1
Revised transcript of evidence taken before
The Select Committee on Economic Affairs
Evidence Session No. 17 Heard in Public Questions 192 - 202
Baroness Blackstone
Lord Carrington of Fulham
Lord Griffiths of Fforestfach
Lord Lawson of Blaby
Lord McFall of Alcluith
Lord May of Oxford
Lord Rowe-Beddoe
Lord Skidelsky
Baroness Wheatcroft
_______________________
Michèle Dix, Managing Director of Planning, Transport for London
Q192 The Chairman: Ms Dix, can I welcome you to this meeting of the Economic Affairs Committee? It is our 8th session of taking evidence in our inquiry into the Economic Case for HS2 and we are delighted that you are able to join us today. Thank you very much.
Network Rail's development director for Euston, who gave evidence at the Committee last month, raised some issues recently about the cost benefits for Euston Station. The minutes say that HS2, “simply could not get the costs and benefits of the scheme to balance in an affordable way”, so the designers have stopped work. This was reported in the Sunday Telegraph as being the end of the story for Euston. Could you give us an explanation of what is happening and what is planned to happen on the development of Euston?
Michèle Dix: I can tell you what I understand, having had a conversation with the mayor and David Higgins, which is that the work has not stopped. There is work that is still ongoing for Euston. The costs for Euston were higher than the envelope of costs expected for Euston. That work is ongoing to re-examine the scheme and the way it will be laid out, and they are seeking to bring those costs down. At the same time, they are also committing to deliver against the objectives for the Euston area plan, such that the scheme is properly integrated into the wider area. The aim is to produce a master plan for the area that is consistent with the Euston action plan, and then to understand how each component of that master plan can best be delivered. So as far as I understand, there will be a scheme at Euston. It will be brought back to the Committee next year, towards the end of the summer, and we will want to work closely with HS2, Network Rail and others to ensure that the design of that layout fits with our own aspirations.
The Chairman: I presume this work has been ongoing for some considerable time already, so can we infer from this pause or delay, or however you like to describe it, that there is some difficulty in achieving the overall objectives within the cost envelope that has been suggested?
Michèle Dix: What was put into the hybrid Bill was not thought to be a satisfactory solution. Sir David had said that he wanted to review the scheme within the hybrid Bill and to come back this December with some additional provisions for a revised Euston Station. The aspirations were that the whole station would be a level station, so HS2 platforms, the Network Rail platforms, would be levelled. When they looked at producing that scheme, which most people would support given the fit with the area plan, the costs were deemed to be too high but the construction time to deliver it was also considered to be too long. So effectively they have gone back to the drawing board to ensure that they can come up with a design that fits in with the cost envelope but still meets the aspirations for the area. As I said, we want to be very much part of that to make sure that the bits that we are concerned about are still addressed within that plan.
The Chairman: What role does TfL have in the preparation of this plan and the discussion of this plan?
Michèle Dix: The Euston area action plan is something that the London Borough of Camden produced as a planning authority. They have had a board that has comprised members of TfL, the GLA, HS2, the Department for Transport and Network Rail to come up with a plan that has been consulted upon, and as I said the ambition was that the plan for Euston itself should fit with that overarching plan. The design that was on the table did fit up until recently, but the work they have done shows that the cost of developing and delivering that, and the timetable for delivering that, exceeds the envelope that they have.
One of the discussions was whether or not, if you developed Euston in that way, you could give rise to a greater economic uplift and whether or not that economic uplift would justify the additional costs. As I understand it, they have concluded that it does not. But we would want to work closely with them to understand why and to influence their design. What we do not want is a fragmented approach to Euston whereby they just deliver the HS2 platforms but do not make the improvements that are needed to the Network Rail side of the station, or—importantly for us—the improvements that are required on the underground and those for onward travel, be it by bus, cycling, walking or taxi. Making sure that it is integrated and that it does include some of these important cross-station walk links are certainly a key feature of the Euston plan, so that the local community is not severed by the station.
Another key thing that we want to make sure is still within that plan when it comes back is that there is a direct link between Euston Station and Euston Square, which again helps with the onward dispersal of passengers—passengers being able to get on to the Hammersmith and City and Circle lines. A key part for us in TfL is making sure that the redesign of Euston fits in with the designs that we are developing for Crossrail 2, because we know from our own work that when Euston is up and running—particularly with phase two of HS2—the volume of people arriving at Euston will exceed the capacity on the Underground lines, even after all the upgrades that we are going through, and we will need additional Underground capacity in the form of Crossrail 2 to help with that dispersal. We have been working closely with them to ensure that there is a link between the stations and that it fits together.
The Chairman: So Crossrail 2 is an essential additional investment that needs to be made to make HS2 work when it is fully built?
Michèle Dix: We have argued that Crossrail 2 needs to be opened before phase two of HS2 goes live in order to help with that dispersal, otherwise the benefits that HS2 claims—particularly the journey time savings of people getting to London quicker—will be lost if people then stand in queues waiting to get on to the Underground.
