Comment

If you want to create jobs, then build railways

Nigel Harris says: build railways to create jobs.

“Emerging new research has revealed that rail is a second-to-none focus for Government investment.”

WE’VE become so accustomed to the word ‘billions’ over the last ten months that we’ve become punch drunk about just how much the COVID-19 pandemic has really cost us all.

On November 25, Chancellor of the Exchequer Rishi Sunak laid bare the horrific truth of the devastating numbers. We’ll see a decline of 11.3% in GDP for 2020. To set context, UK growth of 2%-3% is considered excellent. In China, growth of 8% a year was considered spectacular. A UK GDP slump of 11.3% is an economic catastrophe.

Unemployment could reach 7.5% - about 2.6 million people. We are unlikely to see a return to anything resembling pre-crisis normality for around five years. There are fears that our economy will suffer a dent of 3% which may be permanent. The only glimmer was that the independent Office of Budget Responsibility had feared a yet worse crash of 13%!

Just as ’austerity’ dominated our political landscape and climate for more than five years to 2015, and just as Brexit has done since, the biggest national problem - politically, socially and economically - for the next five years (at least) will be unemployment. Hence the focus of the Chancellor’s November 25 Spending Review was ‘jobs, jobs, jobs’. Paul Stephen reports on the rail and infrastructure planning aspects and implications in News (pages 6-7).

What are the implications and outlook for rail UK? Let’s set this in its full historic, catastrophic context: 2020 is the worst single year in UK economic history for… 311 years. To find a single year of economic damage greater than the 11.3% of 2020, you have to go back more than three centuries to the ‘Great Frost’ of 1709.

When the European winter came in late 1708, it was the harshest and coldest in 500 years and led to widespead famine.

Instinctively, it’s hard to keep despondency at bay. After all, railway schemes - enhancements, never mind new routes - are always tortuously slow to win approval and then equally slow and very expensive to build, even at the best of times. Which, clearly, these are not.

The pessimist ponders afresh how long the Treasury will pay to run empty trains on the existing network on the one hand, while prophesying a wave of ‘Beeching 2’ closures and writing off HS2 on the other.

But we should not be so hasty. Far from a programme of ‘Beeching 2’ closures, in his personal Foreword to the new National

Infrastructure Strategy, Prime Minister Boris Johnson actually says: “We will restore many of the rail services lost in the Beeching cuts…”

Given that Beeching’s first report proposed 2,363 station closures (55% of the total), plus the axing of 5,000 route miles (fully 30% of the network), the PM’s word ‘many’ inevitably prompted much scoffing.

But hold on - its use is at least indicative of a positive government mindset towards railways, which given the financial disaster of 2020 is encouraging.

Sure, it’s going to take more than fine (if woolly) words to create real rail investment, but scrutiny of proposed changes to the muchcriticised Treasury ‘Green Book’ implies considerable opportunity for our rail industry.

This document (see pages 6-7) has for many years informed the business case assessments used to arrive at the thumbs up/down to capital investment projects - and traditionally favoured schemes in London and the South East to the detriment of, well, everywhere else. As the Treasury’s Green Book review document itself concedes: “The Review has concluded that the current appraisal practice risks undermining the Government’s ambition to ‘level up’ poorer regions and to achieve other strategic objectives unless there is a step change improvement. Significant changes are needed to enable ministers and other decision makers to fully understand what investments they need to make to most effectively drive the delivery of the levelling up agenda and other policy priorities.”

Some very significant but not very widely known news (even in the sector itself) is that rail is not only uniquely placed to benefit from this promised change of direction, there is already solid evidence to put the rail sector ahead of the pack as a potential investment priority. Emerging new research has revealed that rail is a second-to-none focus for Government investment.

Take HS2. New National Skills Academy for Rail research indicates that construction will create 30,000 jobs, of which just 13,000 or so are already in the supply chain. Those 30,000 jobs will generate a value of £6.3 billion, a figure which NSAR says has been impossible to calculate until now because the relevant data has never been accurately measured and collated. That’s more than £6bn of benefits which have never been valued before as part of the case for the line.

And it gets better. If 10% of those 17,000 new jobs employ people from a disadvantaged background, that value rises to £8.3bn. Push that to 20% and the value to UK plc soars to £10bn - and that would have a powerful impact on the Government’s levelling up policy.

It becomes even more enticing when you consider that post-Brexit migration policies and costs will make it very difficult to follow the previous path of bringing in (say) signalling engineers from across Europe. This is good news for HS2 to Birmingham, Crewe and Manchester in general and could have a major impact on thinking for the eastern leg through the East Midlands to Leeds, which is once again under scrutiny.

NSAR Chief Executive Neil Robertson told RAIL: “This data has never been available before and it means HS2 provides government with a powerful opportunity to make big strides in delivering its key ‘levelling up’ policy in northern England - especially when you consider two further key advantages.

“Firstly, decades of underinvestment in the North has left a region which has a solid tradition of heavy traditional work among a disadvantaged workforce, so the opportunity is significant. We estimate that the recruitment target of 10% from disadvantaged backgrounds is conservative and that 20% figure - with its £10bn value - is more likely.

‘Secondly, rail as a sector is unique in having this data to prove its point, and so is incredibly well-placed to prove its business case under whatever new Green Book capital investment business case assessment rules emerge.”

Thanks to NSAR’s research, the rail sector can present itself as a key solution to the Government’s biggest post-COVID problem: unemployment. And not just for HS2 - the principle applies to the wider network, too. Who knows, maybe even the occasional Beeching reopening might benefit!

NSAR’s research indicates the compelling and persuasive case that is emerging: if you want to create jobs… build railways.