Sheffield City Region, Leeds City Region FINAL REPORT September 2010 Ove Arup & Partners Ltd Admiral House Rose Wharf 78 East Street Leeds LS9 8EE United Kingdom www.arup.com This report takes into account the particular instructions and requirements of our client. It is not intended for and should not be relied upon by any third party and no responsibility is undertaken to any third party. Job number 120788-64
Document Verification Job title Document title High Speed Rail to Yorkshire Job number 120788-64 File reference Document ref 120788-64 Revision Date Filename Draft 1 23/08/10 Description First draft Prepared by Checked by Approved by Name Iain Mobbs, Ellie Cooper (Volterra) Tom Bridges Nigel Foster Signature Draft Final Report Septemb er 10 Filename Description Draft Final Report.docx Draft Final Report Name Prepared by IM, FB, EC (Volterra) Checked by Tom Bridges Approved by Nigel Foster Signature Final Report Septemb er 10 Filename Description Final Report Incorporating client comments Name Prepared by IM, FB, EC (Volterra) Checked by Tom Bridges Approved by Nigel Foster Signature Filename Description Prepared by Checked by Approved by Name Signature Issue Document Verification with Document 120788-64 Final Report 5 October 2010 C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX
Contents Summary 1 1 Introduction and Context 2 Page 1.1 Introduction 2 1.2 Background 2 1.3 Scope for the Further Work on the Economic Case for High Speed Rail to the Leeds and Sheffield City Regions 4 2 The Benefits and Costs of High Speed Rail to the North 5 2.1 Background 5 2.2 Journey Times 5 2.3 Capital Costs 6 2.4 Incremental Benefits and Costs 7 2.5 Background and Overview: Wider Economic Impacts 8 2.6 Estimating Wider Economic Impacts 9 2.7 Further Measures of Economic Impact 15 2.8 The Number of People and Jobs Connected 16 2.9 Conclusions 17 3 The Case for Progressing High Speed Rail Services and Routes to the Sheffield and Leeds City Regions and beyond as soon as possible 19 3.1 Introduction 19 3.2 Progressing the route to the Leeds and Sheffield City Regions19 3.3 Connection to the First Phase of High Speed Rail 20 3.4 Providing a Connection to the North of Leeds 24 4 Station Location and Economic Benefits 26 4.1 Introduction 26 4.2 The Case for City Centre Stations 26 4.3 Chapter Conclusions 28 5 Integrating High Speed Rail as Part of a Long Term Strategy for the Rail Network as a Whole 30 5.1 Context 30 5.2 Midland Main Line 30 5.3 East Coast Main Line 33 5.4 TransPennine 35 5.5 Improvements to Local Services 36 5.6 Chapter Conclusions 36 C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX
Appendices Appendix A Assumptions C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX
Summary High speed rail has the potential to transform the shape of the national economy. To do so it must access the areas with the most significant centres of population and employment. Linking the Leeds City Region, the Sheffield City Region and the Three Cities of Derby, Nottingham and Leicester would connect an area of 6.7 million people and 3 million jobs. Onward connections to the Tees Valley and Tyne and Wear City Regions would provide access to a further 2.2 million people and 0.9 million jobs. This route to the East of the Pennines would deliver an estimated c. 60 billion in standard transport benefits and a further 2.3 billion of productivity benefits. Its Benefit to Cost Ratio would be 5.61, compared with 2.58 for the route to Manchester. A direct route to the Leeds City Region via the East Midlands and Sheffield City Region would have greater economic benefits than the alternative option of a less direct route to Leeds via Manchester. The previous Government recommended in March 2010 a Y shaped high speed rail network, linking London to Birmingham with two extensions northwards, one to Leeds via the East Midlands and Sheffield, and another to Manchester. However, in June the Government asked for an alternative Reverse S shaped route to be considered. This would access Leeds by a less direct route via Manchester, but would not serve the East Midlands and Sheffield City Region. For the entire network the direct route to Leeds and beyond via the East Midlands and Sheffield would have a higher Benefit to Cost Ratio (2.46) compared to the less direct route via Manchester (1.88). It would deliver far greater productivity benefits ( 2.3 billion compared to 0.4 billion), and in faster journey times to Leeds, York and the North East. High speed rail services and routes should be progressed to the Sheffield and Leeds City Regions and beyond as soon as possible, to create growth and jobs. There could be a significant east-west imbalance created in the economy of the north of England if a route was progressed to Manchester in advance of a route to Leeds, or if Manchester had a far faster journey time to London. Prior to the high speed network being extended to Yorkshire, a link to the Midland Main Line from the first stage of HS2 should be provided time to allow high speed trains to run north of the West Midlands to Sheffield and Leeds. In order to spread the benefits of high speed rail to York and the North East, it is important the network links to the East Coast Main Line near York and is extended to the North East and Scotland in due course. High speed rail should serve city centres. City centre stations will maximise the economic benefits due to the proximity of high value jobs and because they are already public transport hubs and therefore would help spread the benefits of high speed rail more widely across the city regions. They would also act as a focus for regeneration and development. Improvements to existing rail routes are also essential in the short-medium term. Delivery of a national high speed rail network will be a long-term (20-30 year) project. Improvements to existing routes are needed to deliver benefits in the short to medium term. Existing proposals to upgrade and electrify the Midland Main Line, and to enhance the East Coast Main Line, Transpennine and Leeds-Sheffield links can deliver substantial benefits, in some cases at modest costs. Improvements to existing routes, and to local and regional rail routes and services, will spread the benefits of high speed rail, including capacity relief on existing lines. C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 1