The Chairman: Just remind us what the total cost of Crossrail 2 is.
Michèle Dix: The total cost of Crossrail 2, depending on which scheme you go for—and we are promoting the regional scheme—including all the optimism bias and so on, Network Rail and rolling stock is £27 billion.
The Chairman: It is £27 billion. Thank you.
Q193 Lord Lawson of Blaby: Following on from the discussion about Euston, you have talked in general terms. Can you give some numbers? Crossrail 2, you have just said, is £27 billion, so in a sense, because it is necessitated by the HS2 project, as you have said, that is really an additional cost of HS2. In addition, you have said that with the transformation of Euston Station—I am not quite sure whether this is to include the Underground station as well, which again you have indicated is going to be necessary, but maybe that is in the Crossrail £27 billion figure—there is a problem because it is running ahead of budget. I understand that the original budget was £2 billion. Can you give an indication of how much above budget it is running? We have had evidence that it is likely to be something like £7 billion. Does that accord with your own analysis?
Michèle Dix: As I understand it, the scheme they had on the table until recently would be about £4 billion to £4.5 billion. Obviously that does not include Crossrail 2, but it does include the works required for the Underground and the Network Rail platforms, as well as the HS2 design, because effectively it was levelling all of it. That is £4.5 billion, and the envelope is to see whether it could be delivered for nearer £2 billion.
Lord Lawson of Blaby: You are quite experienced in this area. That is unlikely, is it not, because in practice with these schemes, costs tend to rise rather than fall, even though you may be able to contain to some extent the amount by which they rise. It is unlikely to be less than it now looks at the present time, is it not?
Michèle Dix: Sometimes costs go down. The optimism bias figure can go down because you have designed the scheme in more detail, so you do not need to add such a large optimism bias. We want to work with Network Rail and HS2, as I said, to ensure that whatever the design that comes out it works and that the plan for the area is an integrated plan, so that even if the proposals are such that they build it in sections, they build it to a plan that delivers a proper scheme for the whole area. TfL would want to see that our station—nothing to do with Crossrail 2, but the station at Euston itself—is an integral part of that plan and is paid for as part of the HS2 costs, because you need to upgrade the station to accommodate the people coming in just to the ticket hall area before you even go down to the platforms. We want to make sure that is an integral part of the cost for HS2, and we will work with the HS2 and Network Rail teams to try to make that whole thing work.
At the same time, we would not be prepared to see things that should be in that scheme omitted from that scheme. We want to work with them and so, before they come back with a proposal, we are trying to influence their design.
Lord Lawson of Blaby: One last point about Crossrail 2. I think you said—and certainly this is the view of the Mayor of London—that Crossrail 2 has to be completed to make sense of HS2. What is the timescale for this? When will it be completed and what is this £27 billion expenditure? Do you know how that is phased over the next five years, say?
Michèle Dix: We have said that Crossrail 2 needs to be in place before phase two of HS2 is completed. If you just built phase one up to Birmingham, the level of flows that come into Euston can be accommodated on the Tube with the uplift that we are providing on the Tube. When you build phase two you double the flows that come through Euston and you will need the Crossrail 2 capacity going through Euston. Crossrail 2, though, is not dependent on HS2. Crossrail 2 is needed regardless of HS2, so we are progressing Crossrail 2 separately. But because we want Crossrail 2 to go past Euston, to help to relieve the pressure at HS2 we want to make sure that the works that we do on Crossrail 2 align properly with the works associated with HS2. If you can build them together so that you only have to have one worksite, one hole and one mess, that would be better.
Our timelines for taking Crossrail 2 forward are that we are currently in a consultation. The DfT has issued a consultation on the safeguarding for Crossrail 2, which is an amendment of the old Chelsea-Hackney line to accord with the new route that we have determined following consultation, subject to getting confirmation from the Secretary of State on that. We are preparing a more detailed case for Crossrail 2 to go back to the Government for the comprehensive spending review next year, along with all our own ideas as to how Londoners can help to pay to deliver Crossrail 2. It is not going to the Government and saying, “Give us a grant for the lot”. It is, “How can we come up with a mechanism that shows that we can get funding from other sources?”. Subject to that, we would seek to prepare Crossrail 2 to submit for powers in 2017 in the hope that we get them by 2019, can start constructing it in 2020 and can have it built by 2030—before phase two of HS2.
Lord Carrington: Just to clarify something, because I am not terribly clear, you were talking about having HS2 and Network Rail on the level at Euston. In simplistic terms, does that mean that there are no steps between the platform levels, or am I misunderstanding?
Michèle Dix: The aim is to level the lot. At the moment you have the HS2 coming in at a lower level, so you would have to lower the Network Rail tracks. But the proposals that are being considered at present are to keep the Network Rail tracks where they are and to bring the HS2 lines in at a different level. That is not completely unworkable, but it has to look like a complete station from the outside. You do not want a bit of a box here and then a new box added on to it. What we do not want to see is what we felt happened with Waterloo. When the Eurostar platforms were added to Waterloo they were just like an add-on. We want the same comprehensive plan that is being done for King’s Cross, where the whole thing is a comprehensive redesign. That has a much more significant effect, so that is what we want to see. If they can do that, even by keeping the platforms at different levels but making sure there is good access, and making it look comprehensive from the outside and meeting the other ambitions for taxi provision, bus provision, cycling and walking provision, then fine.
