions meant many construction workers fell ill or even died. This created a business opportunity. Entrepreneurs travelled to the railroads to sell ‘snake oil’ to the labourers. They claimed it would treat a whole range of conditions from infections to joint pain. The only problem was that it didn’t work. Customers were being misled.

HS2 is being sold as a modern-day elixir. At first it was promoted on the basis of faster journey times. Then it became an essential means to increase rail capacity. Politicians now argue the project will transform the North of England, bridge the North-South divide and turn northern cities into ‘world leaders’.

The scheme is therefore much more than a railway. It’s an economic cure-all that supposedly will rebalance the economy and create, depending on the lobby group, tens of thousands or hundreds of thousands of jobs.

It would be wonderful if HS2 really could make such an enormous impact. But in reality these assertions reflect a combination of blind faith and political spin. The economic evidence casts serious doubt on the ability of high-speed rail to deliver regeneration on a grand scale.

Take the example of East Kent. Back in the 1990s the government was pushing through the Channel Tunnel Rail Link, Britain’s first high-speed railway. The business case was very poor but regeneration claims were crucial in overcoming Treasury opposition. In particular, ministers said the line would transform the struggling old mining area along the Kent coast.

High Speed 1, as the line became known, did deliver impressive journey times. After fast services began in 2009, Central London could be reached in around an hour, compared with almost two hours previously.

Yet despite this major transport boost, East Kent is still economically depressed. Indeed in the period after the high-speed trains arrived, the region has performed worse on key economic indicators than the rest of Britain.

In the borough of Thanet, which includes Margate and Ramsgate, the employment rate has fallen to 61 per cent – 10 percentage points below the national average and similar to struggling old industrial cities like Liverpool. Median weekly pay for full-time workers is just £446, 14 per cent lower than the national figure.

East Kent has many advantages over the North of England. It’s just an hour’s drive from the M25 and close to prosperous areas in the South East. The Channel Tunnel gives the region easy access to the Continent and it is the closest part of the UK to Europe’s economic core. High-speed rail’s failure to transform the area augurs badly for the ability of HS2 to rejuvenate northern cities.

A second example is Doncaster. 125mph trains to London were introduced in the late 1970s, with electrification of the East Coast Main Line completed in 1991. The fastest trains to London take a little over 90 minutes to reach King’s Cross. Yet despite excellent transport links, Doncaster was ranked 42nd worst out of 318 boroughs in England in the 2010 Index of Deprivation. If the town itself were measured rather than the much wider area of the borough, it would be one of the very poorest places in the UK.

Big cities such as Leeds and Sheffield are of course different from smaller towns. High Speed 2 will make their journey times to London broadly similar to those enjoyed by the West Midlands today. Yet on most measures Birmingham performs far worse than Yorkshire’s major cities. Its employment rate is just 59 per cent, compared with 68 per cent in Leeds. Birmingham comes in the bottom ten districts in the Index of Deprivation.

Clearly improved rail links to London are no panacea. Other factors such as skills, education and entrepreneurship are more important determinants of economic success. But despite the evidence that HS2 won’t deliver the promised gains, it would be unfair to describe its promoters as snake oil salesmen.

For certain sectors and some localities there will indeed be benefits from the project, even if the enormous tax bill means they’re likely to be at the expense of other areas and the wider economy. However, assertions that high-speed rail will deliver a major transformation are far-fetched. HS2 is not an economic cure-all for the North of England and politicians that claim it is are indulging in economic quackery.

1st May 2014, Yorkshire Post (edited version)

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