1 Introduction and Context 1.1 Introduction This report sets out the evidence that supports the economic case for developing a national high speed rail network to provide a direct connection from London to the Leeds and Sheffield City Regions and beyond via the West and East Midlands. This technical report is intended as a background document to support and be read alongside the main summary report The Economic Case for High Speed Rail to Leeds City Region and Sheffield City Region Summary Report which has also been completed in September 2010. The main points from the summary report are set out in the box on the previous page. This report and the summary report update the previous work for the Leeds and Sheffield City Regions undertaken by Arup and Volterra in 2009 on the wider economic case for high speed rail. The analysis has been updated in light of the coalition Government s decision to reconsider the optimal shape for a national high speed network. The new work has also taken into account recent changes in Government guidance on the Wider Economic Impacts of transport projects. 1.2 Background 1.2.1 Previous Work The Leeds and Sheffield City Regions commissioned Arup with Volterra in 2009 to assess the economic and wider case for high speed rail serving the city regions 1. This work was used by Yorkshire Forward and Local Government Yorkshire and Humber to produce a regional position statement. The work concluded that: There was a strong economic case for high speed rail serving Yorkshire. It would bring the Leeds and Sheffield city regions closer together, improving links with cities in other regions, including access to the global city of London and its international gateways. High speed rail needs to be approached as an economic transformation project which can contribute to the development of a more balanced, better distributed national economy. It will help to alleviate capacity constraints on existing main north south rail routes. There is a need to consider high speed rail in the context of a coherent strategy for the rail network as a whole. Recognising that high speed rail is a long term project, the two city regions also need to make the case for upgrades to existing lines to deliver benefits in the short to medium term as well as to lock-in benefits of capacity relief that would be created by high speed rail over the longer term. 1 The Case for High Speed Rail, Arup and Volterra on behalf of the Leeds City Region and Sheffield City Regions (2009) C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 2
Subsequent work by Arup and Volterra was commissioned to assess the case for upgrading the Midland Main Line 2. This examined the feasibility of running high speed services to Sheffield, using existing lines north of Tamworth, following the construction of the first stage of HS2 from London to the West Midlands. The East Midlands Development Agency also commissioned work to assess the benefits of high speed rail serving the Three Cities area of the East Midlands 3. 1.2.2 2010 White Paper This previous work influenced the recommendations of HS2 Ltd, the Government s high speed rail development company. HS2 Ltd recommended the development of a Y-shaped network that would connect London to Birmingham in the first phase, with two extensions north of the West Midlands to be delivered subsequently. One of these extensions would be to the East Midlands, Sheffield City Region, and to Leeds with a connection on to the East Coast Main Line north of Leeds. The other extension would be to Manchester, with a connection to the West Coast Main Line. The previous Government published a White Paper on high speed rail in March 2010, based on the recommendations from HS2 Ltd (see: http://www.dft.gov.uk/pgr/rail/pi/highspeedrail/). The relevant section of the HS2 Ltd report concludes: "There is a good case for going on to develop high speed lines beyond the West Midlands and, of the networks we have looked at, a network with two branches either side of the Pennines performs best. While there appears to be a good case for continuing HS2 on to the North West and Manchester, there looks also to be a particularly strong case for a branch to Yorkshire and Leeds, via the East Midlands. HS2 Ltd (2010) High Speed Rail for Britain Report by HS2 Ltd (page 242) 1.2.3 Review of Optimal Network Shape In June 2010 the new coalition Government, whilst committing to the development of a high speed rail network, asked HS2 Ltd to reconsider the optimal network shape. The Secretary of State for Transport wrote to HS2 Ltd to request that they give further consideration to the proposals for linking Yorkshire to the high speed network. Specifically HS2 Ltd were asked to reassess whether the proposed Y shaped network is the better option compared to a reverse S network shape which would link the West Midlands to Manchester and then across the Pennines to Leeds (but would not serve the East Midlands or Sheffield). The Government also asked Lord Mawhiny to review the scope and options for the high speed rail network to access Heathrow Airport. 2 Arup and Volterra (2009) The Future of the Midland Main Line: The Case for the Upgrade and Electrification of the Midland Main Line 3 Arup and Volterra on behalf of the East Midlands Development Agency (2009) The Case for High Speed Rail to the Three Cities C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 3