Lord Carrington: When you say “look comprehensive from the outside” how important is that? Going from one platform to another is what is important, is it not, rather than the aesthetics of what the station looks like?
Michèle Dix: It is, but there are two things. If you are bringing more people into London and you have the opportunity for more development in that area—particularly oversight development—you want to capture that, so you would want the opportunity to have oversight development and have the frontage look comprehensive. You do not want it to look like some temporary building added to what is there already. There are some people who also want the Euston Arch popping back in front as well.
Q194 Lord Carrington: Absolutely. On the first stage of HS2 coming through to Birmingham, how many passengers would that produce, would you estimate, into Euston?
Michèle Dix: With HS2 phase two we add another 30,000, which is a doubling of number of the passengers.
Lord Carrington: That is 30,000 in the peak time in the morning?
Michèle Dix: Yes, in the am peak period, and I think it is about half of that in phase one.
Lord Carrington: So it is 45,000 in total?
Michèle Dix: With phase two it is 60,000. You are adding 30,000 more.
Lord Carrington: So you have 60,000 coming in?
Michèle Dix: Yes.
Lord Carrington: But you can cope with the ones that come from Birmingham, can you, because Euston is pretty crowded now in the morning with the Underground?
Michèle Dix: We are upgrading the Northern Line. We have upgraded the Victoria Line. We have further upgrades that we are making across the whole network, which is adding capacity to the Underground network generally. We have Crossrail 1 in 2018, and all these things cause some people's journeys to change so that you can accommodate more on the system. We are sort of playing catch-up with growth in the sense that if we look at the growth that is taking place, even though we are providing additional capacity, that gets filled up. So when HS2 phase two comes along there is what we call reference case growth, and then there is the addition of phase two, added to phase one, which tips it.
Lord Carrington: These passenger numbers, particularly on phase two, are the ones you have from the HS2 project team, or are they your own assessment of it?
Michèle Dix: They are ones that we have worked with with them, because we have our own rail plan model and they have their PLANET model. Our planners have been working with their planners in order to understand the flows at Euston and, in particular, because our models are more accurate for measuring crowding, then to understand the knock-on effects on our wider area.
Lord Carrington: You are confident that those numbers are robust?
Michèle Dix: We have been looking at them, we have been scrutinised by HS2 on them many times and we are confident that our numbers are robust.
Lord Carrington: One last question then, coming back a bit on to Crossrail 2, if you are constructing Crossrail 2 during the period when you have the first phase of HS2 coming into Euston, it is going to be a bit of a mess, is it not? Are you going to be able to cope with the construction project of Crossrail 2 disrupting the new Euston Station, at the same time as getting all this extra traffic coming into Euston Station?
Michèle Dix: Crossrail 2 is completely under the ground and the design of Euston Station, which makes provision for Crossrail 2, is to provide access down from the ticket hall at Euston to Crossrail 2. We have identified within the area certain worksites that we want to use in which we can get down into the ground. We will be doing the works, but the sensible thing is to try to do those works at the same time but to co-ordinate them rather than to do Euston, make it all nice again and then come back just a few years later and dig it up again. One would like to co-ordinate them.
Lord Carrington: Crossrail 1 has created quite a lot of disruption on the Underground network during the construction phase.
Michèle Dix: I think it is being quite well managed though, given the scale of development that is taking place.
Lord Carrington: Indeed, but it has shut down quite a lot of interchanges.
Michèle Dix: For required periods of time, but as with the Bond Street Station it has been opened again in time for Christmas, so all those works can continue.
Q195 Lord Rowe-Beddoe: Could we turn now to the Stratford Spur? The Committee received written evidence, as I am sure you must be aware, from the London Borough of Newham, which is very concerned about this whole question. They say, “A link with robust capacity would enable Stratford International to play a supportive role in serving additional growth”, and so on. What are your comments on that?
Michèle Dix: We objected to the original HS1-HS2 link that was in the original proposals, because it would have been totally inadequate and it would have had an adverse effect on our own overground trains. We wanted to see that link taken out, but at the same time we want to see a proper link put back in. So we do want to see an HS1-HS2 link provided but we would like to see that as a twin-bore tunnel that went from Old Oak Common to join with HS1 and onward to Stratford. We did some work with Jim Steer and SYSTRA on the case for that link, because HS2 considered that it would not be well used and could not justify further investment over and above the proposals that they had. We would argue that that particular link, if put in place, would certainly help with the regional movements across London and the wider south-east towards the north, as well as provide a direct link to Europe. So we will continue to lobby HS2 for work to be done on looking at a link between HS1 and HS2.
Lord Rowe-Beddoe: Thank you. No doubt you have had the conversations with the Borough of Newham. Are they aware of what is going on currently?
