Rail (UK)


If you want to cre­ate jobs, then build rail­ways

- WHAT’S YOUR VIEW? Email: rail@bauer­me­dia.co.uk Business · HM Treasury · United Kingdom · Beijing · Boris Johnson · London · Birmingham (England) · Crewe · Crewe Alexandra F.C. · Manchester · East Midlands · Leeds · England

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.

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