The Department for Transport has said it was “confident” the argument for HS2 plans to connect London to the North was “clear and robust”, rebutting earlier criticism from the House of Lords.
The House of Lords Economic Affairs committee said in March 2015 that supporters of the high-speed railway line had failed to make the economic case for the project. Peers suggested cheaper options for easing congestion on the railways should be explored.
It added that the argument that the HS2 project would rebalance the economy was not credible, since the main beneficiary was likely to be London – as opposed to the Midlands or the North.
The committee’s chairman, Lord Hollick, said: “The government is basing the justification for HS2 on two factors – increased rail capacity and rebalancing the UK economy. We have not seen the evidence that it is the best way to deliver either.”
The Department for Transport has disputed this – responding to the cross-party review of the project, saying that HS2 “will have a transformational effect, supporting growth and increased productivity across the country, particularly in the North”. The proposal also formed a key part of the plans to create a Northern Powerhouse, it said.
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Productivity has been an area of discussion for both businesses and the government – the most recent figures from ONS showed that it remained subdued despite stronger economic growth. Output per hour rose by 0.3 per cent in the first three months of the year compared with the previous quarter. This measure had grown by 1.3 per cent in the year to the end of March – the fastest growth rate since the start of 2012, but still marking a fall in productivity across the whole economy.
ONS added that productivity remained “exceptionally weak” across many industries. The Bank of England has repeatedly cited the UK’s productivity problem as an area to address.
Meanwhile, the government has faced criticism over its delays and cut backs of a number of modernisation projects planned for Network Rail. The electrification of the London to Sheffield line has been shelved and the trans-Pennine upgrade delayed – meaning improvements to services between Leeds and Manchester had been delayed indefinitely.
Transport secretary Patrick McLoughlin placed the blame on Network Rail, revealing that the chairman, Richard Parry-Jones, was stepping down, while its executive directors were to have their annual bonuses held back.
The plans for HS2 meanwhile, are for it to run from London to Birmingham, Manchester and Leeds, with work predicted to start in 2017. Scepticism remains over its estimated cost and proposed economic benefits.
The government claimed it has considered other options thoroughly – highlighting reports it had published from consultants on the issue. It added that upgrading the existing line would be “extremely disruptive” and would provide “limited returns”.
The formal response to the committee’s report also held firm on the belief that capacity is constrained. It said “demand for rail travel has grown consistently over the last two decades”, and that the capacity problem stems from “the combination of markets that the existing railways are serving – intercity, commuting and freight”.
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