Michèle Dix: I do not know if they are aware of the later stuff, because when we spoke to HS2 about the work that they are doing we asked to be more involved in the options that they are looking at. They say that they are looking at the wider networks, so this is not necessarily a link between HS2 at Old Oak Common and HS1 at Stratford but a wider network beyond London. If they are, we would want to understand what they are joining to what and what benefits that would deliver.
What one would not want is to miss the opportunity to be able to provide that link between HS1 and HS2, particularly when they are doing the tunnelling work around Old Oak Common. We have told them previously that if, when they are doing that tunnelling work, they could provide what we call a little spur that was big enough to get a tunnel boring machine in, even though they did not then provide the link now they would be able to go back and start tunnelling again at a later stage without causing disruption. We would like that work to be done to examine whether that particular location is the best location for providing that link.
Again, it is one of the things on which we want to work with HS2 and Network Rail so that we can understand what they are doing about that, certainly before we get to the Select Committee stage.
Lord Rowe-Beddoe: I assume that Newham would know of this and should be somewhat relieved.
Michèle Dix: There is no guarantee that there will be such a link. As we understand it, the current thinking of HS2 is that they are not necessarily looking at what we are asking them to look at. They are looking wider afield at where there can be some connections somehow in relation to the East Coast Main Line. But we want to understand what their proposals are and importantly then to say, “If you do not have a firm proposal, please make passive provision in the current Bill for a link to go from Old Oak Common through to HS1 now”.
Lord Rowe-Beddoe: Finally on this point, and I am sorry to push it, Newham said in its written evidence that the absence of a link, putting it in a negative way, would, “greatly reduce the prospect of ever substantially improving the connection”—and this is the interesting one—“between east London, Kent and Essex with the regional cities”. So they are looking further than themselves, so to speak.
Michèle Dix: Yes. Based on the work that we did with Jim Steer and SYSTRA, when you look at the volumes of traffic that would go through that link—so if you were able to join HS1 and HS2 with a direct link—you would see much more activity not only in east London going northwards but into Kent going northwards, more so than perhaps the activity going across the Channel. Linking the south-east with the north would be a valuable regional link.
Lord Skidelsky: Arising from that, are you satisfied that these various schemes are being adequately co-ordinated? It seems to me there are quite a lot of things going on: a lot of possible links, spurs, different timescales, and consultations. Is there a danger that a lot of things will be done that in the end do not make any sense as part of an overall plan? Whose job is it to knock heads together when it really comes to the point?
Michèle Dix: Within TfL and the Mayor's Office we are very keen to ensure that all these things are joined together, because they are affecting London and the connections to London. HS1 and HS2 are something that we are actively keeping on the table because it is important for us to have that link, but because we are not the promoter we have to lobby, petition, argue or engage to make those changes come about. So there is an overview of what is going on, but then there is a requirement to influence how things are taken forward.
Lord Skidelsky: So ultimately it is the Secretary of State who decides?
Michèle Dix: Ultimately, yes.
Lord Skidelsky: But you lobby?
Michèle Dix: We lobby. We do the work and we say, “If you do this, it fits in with that. If you do this, then please make provision for that”. We want to do that through collaborative working, being part of forums, boards and so on, but when we cannot achieve it through collaborative working we petition.
Q196 Lord Griffiths of Fforestfach: We have received evidence from the Mayor of London, who argued that the full benefits of HS2 for London were not being captured by traditional cost-benefit analysis because that is more appropriate if you have an incremental improvement to an existing structure. He argued that what you have here is a major restructuring through HS2. To what extent do you think there are other things that we should take into account in the cost-benefit calculation, and if there are, what should they be?
Michèle Dix: There are two ways of answering that. The first is that when we are evaluating schemes we look at a strategic appraisal framework: what are the broad objectives, particularly for London; what are the Mayor’s transport objectives; and how does the scheme compare against those objectives? They are not all monetised into some value, so we are looking at wider accessibility, supporting regeneration, jobs and growth, physical accessibility, quality of life, safety, security, and so on. In complying with government, though, we will calculate BCRs and the wider economic benefits. In fact, the work that we did on Crossrail 1 was a starter for including, in that wider economic benefit, the impact on jobs and growth through agglomeration benefits and through increased productivity benefits. That effectively doubled the benefits associated with Crossrail 1. So that has been incorporated into WebTAG.
We also recognise, particularly in London, that because a large proportion of foreign direct investment gets made in London and because London is competing on a global scale, it is bringing new jobs. There is an element of increased connectivity that is also attracting new jobs into the equation, not just relocated jobs and not just more productive jobs. So for the Northern Line extension then, in the various scenarios that we calculated we looked at the impact of new jobs coming to London as well as more productive jobs and jobs generally being more active. That bit makes quite a big difference. Separately, that means taking a traditional BCR approach and then adding these wider economic benefits, so with the Northern Line you effectively double the benefits associated with that.
