Following a consultation process run during 2020, the National Infrastructure Commission (NIC) has identified prioritising improvements to regional rail links as the key to achieving the greatest economic benefits from the Integrated Rail Plan for the Midlands and North.
Prepared following a consultation process, which Gowling WLG contributed to as a participant in the preparation of the IPFA response, the NIC's report makes the case for continuing rail investment across the Midlands and North of England. The consultation process and the production of the report took place during a period where restrictions arising from the COVID-19 pandemic materially affected passenger rail in the UK, and this is recognised in the Report. The NIC has encouraged continued work on improvement plans whilst emphasising the need for adaptation to changing circumstances.
The report considers a series of options based upon three indicative budget scenarios: the baseline budget (£86 billion) which is based on the budgets identified in the NIC's most recent National Infrastructure Assessment; a 'plus 25%' budget (£108 billion) and a 'plus 50%' budget (£129 billion). These budget options were themselves informed by the striking statistic that one in three major rail projects exceed their initial cost estimates by at least 50% - so they recognise the potential for overspends and/or a decision to spend more than the current baseline, but acknowledge the need to balance investment in railways alongside other important aspects of economic infrastructure including local urban transport projects.
The NIC identified the need for government to ensure a core pipeline of projects is achieved on time, on budget, and that commitments to further funding to enhance or add to the selected schemes should be conditional on this. The NIC also indicated that that further enhancement programmes should be sufficiently developed, with robust cost ranges and complementary investments to increase the likelihood of a "multiplier effect" resulting from major rail investments. The NIC emphasise the need for a cohesive and adaptive strategy, both within the more narrow focus of the specific railway schemes chosen and the wider context of the broader infrastructure developments required to give those railway schemes the best chance of success.
The NIC's conclusion that the focus should be on improving regional rail links was based on a number of factors and initiated by financial realism. The NIC noted that even their 'plus 50%' budget was not capable of delivering all currently proposed schemes in the Midlands and the North. The current total estimated capital cost of HS2, Northern Powerhouse Rail, the Transpennine Route Upgrade, Midlands Engine Rail and other required interventions (including those linked to decarbonisation and digital signalling) in the period 2020 to 2045 is currently identified as in the region of £140-185 billion . As such, the NIC were already working on the basis the full spectrum of schemes was unaffordable, and they identified three separate, self-contained strategies, with options for prioritisation, based on the 3 budget scenarios:
- Focusing on upgrades: completing the western leg of HS2 Phase 2b and upgrading key existing lines, which was in line with the baseline budget.
- Prioritising regional links:
- delivering major upgrades (including some new lines) to better connect cities in the north of England and reduce congestion there, adding a new high speed line from Birmingham to the East Midlands and upgrading and enhancing other connections in the Midlands (including improving links to Birmingham Airport) - deliverable within the 'plus 25%' budget; and
- building new lines across the north of England, alongside further upgrades to improve travel times and capacity between northern cities, adding a new high speed line from Birmingham to the East Midlands and upgrading and enhancing other connections in the Midlands including improving links to Birmingham Airport, deliverable within the 'plus 50%' budget.
- Prioritising long distance links:
- focussing on delivering the full HS2 Phase 2b network to improve long distance connections, completing the Transpennine Route Upgrade between Leeds and Manchester, and Midlands Connect schemes that utilise the eastern leg of HS2, deliverable within the 'plus 25%' budget; and
- delivering the full HS2 Phase 2b network and the other schemes in the 'plus 25 per cent' package, as well as adding additional tracks to the Transpennine Route Upgrade between York and Manchester, upgrading connections and capacity from York to Newcastle, and Manchester to Liverpool, and building the Midlands Rail Hub to improve capacity into and across the Midlands, deliverable within the 'plus 50%' budget.
The NIC's analysis was conclusive in its support for prioritising regional links, although none of the packages are in line with the current baseline budget. Packages prioritising regional links were considered the most likely to provide the highest combined benefits. At the 'plus 25%' budget level, the package prioritising regional links was identified as delivering the greatest potential improvements to productivity overall in cities in the Midlands and the North, and may also provide better connectivity and higher trade benefits to businesses from faster and more frequent connections between cities. At the 'plus 50%' budget price point, the package prioritising regional links has the highest potential benefits of all the packages, both in terms of productivity and trade benefits. The NIC concluded that those packages would substantially improve regional (mostly east to west) rail links between cities within the Midlands and the North - these are generally inferior to longer distance rail links, meaning a larger gain from a comparatively lower starting point.
The NIC identified these improvements as particularly necessary in light of the historic data concerning increased rail use in the affected areas. Rail use rose substantially in Birmingham (41%), Manchester (36%) and Leeds (19%) between 2010 and 2019, but, journey speeds in the Midlands and North consistently lag behind comparative services in London and the South-East of England, as well as those in mainland Europe. The NIC considered that addressing these issues with a cohesive pipeline of projects is the best solution for the Integrated Rail Plan.
In addition, with certain elements of these core schemes already underway or independent of other major schemes, some already present opportunities for earlier delivery. Meanwhile, further plans to enhance, or expand on or beyond, the core schemes can be developed concurrently, whilst adherence to the aforementioned conditions can be monitored. The NIC indicated there may be a strategic case for increasing the budget to 'plus 50%' if core schemes remain on track and public finances can accommodate greater investment in complementary initiatives to support regional growth. Alongside the proposed developments to the lines, the NIC also stressed that the government must consider ways of accelerating benefits to passengers in the North and Midlands, given the time it currently takes to bring new railway lines into service. Such strategies would include rolling stock upgrades and providing city leaders with the requisite funding to develop strategies for improving urban transport, which can bring benefits faster than major intercity rail networks. These strategies clearly form a key part of the cohesive, wide ranging plan envisaged by the NIC, with rail investment forming an important, but integrated, part of the government's levelling up agenda.
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