1.3 Scope for the Further Work on the Economic Case for High Speed Rail to the Leeds and Sheffield City Regions There is now a need for additional work and activity to further strengthen consensus on high speed rail, to continue to make the case for the region, and to inform the engagement of partners with HS2 Ltd and Government. This report provides the evidence on: Quantified estimation of GVA and employment impacts, with analysis broken down geographically and across key sectors in the city regions; Consideration of the wider transformational benefits of high speed rail; Assessment of the other rail investments that would be required ahead of high speed rail as part of a package of rail connectivity improvements for the Leeds and Sheffield City Regions; Assessment of the location of high speed stations; and Consideration of economic benefits and costs to the city region of the Y proposal from HS2 in March 2010, compared with other potential alignments that were promoted by various political parties and other organisations. The work published by HS2 Ltd in March 2010 has acted as the foundation for much of the analysis presented in this report and the accompanying summary. Adopting such an approach will help to ensure that the assumptions used are comparable, facilitating the process of making the case for a high speed connection to Yorkshire. Engaging with stakeholders has been an important part of the completion of this work. This has included undertaking a workshop with stakeholders from the two city regions, including the South and West Yorkshire Passenger Transport Executives (PTEs) and representative from three local Chambers of Commerce. The work was also presented at the Leeds City Region Transport Panel and the Sheffield City Region Transport Joint Issue Board. C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 4
2 The Benefits and Costs of High Speed Rail to the North 2.1 Background The report published by HS2 Ltd in March 2010 recommended the development of a Y-shaped high speed rail network comprising a route between London and the Midlands, plus spurs to Leeds and Manchester. Previously, the Conservative Government had supported a Reverse S shaped network between London, Birmingham, Manchester and Leeds. The Coalition Government announced a strategic review of the proposals to determine the relative merits of the two proposals, although the results from this review have still to be announced. Previous analysis suggested the Y shaped network would generate larger benefits for the Leeds and Sheffield City Regions. We have compared the performance of the two network options to serve the Leeds and Sheffield City Regions in terms of capital costs, standard transport benefits and the wider economic benefits that would be created. In order to undertake this comparison we have made assumptions in relation to demand and service patterns, these are set out in Appendix A. 2.2 Journey Times Table 2.1 compares the journey times between several principal destinations, with the timings presented for the classic lines (including planning improvements), plus the proposed timings via High Speed Rail with the Reverse S or Y shaped networks. With the exception of Leeds to Manchester, the Y network generates faster journey times compared with the Reverse S network. For example, journey times would be further reduced by 27 minutes between Leeds and London, whilst the savings are also greater for trips between Leeds and Birmingham. Timings between Sheffield and Leeds could also be reduced by around 40%. The Reverse S would lead to significantly faster journey times between Leeds and Manchester, although it is worth noting relatively modest improvements to the classic lines could also reduce timings from 55 minutes to about 43 minutes 4. 4 This would comprise line speed improvements and additional capacity to reduce conflict between freight and passenger services C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 5
Table 2.1: Comparison of Journey Times to London (minutes) Via the Classic Lines Via the Reverse S Via the Y shape Sheffield 127 127 * 73 Leeds 130 110 83 East Midlands Parkway 95 95 55 Manchester 125 80 80 Birmingham 82 49 49 Note: * Could deliver 102 minutes by running high speed trains from HS2 (near Tamworth) on electrified classic lines (via Derby) The benefits for Sheffield generated by the Reverse S are relatively limited. There is a useful saving if a connection from the Birmingham to Derby line to HS2 is constructed, possibly in the Tamworth area. Otherwise the journey times are unchanged compared with current timings. Table 2.2: Comparison of Journey Times between Major Regional Cities Via the Classic Lines Via the Reverse S Via the Y shape Leeds - Sheffield 41 41 25 Leeds Nottingham 120 120 45 * Leeds - Manchester 43 25 43 Note: *Assumes the construction of a parkway station serving the East Midlands 2.3 Capital Costs The indicative capital costs for the Y shaped high speed rail network presented by HS2 Ltd are about 30bn at out-turn prices, including the necessary allowances for risk and optimism bias 5. Although some costs are shown for the individual route sections, this information is presented in terms of discounted prices, thus making it difficult to understand the individual cost components for the networks. The topography between Leeds and Manchester means this section will largely need to be constructed in tunnel, so it is inevitable that the capital costs for this section will be higher compared with the route between the Midlands and Yorkshire. For example, previous studies for the Strategic Rail Authority estimated the incremental capital costs for a high speed link between Leeds and Manchester to be around 7.4bn, or about 100m / per kilometre. This is even higher than the out-turn capital costs for HS1 between Ebbsfleet and London St 5 Issues Note Transport Economic Efficiency tables prepared by HS2 Ltd C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 6
Pancras (circa 85m/km), demonstrating the complexity of this link. The costs of a link between Leeds and the Midlands would be significantly lower compared with the Trans-Pennine link (about 50m per kilometre). The significantly higher capital costs for a high speed rail link to serve Leeds via Manchester would adversely affect the robustness of the value for money case. 2.4 Incremental Benefits and Costs The section approaching London will inevitably attract the highest number of passengers and therefore generate substantial benefits. However, much of the route between the Chilterns and central London will also need to be constructed in tunnel, so the construction costs per kilometre will be significantly higher compared with other parts of the high speed rail network. In contrast, the section between Leeds and the Midlands could generate a higher incremental benefit cost ratio compared with the overall scheme, simply because the capital costs per kilometre for the northern section are substantially lower, even though the number