One thing that we have done recently—and I notice that Bridget Rosewell came to speak to your Committee—is commission Volterra to do a piece of work with Transport for Greater Manchester on how we can case-make for transport investment, particularly in association with supporting jobs and growth. The recommended approach, which we would have to argue with Treasury, is to look at it slightly differently and to ask, “What could the future look like in an area? How could this be developed? How many jobs could you support in this area? What transport infrastructure is required to support that new future? Does that new future then provide some sort of payback mechanism to cover the costs of the transport infrastructure?”, which is different from the way we do it at present. It is the way that we feel we will need to make the case, particularly if we are moving to a world where less money is available. Then you are thinking of mechanisms outside of just straightforward grants to be able to pay for infrastructure schemes.
Q197 Lord Griffiths of Fforestfach: You mentioned that with a Northern Line extension there were two methodologies, and that using the larger methodology or the greater, more extended methodology doubled the benefits. Do you have any sense of what the multiple would be for this particular scheme if you were to apply the larger methodology?
Michèle Dix: I do not know what the sense would be for the whole of the scheme, because we have not looked at the whole of the scheme. What we have been arguing with the department is that if you imagine the future and then you imagine the transport requirements for that future, such as Old Oak Common, it is not just a question of having an HS2 line running through it and a station intersecting with Crossrail and that is it, because that is not going to deliver future growth in that area. What is required, then, is the local connections that will enable people in the vicinity, the local people, to get to that location to support the jobs that can take place there and to allow more people to go through that area. Part of the debate for Old Oak Common is that if you want Old Oak Common to be able to grow and benefit from HS2, and if you also want HS2 to be able to claim wider economic benefits, then looking at the local connections and ensuring that they are part of the scheme becomes very important. The work that we did at Old Oak Common, in conjunction with Jones Lang LaSalle, was to look at the development that could take place around Old Oak Common and then to look at the infrastructure requirements associated with that on top of HS2 and Crossrail 2.
A key piece of infrastructure would be needed, because you have two railway lines—the West London Line and the North London Line just running past Old Oak Common—but no station, and you could go past the development site but you could not get off. Therefore, you need to put two stations there so that you can get off and then you can access HS2 and Crossrail 2. They would then help to deliver the uplift in value that would be associated with that development, which would then add to the benefits of the scheme. That is the approach.
Lord Griffiths of Fforestfach: They would also involve a cost?
Michèle Dix: They would involve a cost, but the cost could be covered by the uplift in the scheme because of their existence. If they are not there, all you have is an interchange.
The Chairman: We are coming to Old Oak Common in a bit more detail in a minute, but you have your own model in London. Does your model come up with an overall benefit to London from the investment in HS2, and how much of that is included in the calculation that the DfT has done?
Michèle Dix: TfL has not calculated a value. Some work was done in association with the Growth Taskforce, which identified development value uplift, which I think was of the magnitude of over £5 billion, but that did not come from TfL.
The Chairman: So in addition to the benefit that was included in the model done by the DfT?
Michèle Dix: The DfT did not include that. That was in association with the work done by Lord Deighton. The DfT does a calculation that is a BCR and then calculates the wider economic benefits. Then there is this additional bit that looks at the economic value, the uplift, in terms of land values. We are interested in how to capture that, particularly by developing a mechanism by which you can get some payback. If you take the Northern Line extension as an example, it would cost us £1 billion to build the link. The link was needed to support the scale of development. The development could not go ahead without the link, but the link could not go ahead without a mechanism for getting some payback from the development. The mechanisms were the community infrastructure levy and the business rate supplement.
Lord Griffiths of Fforestfach: The study done by Lord Deighton, that would have been a Treasury study, would it?
Michèle Dix: He did a piece of work with the taskforce and he collected evidence from—
Lord Griffiths of Fforestfach: Before he was a Minister?
Michèle Dix: No, he did this work last year. He led a taskforce last year that involved holding stakeholder groups with key stakeholders along the route: Birmingham, London, various stakeholders, collecting evidence.
Q198 Lord McFall of Alcluith: Can I bring you back to the Chairman’s question? In written evidence to us, the mayor said that analysis by Transport for London has suggested that the addition of a new station in west London could boost the London economy by at least £3 billion.
Michèle Dix: That is specifically in relation to Old Oak Common, so that is the Jones Lang LaSalle work.
Lord McFall of Alcluith: How do you get to that figure? Give us an idea.
Michèle Dix: That was on the basis of looking at the development opportunities that could be supported at Old Oak Common and the impact that the overground connections in particular, which I just referred to, would make in allowing more people to access that area within 30 minutes, 45 minutes and 60 minutes.
Lord McFall of Alcluith: Yes, but have you taken into consideration the fact that the proportion of jobs at Old Oak Common and Euston could be jobs that were displaced from elsewhere?
Michèle Dix: This is the big argument about increased productivity and this is the case that we were making with Manchester last week. It is not a zero-sum game. There are additional jobs that can come into the economy. It is not just a case of displacing a job from one area to another area. With London, there is a lot of direct foreign investment into London whereby jobs are coming to London not from Manchester or Leeds but from Tokyo or Paris. Therefore, that is additional.
Lord McFall of Alcluith: What you are saying to me is that this is dependent on increased productivity, but if you look at our productivity over the past 40 or 50 years in the UK it has not been that great. Is this a magical solution that is coming to increase the productivity now?
Michèle Dix: No. The department accepts the increased productivity. So of the work that was done on Crossrail, the department accepts the two bits that were done for Crossrail 1. They accept that there is an agglomeration effect. If you increase accessibility to an area, the people within that area become more productive and there is an agglomeration benefit. That is taken into account in the department’s WebTAG proposals.
They also accept, if you look at the relationship between density of jobs, that there is a relationship between how dense an area is in terms of employment activity, the wages associated with that and the output. If you get more people into an area and they become more dense, there is an uplift there. Both those factors are taken into account in WebTAG. They were things that were done as part of Crossrail 1. They are now part of WebTAG.
The bit that they have not accepted—the bit that we want to argue for—is that there are also new jobs. It is not a case of jobs moving from one area to another just because you made it more accessible; there are new jobs that come in from elsewhere because we are part of a global economy. The question is how you attract those new jobs from other countries into the country in order to add to that.
Q199 Lord McFall of Alcluith: I use Euston quite regularly, and it is a very busy station. We have a £2 billion project here. For the life of me, I cannot think that if you have a £2 billion project there will not be some great discomfort over quite a period of time to passengers, given the tightness of the situation there just now. We have—what is it?—17 platforms in use at the moment all on the one level. What is Euston going to look like? As a commuter, is it going to be worth my while having a weekly journey from Scotland to Euston for the next few years, or do I not have anything to worry about?
Michèle Dix: If your question is whether Euston is going to be busy and whether something needs to be done about it, the answer is yes.
Lord McFall of Alcluith: No, my question is going to be: I am going to come down from Scotland and there is going to be a £2 billion project at Euston, so is it worth my while to persevere in coming down to Euston? In other words, will the quality of my travelling life be good or will there be an adverse effect on the quality of people’s travelling lives? That is what I am trying to get at, because £2 billion is one hell of a big sum.
Michèle Dix: In TfL, we support HS2 because we support increased connectivity to the rest of the country and—
Lord McFall of Alcluith: Yes, but I am interested in Euston.
Michèle Dix: No, but that is because the lines coming into London, into Euston, will get busier and busier. You talk about it being uncomfortable. Euston will be crowded. King’s Cross will be crowded. Paddington will be crowded. The lines coming into these stations will be crowded. The Underground will be crowded.
Lord McFall of Alcluith: It is crowded at the moment.
Michèle Dix: It is more crowded than people thought at this stage because the population and number of visitors have grown more quickly than we thought. It will be crowded. We need to do something about it. We very much support HS2 because it can provide new capacity. It is going to provide new capacity linking London to the rest of the UK. Yes, we want to see those improvements take place.
Lord McFall of Alcluith: I understand that you do. I am just trying to get a bit of a qualitative sense from you. What would the impact be? I have nothing against it, but when you have a £2 billion scheme it is quite considerable. What do you think the impact will be on the travelling public over the next few years? Is that a real big thing for that change in Euston?
Michèle Dix: There will be an impact on the travelling public if no improvements are made at Euston and if capacity is not provided for the reasons—
Lord McFall of Alcluith: I understand that. I am asking you about this project. I am asking you to turn your attention to this project, if you can, and the impact that there will be on the travelling public. I understand that if we do not do anything about it there is going to be an impact later on down the line, but you have decided that you are going to do something about it: a £2 billion project. What will the impact be, do you think?
Michèle Dix: On the travelling public?
Lord McFall of Alcluith: Yes.
Michèle Dix: It will be better than not spending £2 billion on the travelling public, because you are going to provide for the travelling public. If you do not spend any money—I am not sure whether your question is: should we spend money on—
Lord McFall of Alcluith: My question is dead simple. I am coming into London, Euston every week, and I am told there is a big project coming along. I want to know what impact that will have on the travelling public. I do not need theory about what it will be like in 10 or 15 years if we do not do anything, just what it will be like with the project as it goes ahead.
Michèle Dix: It will depend on what the scheme looks like, because at the moment we do not know what the scheme is. There was a scheme on the table a few months ago. There is no scheme on the table now. I am not designing the scheme.
Lord McFall of Alcluith: I understand that.
Michèle Dix: I am TfL. HS2 and DfT are designing the scheme with Network Rail. We want to influence the shape of the scheme, such that the travelling public and the people who live in that locality have a station that works. What will £2 billion look like? It depends in part on what comes out of the design, but we hope that it will look like a station that works and that is accessible, a station where onward distribution is easy and where it is obvious where you go when you come out of the station.
Lord McFall of Alcluith: Okay, thanks.
The Chairman: I think we have exhausted that one.
Lord McFall of Alcluith: Yes.
Michèle Dix: I am sorry if I have not understood your question properly. I apologise.