of passengers using this part of the network is smaller. Analysis by HS2 presented the incremental benefits and costs associated with each section of the network 6. Table 2.3 illustrates a comparison of the Benefit Cost Ratios for the overall scheme, plus the individual components. We have selected the results from the economic appraisal that align most closely with the scenarios discussed in this report, although it is recognised there are some differences. The benefits and costs shown have been discounted and are therefore not consistent with other results quoted in the HS2 report which are shown in outturn prices. The results indicate the Y network generates significantly higher benefits compared with the Reverse S proposal. However, the capital costs for the Reverse S network are broadly similar to the Y network (including extensions to Scotland). As a result, the benefit cost ratio for the Y network is almost 2.5, whereas the BCR for the reverse S network is less than 1.9. The benefits and costs of the incremental scheme to Leeds also generate a very strong value for money case. The extension to Leeds has a slightly lower capital cost compared with the route to Manchester, but the benefits are substantially higher, since the incremental improvements to rail services are larger. The Leeds extension achieves a BCR of 5.61 and is significantly higher than the incremental results for the link to Manchester. This is an extremely high BCR. DfT guidance states that a project with a BCR over 2 is considered high value for money and that most, if not all, projects with high value for money should generally be funded 7. On this basis, the HS2 extension to Leeds would offer extremely high value for money and should be progressed. 6 Issues Note Transport Economic Efficiency tables prepared by HS2 Ltd 7 DfT Guidance on Value for Money http://www.dft.gov.uk/about/howthedftworks/vfm/guidanceonvalueformoney?page=1 C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 7
Table 2.3: Summary of BCR for Selected High Speed Rail Schemes Network Benefits ( M) Costs ( M) BCR Central Case London to Birmingham 28,708 11,913 2.61 Y network including extensions to Glasgow and Edinburgh Reverse S network including extensions to Glasgow and Edinburgh 103,097 44,848 2.46 73,886 41,166 1.88 HS2 to Manchester 37,292 15,672 2.58 HS2 to Leeds 59,896 13,206 5.61 Source: Issues Note Transport Economic Efficiency tables prepared by HS2 Ltd 2.5 Background and Overview: Wider Economic Impacts The previous section summarised the work which has been carried out by HS2 Ltd to estimate the capital costs and conventional transport benefits for a selection of different options for high speed rail in the UK. These options included the central case from London to Birmingham, extensions of HS2 to Manchester and Leeds, and two total network options the Y-shaped and the Reverse S. Wider economic impacts are additional to these conventional transport benefits and aim to capture the impact of transport investment upon business productivity and labour markets. Using DfT guidance, we estimate that the wider economic impacts would be around 2.3bn from the Y-shaped network 8, in comparison to only 0.4bn from the Reverse-S. The Reverse-S would result in no wider economic impacts for Sheffield City Region, the East Midlands or the North East, and only around a third of the benefits for Leeds City Region in comparison to those from the Y-shaped network. The Y-shaped network results in 750m of benefits to Leeds City Region and 420m to Sheffield City Region, of which around 400m and 250m accrue to Leeds and Sheffield respectively. The majority of the wider economic impacts from the Y-shaped network are through increased productivity in Producer Services. However, the DfT s appraisal approach does not capture all of the wider impacts that high speed rail could have upon the UK s economic geography. Specifically, the DfT s approach requires us to assume that the number and location of jobs, residents and businesses is independent of transport provision. This means that the potential impact of transport investment upon land use decisions is missed from the existing analysis. KMPG carried out some work for Greengauge21 9 which relaxed this assumption and tested new methodologies. This work found that by 8 This applies to the link to the east of the Pennines 9 Greengauge21: High Speed Rail in Britain: Consequences for employment and economic growth. February 2010 C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 8
2040 employment in Yorkshire could be 50,000 higher and wage income could be 3.7bn higher if high speed rail is delivered. Although this methodology is not currently endorsed by DfT, this gives an indication of the potential magnitude of the benefits which are not currently captured by the DfT s appraisal methods 10. 2.6 Estimating Wider Economic Impacts 2.6.1 Approach We have used the DfT s latest guidance and economic dataset to estimate the wider economic impacts of the options for high speed rail serving Yorkshire. Because we do not have a Land Use Transport Interaction (LUTI) model, we have not estimated move-to-more-productive-jobs and have concentrated instead on pure agglomeration benefits. This aspect of wider economic impacts attempts to value the productivity benefits of more jobs being clustered together. The premise is that as more businesses colocate they become more productive, creating higher levels of output per worker. In the context of transport, the principle is that the quicker you can travel between places, the more they become effectively closer together this concept is known as effective density. Using the DfT s dataset and guidance, along with the travel time savings detailed in Table 2.1, we estimate the changes to effective density which would occur as a result of the different high speed rail options and in turn how this feeds through into improved productivity. This allows us to estimate the GDP benefits of the different options for high speed rail serving Yorkshire. These benefits are split across employment sectors and different locations. The sectors are those advised by DfT, which are consumer services, producer services, construction and manufacturing. We have included a wide study area in our analysis, which covers the Leeds and Sheffield City Regions, the East Midlands and the North East and their journey time savings with each other as well as with the Birmingham City Region and London. The benefits presented in this section reflect the benefits of time savings linked to the Yorkshire part of the route. They therefore include benefits from journey time savings between Leeds City Region, Sheffield City Region, the East Midlands and the North East and with London and Birmingham. They do not include benefits accruing to Birmingham or London from reduced times between Birmingham and London. The intention is to estimate the marginal benefits from the Yorkshire part of each high speed rail network option considered. We have considered three scenarios: Y-shaped network; Reverse-S network; and Enhanced Reverse-S network (with MML connection). 10 A critique of this methodology is provided in by: The Northern Way (2010) Review of Methodologies to Assess Transport s Impacts on the size of the Economy C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 9
2.6.2 Limitations The existing guidance from DfT on Wider Economic Benefits emerged following a particular type of investment (Crossrail) that increased the accessibility to a single key business area and as a result the guidance focuses upon the benefits of relieving capacity constraints to productive city centres. High speed rail links can and often do improve accessibility to key business areas. The principal function of high speed rail, however, is often a different one: to transform the future development of the country s economic geography. If the delivery of high speed rail is accompanied by planning policies to support sustainable economic development, European examples suggest that it can have very positive impacts. The potential transformational impacts of transport investment are not yet captured by current guidance. The key limitation of existing techniques is that they assume as inputs the residents and jobs of the system. With these assumptions made, the models are often restricted in their ability to allow people to choose to live or companies to choose to locate elsewhere due to improved transport links. This implicitly often forces a large degree of intransigence into the modelled system and means that these models are not fit for the purpose of estimating the impacts of investment in wholly new transport links upon location decisions and the interconnectivity of towns, cities and regions. Put simply, the results from an analysis of Wider Economic Benefits are driven by capacity, time savings and the places served. This means that: Larger time savings; Larger cities served; and Larger numbers of people; will ALWAYS RESULT IN HIGHER WEBS. This means that the potential for high speed rail to make regions of the UK more attractive to foreign investment, or more attractive to domestic investors relative to other parts of the country, are currently missed out of the evaluation. We discuss ways in which the DfT s guidance can be relaxed, and other benefits could be considered, in sections 2.7 and 2.8. 2.6.3 Results The table below summarises the wider economic impacts resulting from the three scenarios considered. It gives the 60 year net present value figures in 2002 prices. We can see that the Y-shaped network produces significantly higher wider economic impacts across the whole of the study area. The Y-shaped network delivers around 2.3bn of Wider Economic Impacts, whereas the Reverse-S only delivers 0.4bn, or up to 0.7bn under the enhanced scenario. C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 10
Table 2.4: Wider Economic Impacts from Y-shaped, Reverse-S and Enhanced Reverse-S networks, 60yr Net Present Value m, 2002 prices (sensitivities) Y-shaped Reverse-S Enhanced Reverse-S Leeds City Region 750 (660-760) 260 (230-260) 260 (230-260) Sheffield City Region 420 (320-450) 0 (0-0) 130 (120-130) rest of East Midlands 350 (250-350) 0 (0-0) 80 (70-80) North East 110 (90-160) 0 (0-0) 0 (0-0) Birmingham City Region 110 (90-110) 70 (50-70) 70 (50-70) London 540 (470-540) 90 (70-90) 160 (140-160) Total 2,290 (1,880 2,380) 410 (350-410) 690 (610-690) Source: Volterra Wider Economic Impact modelling The Reverse-S offers no benefits to Sheffield City Region, the East Midlands or the North East, and even the enhanced option with a link to the MML only results in benefits which are less than a third of those delivered by the Y-shaped network. The maps below show the distribution of the wider economic impacts across the study area, comparing the Y-shaped network with the Reverse-S one. C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 11
Figure 2.1: Maps showing the wider economic impacts of Y-shaped and Reverse-S networks Source: Volterra Wider Economic Impact modelling Digital Map Data Collins Bartholomew Ltd; Crown Copyright Overview Mapping We now consider the Y-shaped network results in more detail. The table below shows the breakdown by sector. We can see that the majority of wider economic impacts are through increased productivity in Producer Services, with these amounting for on average 75% (and up to 90%, depending on sensitivities) of the estimated impacts. C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 12
Table 2.5: Wider economic impacts from Y-shaped, 60yr Net Present Value, split by sector m, 2002 prices (sensitivities) Manufacturing Construction Consumer Services Producer Services Total Leeds City Region 60 (30-60) 30 (20-30) 80 (80-90) 580 (530-590) 750 (660-760) Sheffield City Region 20 (10-30) 20 (10-20) 50 (40-50) 340 (260-340) 420 (320-450) Rest of East Midlands 20 (10-20) 10 (10-10) 40 (30-40) 280 (190-280) 350 (250-350) North East 20 (10-30) 10 (10-10) 10 (10-20) 70 (70-100) 110 (90-160) Birmingham City Region 20 (10-20) 10 (0-10) 10 (10-10) 70 (60-70) 110 (90-110) London 70 (40-70) 40 (30-40) 60 (50-70) 370 (320-370) 540 (470-540) TOTAL 210 (110-230) 110 (80-120) 260 (220-280) 1,710 (1,430-1,760) 2,290 (1,880-2,380) % (sensitivities) Manufacturing Construction Consumer Services Producer Services Leeds City Region 7% (4% - 7%) 4% (3% - 4%) 11% (11% - 12%) 78% (71% - 79%) Sheffield City Region 5% (3% - 8%) 4% (3% - 5%) 11% (8% - 12%) 80% (61% - 82%) Rest of East Midlands 7% (3% - 7%) 3% (3% - 3%) 10% (8% - 11%) 79% (54% - 79%) North East 17% (8% - 27%) 7% (5% - 10%) 12% (12% - 17%) 64% (58% - 90%) Birmingham City Region 18% (7% - 18%) 6% (4% - 6%) 12% (11% - 13%) 64% (57% - 64%) London 13% (7% - 13%) 7% (5% - 7%) 12% (10% - 12%) 69% (60% - 69%) Source: Volterra WEI modelling C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 13