The Chairman: I think “very crowded” is probably one answer.
Q200 Lord Skidelsky: We heard evidence from cities in the north that due to specialisations they see themselves as complementary to London rather than direct competitors. Would you agree?
Michèle Dix: Yes.
Lord Skidelsky: Last week Mike Blackburn, from the North West Business Leadership Team, told the Committee that Manchester is complementary to, rather than competes with London. He cited areas such as the development of graphene in which Manchester is a world leader. Similarly, Jerry Blackett, chief executive of the Birmingham Chamber of Commerce, said that Birmingham’s competition came from outside rather than inside the UK. In written evidence, the Mayor of London said that the benefits from HS2 “should not be seen as a ‘zero sum game’. Improving connections between the UK’s regions will help create several clusters of economic activity that are more internationally competitive”. You mentioned earlier that you accept the agglomeration argument; in other words, you accept the case that clusters improve productivity. Is there robust evidence that that is the case?
Michèle Dix: There is evidence in other countries, in the Rhine and in the Amsterdam region, that that is the case. Because, as I say, we are working with Manchester, Leeds and Sheffield, we would be supportive of the linkages between them so that they can create a cluster. The interesting thing is how close Leeds and Manchester are. A line between them would be no longer than the Central Line. So we would support a clustering of the northern cities.
Lord Skidelsky: But the benefits of the clustering are offset by the disbenefits of congestion?
Michèle Dix: I am not sure they would be offset by disbenefits. The clustering will work if the transport infrastructure is in place to enable that clustering to work.
Lord Skidelsky: The transport system that you are planning is designed to accommodate the increased clustering that you think is desirable. How far does that logic go? Is there no limit to clusters? Is there no limit to the growth of London’s population?
Michèle Dix: I am talking about clustering of the northern cities to form a cluster themselves.
Lord Skidelsky: Yes, but the argument is more general than that.
Michèle Dix: In terms of London being a centre and the northern cities forming a centre through clustering, they can form a centre through clustering if they have the right transport connections between them. We would support proposals for a link that connected Manchester and Leeds so that you had a wider catchment area for the centre of Manchester support, and similarly Leeds and Sheffield so that you get more agglomeration. We do not see that as being in competition with London.
Lord Skidelsky: Leaving aside the competitive bit, just on the general point, you regard the function of a transport system to accommodate whatever population increase other economic forces may be producing. Is that right? In London terms, that is the logic of the mayor’s argument. London’s population will just grow. We know that it is going to grow. It is projected to grow, so we must provide a transport system to accommodate that growth.
Michèle Dix: We have looked at the growth of London in the context of the 2050 plan, we looked at the mayor’s transport strategy back in 2010, and we have looked at whether or not you can disperse some of the economic activity within London, and so more of the housing activity, such as to reduce the activity in the centre. From a transport planner’s world, does that lead to a less congested, better plan? The work that we did then showed that it does not necessarily do so, because in some instances if you do not have the concentration of links, some of the public transport links that you would provide would not be as justified. Some of the tests that we did there led to more car traffic, particularly in the outer areas.
The key to all that was not so much whether or not from a transport perspective we could reshape London by providing different links but who, in part, wanted to invest where. If people are coming to London and saying, “We want to invest in this location and we are not interested in investing in that location”, the question is: do you turn them away or do you seek to accommodate them? The pressure is to accommodate people who want to be located in and around the centre. That is why you are seeing more development outside the traditional CAZ area—the central activities zone—and the expansion of that, because there is a desire to expand in that area. You either respond to it or you do not.
Lord Skidelsky: But there is a limit to how much you can respond, is there not? There is just a limit of land.
Michèle Dix: There is a limit to the quality of life, yes, and whether or not people are prepared to accept the densities associated with that. In any design you would want to ensure that places were designed such that there was good quality of life and you were taking care of air quality, providing spaces and providing transport links that were pleasant to travel on. They are important factors, and certainly part of the 2050 discussion has been about continuing support of the centre and how you can spread some of that activity further afield, particularly housing and the densification of housing.
Lord Skidelsky: That is dispersal.
Michèle Dix: Yes. These are options to be considered where people are saying, “I want to be in the centre”. Going back to the Volterra work that I referred to, Volterra is looking at the relationship between the productivity of jobs and the density of jobs. The central area and the Canary Wharf area occupy about 1% to 2% of the London area. They accommodate 30% of the London jobs, and on average those jobs are 70% more productive than average jobs elsewhere.
Lord Skidelsky: That would include jobs in the retail and service sectors? Restaurants, everything, becomes more productive?
Michèle Dix: All jobs in that area, because those jobs are also helping support other jobs.
Lord Skidelsky: Okay, thank you.