The table below shows the breakdown by district, along with the percentage of benefits which are in producer services. The table shows all districts which benefit by more than 50m of wider economic impacts (with the exception of Newcastle which is the largest North East district but benefits are lower than this). This shows that Leeds and Sheffield benefit by the largest amounts, with benefits of 400m and 250m respectively. Nottingham also benefits from significant wider economic impacts, estimated at 150m. The majority of all of benefits in all areas are due to increased productivity in producer services. Table 2.6: Wider economic impacts from Y-shaped, 60yr Net Present Value, split by district Leeds City Region Total wider economic impacts ( m, 2002 prices) % Producer Services (central case) Leeds 390 (350-390) 82% Bradford 80 (70-80) 72% Kirklees 60 (50-60) 66% Rest of LCR 220 (200-230) 75% Sheffield City Region Sheffield 250 (170-310) 82% Rotherham 60 (40-70) 75% Rest of SCR 110 (110-80) 77% Rest of East Midlands Nottingham 150 (90-150) 85% Derby 80 (30-80) 83% Rest of East Mids 120 (120-120) 70% North East Newcastle 20 (20-40) 80% Rest of North East 90 (70-120) 60% Birmingham City Region Birmingham 60 (50-60) 69% rest of BCR 50 (40-50) 57% London 540 (440-550) 69% Total 2,290 (1,880 2,380) 75% Source: Volterra WEI modelling C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 14
2.7 Further Measures of Economic Impact 2.7.1 Overview As discussed in section 2.6.2, the DfT s appraisal approach does not capture all of the wider impacts that high speed rail could have upon the UK s economic geography. In this section we consider a few methods which might help to gauge the scale of other potential benefits. This is undertaken through a removal of some of the constraining assumptions. 2.7.2 Employment The DfT s approach requires us to assume that the number and location of jobs, residents and businesses is independent of transport provision. This means that the standard approach to wider economic impacts estimates increases in productivity but this does not translate into increased employment. If we relax this assumption and assume instead that all increases in productivity are translated into increased employment, we can estimate the number of jobs which could be created. This results in an estimate of 1,000-1,100 new jobs, of which 550-650 would be in the Leeds and Sheffield City Regions. These jobs would be instead of the increased output numbers presented in tables 2.4-2.6, not additional. 2.7.3 Construction employment Construction of any development requires construction workers. The standard method used to estimate construction employment resulting from a development is described below: Estimate the total capital expenditure for the development; Divide this by the annual output of a construction worker in the UK; This gives the number of construction job years which the development will create; and The final step is then to convert this into either full time equivalents (FTEs) or simply jobs: Employment studies typically consider that one FTE job comprises 10 construction job years ; and Or, one can divide the total number of jobs by the planned length of construction and give the result as the number of jobs it will create over a set period. The estimated construction cost for the Leeds extension of HS2 is 13bn. Using the DfT s estimate of average output per construction worker, and inflating it from 2002 prices to 2009 prices, in line with the estimated construction cost, would result in an estimated employment of 21,500 FTEs as a result of building the HS2 extension to Leeds. Depending upon the length of construction, this may result in higher numbers of jobs, but for shorter periods of time. C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 15
Construction jobs are notoriously difficult to source locally as demand for workers shifts with developments and workers therefore tend to travel more than in other sectors. However this is a significant number of jobs required to build the line between the West Midlands and Leeds and in principle many of these jobs could be taken by Yorkshire and Humber and East Midlands residents. 2.7.4 Relaxing the assumptions still further As detailed previously, the DfT s approach requires us to assume that the number and location of jobs, residents and businesses are independent of transport provision. This means that the potential impact of transport investment upon land use decisions is missed from the existing analysis. KMPG carried out some work for Greengauge21 11 which relaxed this assumption and tested new methodologies. This study related productivity and employment density with a measure of connectivity and used this to model the potential increased productivity and employment which might be associated with the connectivity delivered by high speed rail. This approach is actually quite similar, methodologically, to the approach developed by Volterra to analyse the potential impacts of Thames Gateway Bridge. This study found that by 2040 employment in Yorkshire could be 50,000 higher with high speed rail. This represents an increase in employment of 2% on the level of employment anticipated in 2040 without high speed rail. Overall the study found that employment in the UK could be 26,000 higher (0.1%), with some regions 12 experiencing falls as well as some 13 experiencing rises. It also found that wage income could be 16.8bn higher across the UK if high speed rail is delivered, 3.7bn of which would be in Yorkshire. This reflects a 1% rise in wage income at the national level, and a 4% rise in wage income in Yorkshire. Although this methodology is not currently endorsed by DfT, this gives an indication of the potential magnitude of the benefits which are not currently captured by the DfT s appraisal methods. 2.8 The Number of People and Jobs Connected The proceeding sections have illustrated the strength of the economic case to develop a Y shaped high speed network, with a link to Leeds via the East Midlands and Sheffield. The strength of the case for this route is reinforced by the number of people and jobs that this would connect. Connecting the Three Cities and the Sheffield and Leeds City Regions via high speed would connect 6.7 million people and 3 million jobs. Hence, this would be a significant single economic zone of national importance. 11 Greengauge21: High Speed Rail in Britain: Consequences for employment and economic growth. February 2010 12 East (-40,000), East Midlands (-25,000), London (-59,000), South East (-71,000), South West (-48,000) and Wales (-21,000) 13 North East (46,000), North West (62,000), Scotland (64,000), West Midlands (68,000) and Yorkshire (49,000) C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 16
The table below summarises the relative sizes of the North East, North West, East Midlands and Yorkshire Regions and then compares the Manchester, Leeds and Sheffield city regions, the Three East Midlands Cities housing market areas (Nottingham, Leicester and Derby) and the Tyne & Wear and Tees Valley city regions in 2008. This shows that whilst the North West is the biggest region and Manchester is the largest city region, Yorkshire and Leeds are not much smaller by comparison. Once you begin to consider the East Midlands and Sheffield City Region, along with the East Midlands Three Cities, the eastern corridor clearly contains more economic activity. Table 2.7: The Number of People and Jobs by Region and City Region 2008 Absolute levels % of National Regions Employees Population Employees Population North East 1,031,100 2,575,500 3.9% 4.3% North West 3,004,100 6,875,700 11.3% 11.5% Yorkshire & the Humber 2,232,300 5,213,200 8.4% 8.7% East Midlands 1,891,300 4,433,000 7.1% 7.4% City Regions Manchester City Region 1,464,200 3,233,800 5.5% 5.4% Leeds City Region 1,214,300 2,694,600 4.6% 4.5% Sheffield City Region 710,500 1,762,100 2.7% 3.0% Three Cities 1,001,300 2,247,600 3.8% 3.8% Tyne & Wear City Region 650,300 1,500,700 2.4% 2.5% Tees Valley City Region 261,600 662,600 1.0% 1.1% 2.9 Conclusions We have completed a short review of the relative performance of the Y and Reverse S networks to serve the Sheffield and Leeds city regions by high speed rail. This analysis highlighted that the capital costs for the latter network would be significantly higher per kilometre compared with the Y shaped route, particularly for the section linking Leeds to the high speed rail network. Furthermore, the journey time savings for passengers travelling from Leeds to London using the Reverse S network would be relatively small compared with the Y shaped network via Sheffield and the East Midlands. As a result, the overall economic benefits generated by the Y shaped network are much higher compared with the Reverse S, and in addition to this, the portion from the Midlands to Leeds C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 17
generates a significantly higher BCR when compared with the overall scheme or the Midlands to Manchester portion. Furthermore, the benefits for the Sheffield city region are negligible unless a connection to the first phase of the high speed rail network in the Midlands is constructed. In addition to standard transport benefits, we estimate that the Y-shaped route could deliver some 2.3bn of productivity benefits. This is significantly higher than the Reverse-S option, which would deliver only 0.4bn of productivity benefits. Around half of these benefits accrue to the Leeds and Sheffield city regions, and are most strongly focussed in the cities themselves. The majority of the benefits are from increased productivity in Producer Services. Furthermore, the DfT s appraisal method does not capture all of the wider impacts that high speed rail could have upon the nation s economic geography. Work by Greengauge21 found that by 2040 employment in Yorkshire could be 50,000 (or 2%) higher and wage income could be 3.7bn (4%) higher if high speed rail is delivered. Although this work is based upon methods which are outside of the scope of existing DfT guidance, this gives some idea of the potential magnitude of further benefits which are not currently captured. This combination of factors provides a clear indication that a Y shaped network would generate higher benefits, be deliverable for lower costs and therefore give a stronger benefit cost ratio. C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 18
3 The Case for Progressing High Speed Rail Services and Routes to the Sheffield and Leeds City Regions and beyond as soon as possible 3.1 Introduction The proceeding chapter has clearly set out the level of benefits that could be generated through the introduction of a high speed service to the Sheffield and Leeds City Regions. Developing a connection to the North West prior to the introduction of a route to Yorkshire could create an imbalance in the economy of the north of England. As part of HS2 s proposals for the first phase of high speed from London to Birmingham a connection to the West Coast Main Line is included in the design. Whilst trains will operate at reduced speeds on this Line, it will create significant journey time savings. The inclusion of a connection to the Midland Main Line within these plans could help to ensure that an imbalance is not created. A link from Yorkshire to the high speed network is needed at the earliest possible opportunity. As well as providing access to London, it will provide significantly faster journey times to Heathrow. This chapter sets out the case for the progression of route to Yorkshire, including the interim solution of a connection from the Midland Main Line and onward connections beyond Leeds. 3.2 Progressing the route to the Leeds and Sheffield City Regions There are more potential benefits (in terms of jobs, population, and journey time savings) in providing a high speed route to the east of the Pennines. A route to Leeds, via the East Midlands and Sheffield would create a single economic zone consisting of 6.7 million people and connect 3 million jobs (see table 2.7). There could be a significant east-west imbalance created in the economy of the north of England if a route was progressed to Manchester in advance of a route to Leeds, or if the network shape brought Manchester within a far faster journey time of London than Leeds or Sheffield. Furthermore, a gap has also opened up between relative performance of the North West and Yorkshire, as shown in the figure below. Yorkshire s GVA trailed the North West slightly for the early 1990s, but caught up in the mid 90s and closely pegged the North West until 2005 when it started to diverge again. Between 2005 and 2008 the economy of the North West grew more quickly than that of Yorkshire. The creation of a connection to the North West in advance of a connection to Yorkshire could exacerbate this trend and generate an imbalance in the economy of the north of England. This could be detrimental to the Sheffield and Leeds City Regions. C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 19