Q201 Lord May of Oxford: I will read you the title of the question here. I am strongly tempted, and trying to resist it, to say that I find much of this discussion leaving me grateful that all my life I have moved in a world where the people I have to deal with know what they are doing, have a focused approach to interacting with people, and you can have coherent conversations with them. I find this painful. Having said that, I will go back to the question here, and God knows what will then follow. Do you think London will gain proportionately more benefit from HS2 than the cities of the north and the Midlands? Last week, council and business leaders from Manchester and Birmingham were confident about the regional benefits that it would bring, and people in Sheffield and Leeds were a little more cautious, thinking it was a risk that London would benefit more. Of course, the Mayor of London said, “There is a highly visible and powerful risk that London and the south-east will become still more unbalanced”. Then people went on talking about it and there was very little in the way of believable quantitative analysis. I wonder if you could tell me that I am wrong.
Michèle Dix: On what? On whether London will benefit more or the regions would benefit more? I would just say that I am not responsible for the economic evaluation of HS2. I am responsible for how HS2 interacts with London and how we can ensure that the design of HS2 is such that we get the most out of it.
In terms of whether or not the regions will gain more than London, I think the regions have more to gain than London, but London supports HS2 for the reasons I gave before: it will provide increased capacity and capacity is at a premium, the trains are loaded, and we would welcome those increased provisions.
Lord May of Oxford: You think, “Just go ahead and do it, it will be vaguely a good thing for everybody”?
Michèle Dix: I think it is a good thing for everybody, and I do not know why that is incomprehensible.
Lord May of Oxford: It is the lack of coherent underpinning analysis that I find painful. I am not talking about you, in particular, but of a long-winded—
The Chairman: In this context, we had Emile Quinet, a French transport economist who is very familiar with the TGV, and he made it clear that all the evidence suggested that the capital city benefited to a much greater extent than the long distance cities that were joined in. That was based on quite a lot of actual data. That was the conclusion we drew from him, but in a sense that takes us to the next question.
Q202 Baroness Wheatcroft: It does. Thank you, Chairman. Understanding that you are not responsible for the economic arguments in favour of HS2, TfL does want to ensure that London functions from a transport point of view. Among his numerous statements, the mayor appears to have said that for the capital Crossrail 2 is more important than HS2. Do you have a view on that?
Michèle Dix: I would say that we value both schemes. Both schemes are in the mayor’s transport strategy. Both schemes perform slightly different functions. Crossrail 2 is necessary for the capital because of the growth, and as I said before we have people who are living in London, living longer, and having more babies. Even though more people are coming into London to work, not as many people are going elsewhere because we are growing older, living longer. We are also attracting a lot of visitors, so all—
Baroness Wheatcroft: So Crossrail 2 is necessary. Would it be fair to say that Crossrail 2 is essential, and as far as the capital is concerned HS2 would be nice?
Michèle Dix: I would say that Crossrail 2 performs three distinct objectives. First, it relieves the congestion that will otherwise arise in the centre. Secondly, it is a solution to the problems that exist on south-west trains, in the sense that they cannot get any more mainline paths into Waterloo. They have problems at Waterloo so if we can take some of those suburban trains off those paths and stick those in a tunnel under London that would help solve quite a lot of the congestion problems in the south-west. The third element is opening up the whole of the Upper Lee Valley for improved connectivity. A key aspect of that, but all the way along the route, is that Crossrail 2 would support the development of up to 200,000 new homes, and one thing that London does desperately need is new homes. Crossrail 2 will be needed regardless of whether or not there is an HS2. We support HS2 for the reason I have given: because all the mainline trains coming into London in the future will be beyond capacity. They will be very busy. Something like 70% of all the trips that will be using HS2 will have a trip origin and a trip destination in London, because London is the capital city and is obviously a gateway to the rest of the UK. People want to come here in the same way as people want to go to those cities. They are equally important for London.
Baroness Wheatcroft: If one has to prioritise—and that is usually the case—which would you prioritise, and would it be right to say, as has been said I think, that it would be foolhardy to do HS2 and open HS2 into London if Crossrail 2 was not there?
Michèle Dix: We would say that it was a big problem to do that. We would still want both. We would want them timed properly. The point that we are trying to make, in the work that we have been doing with Volterra, is that there are ways in which these schemes can be funded that do not automatically involve everyone going back to the Treasury and saying, “Give me the grant to do it”. It is about looking at the areas of land these schemes open up and identifying new ways in which the value of that land can be captured to help pay for the scheme in the first place, so if HS2 is going to promote economic growth up and down the country a lot of the mechanisms by which we can capture that increased value. The same for Crossrail 2; we have to find mechanisms by which we can help pay for it.
Baroness Wheatcroft: I understand that but I am slightly confused. Did you say the problem would be if we did try to do Crossrail 2 before finishing HS2 or if we did not?
Michèle Dix: No, whether there was an HS2 on the table or not, we would want to do Crossrail 2. We are going ahead with promoting Crossrail 2. We want Crossrail 2. We support HS2. If HS2 is going to go ahead and if HS2 phase two is going to go ahead, we would want the timing of those things to be such that Crossrail 2 was in place before HS2 phase two opened. The gentleman said, “Is there someone who is trying to join these together?” We are trying to make sense of that.
The Chairman: That brings this first session to a close. Thank you very much, Ms Dix, for your answers.