Figure 3.1: Growth in GVA per head in Yorkshire and Humber and the North West, 1989-2008 20,000 18,000 16,000 North West Yorkshire & the Humber North West - Yorkshire Divide? 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1989 1990 1991 1992 1993 1994 1995 GVA per head ( ) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Office of National Statistics, Volterra Analysis 3.3 Connection to the First Phase of High Speed Rail 3.3.1 The Case The completion of the first phase of the proposed High Speed Line from London to the Midlands also creates opportunities to further reduce journey times to Sheffield, through the construction of a link to the Birmingham to Derby Line. The work by HS2 Ltd shows that as part of the first phase of the high speed link from London to Birmingham a connection to the West Coast Main Line would be incorporated. Initial alignment drawings prepared by HS2 Ltd indicate the high speed rail alignment would rejoin the West Coast Main Line near Lichfield, with a triangular junction near Water Orton and Coleshill to serve central Birmingham. An additional connection from the high speed line to the Derby Line could also be constructed as part of this first phase of high speed. Such a connection could potentially be located to the north east of Water Orton 14, see figure 3.2. Trains from London could serve Derby and Chesterfield en-route to Sheffield, potentially offering a saving of a further 13 minutes and reducing the end-to-end timing from London to just 102 minutes, see figure 3.3. With some longer distance trains from Sheffield diverting onto the high speed rail alignment, this creates an opportunity to improve other services using the Midland Main Line, for example, extra and / or faster trains from Nottingham. 14 see plan for reference: http://www.dft.gov.uk/pgr/rail/pi/highspeedrail/hs2ltd/route/keyplan.pdf C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 20
Figure 3.2: An interim solution to connect to the first phase of high speed rail Source: Arup C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 21
Figure 3.3: Potential improvements to the Midland Main Line, via a HS2 connection, and possible journey time savings Source: Arup analysis C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 22
3.3.2 Operational Considerations It is understood HS2 will be able to accommodate up to 14 trains per hour in each direction on average and a maximum of 18 trains per hour. This, along with services diverted from the existing WCML route could provide ample space in the timetable scope for hourly high speed services to Derby and Sheffield. There is a need for a greater understanding of the journey time savings that could be created by serving Nottingham; this will help to determine the strength of the case for a connection to the city. Figure 3.3 sets out the potential improvements that would be needed to create a high speed rail connection and the associated journey times that this would generate. There are a number of operational issues to consider between both Tamworth and Derby, and Derby to Sheffield. The section between Tamworth and Derby is mainly double track, although there are freight loops in the Burton on Trent area that enable passenger trains to overtake. There are also freight lines from Peartree to Derby. In developing a timetable for the high speed rail service there will be a need to avoid conflicts with the Cross Country services to North East and Scotland via Sheffield, plus the Birmingham to Nottingham trains. These services are operated by 125mph and 100mph rolling stock respectively, and there are differences in stopping patterns between Birmingham and Derby that could affect the timing of the high speed rail service. There are also significant freight flows to consider, which may themselves increase as a result of the greater capacity on the line. There are similar timetabling issues between Derby and Sheffield. The relatively high service frequencies, different operating speeds and stopping patterns affect capacity, particularly on the approach to Sheffield station. The journey time for the fastest service between Derby and Sheffield is 30-34 minutes. Hence there will be a need to ensure that these fastest journey times can be also be achieved on this high speed train service. In particular, the capacity issues between Dore and Sheffield will need to be carefully addressed. The delivery of junction improvements at Dore Junction during Control Period 5 will help to alleviate some of these constraints. 3.3.3 Capacity Improvements In addition to the journey time improvements between London and Sheffield that would generate new revenue, the new service via high speed rail could also deliver other benefits. For example, diverting a Sheffield service via HS2 could enable the total number of trains between South Yorkshire / East Midlands and London to be increased, thus enabling overall capacities to be boosted. The following summarises the likely change in hourly line capacities in each direction: Existing capacities per hour, per direction: 248 seats from Derby; 342 seats from Sheffield; 457 seats from Nottingham; 457 seats from Nottingham; and Total = 1504 seats. Future capacities per hour per direction: C:\DOCUMENTS AND SETTINGS\TOM.BRIDGES\DESKTOP\LCR & SCR HSR\FINAL TECHNICAL REPORT ISSUE.DOCX Page 23