Around 50 per cent of the people travelling into cities like London and Birmingham by train would be standing and there would be 150 people for every 100 seats on commuter services by the middle of the next decade, if HS2 were shelved – High Speed 2 chief executive Alison Munro tells Dean Carroll in an exclusive interview with Policy Review

Given that high-speed rail has much wider penetration in continental Europe, have you learnt the lessons in terms of what works and what doesn’t – is there a sense of that sort of policy tourism being imported into the High Speed 2 planning process?

“Yes, certainly, we have learnt from Europe in many respects – and we have learnt from High Speed 1 as well – particularly in terms of the regeneration potential that these projects can bring; having seen the benefits in places in France as well as Kings Cross and St Pancras here in England. These examples show not only the success of high-speed rail but also the factors that lead to it.

“In France, urban development policies have supported the locations of high-speed rail stations. For example, a whole new business district has grown up around the Lyon station bringing the creation of 800 new enterprises and 40,000 jobs – with high-speed rail as the catalyst. Look at the amount of activity on the ground around St Pancras now in this country. It just wouldn’t be there without HS1.

“We have also looked at how you connect the lines into wider transport networks so that you are maximising the benefits. On the periphery of some of the cities in France, they have provided good regional connections that then serve the high-speed hub in places like Saint-Étienne.

“In terms of considering what we want HS2 to look like, we have looked not just in Europe – France, Germany and Spain, for example – but around the world. Japan is a really interesting example of how you develop a high-speed rail network. The Japanese model is probably closer to what we are aspiring to in terms of high-capacity, high performance and a network that is highly reliable. We have an ambition to operate 18 trains an hour and in Japan they operate at four-minute intervals. Looking at these other models has allowed us to work out our vision for HS2.”

Moving on to the ramifications for passengers using the service, has any economic forecasting been done to estimate the average ticket price – a number of commentators have claimed, rightly or wrongly, that this will be a ‘rich man’s railway’?

“All of our assumptions to date have been on the basis that the fares for HS2 will be the same as the rest of the network. By relieving pressure on the existing network, you release greater capacity and so prices will reflect that with the same fare structure. We have assumed that there will not be a premium for travelling on HS2. The fares being set at the same level has underpinned all our analysis to date.”

Given then that the cost of travel on the new network will be competitive and you will be able to get from London to Birmingham in 49 minutes, shaving 25 minutes off the current time, and the fact that the booming property bubble in the capital city is pricing the average person out of the market – the likelihood is that Birmingham will become somewhat of a dormitory town for those working in London, isn’t it?

“Clearly, Birmingham will be more accessible to London. But officer and commercial space is also expensive in London so it also makes Birmingham a more attractive place for businesses to locate. The work that we’ve done has suggested that both London and Birmingham will benefit but proportionately Birmingham will benefit more because of the step change in connectivity. We are expecting to see business relocation not just people.”

So looking to British Prime Minister David Cameron’s recent comments, which suggested that HS2 was always about increasing capacity rather than reducing journey times, how strained will existing services be in the future if HS2 is shelved due to public pressure or political gaming? Could we expect to see airport runway expansion programmes and toll roads bridging the capacity gap?

“We would face an extreme capacity problem is HS2 doesn’t go ahead. The Department for Transport has looked at alternatives and for city-to-city travel, which is primarily the market for this project; roads are just not very efficient. They are also costly and would have significant environmental effects. Building new roads is not the answer.

“There are also real issues around providing extra airport capacity so that is not an option. It’s also not very environmentally-friendly in terms of greenhouse gases so the government doesn’t see aviation s the answer either. So really, you are back to rail. If HS2 doesn’t go ahead, the work that the DfT has done has shown there isn’t really any alternative in terms of delivering the capacity we need.

“Looking ahead, we are expecting continued if somewhat slowing growth – in the last 15 years it has doubled – in the number of people making long-distance trips. By the middle of the next decade, you would be seeing severely overcrowded trains. The predictions are that 50 per cent of the people travelling into cities like London and Birmingham would be standing. There would be 150 people for every 100 seats on commuter services. That is the problem we will face if we don’t have HS2.”

Modern Britain tends to struggle with big long-term infrastructure projects because public expenditure revolves around the five-year electoral cycle. Given the public dissatisfaction in some areas and the temptation for politicians to tap into those objections, are you concerned that HS2 could in the end be defeated by democracy?

“For phase two of the project we are talking about a 20-year project so that is a lifespan of several parliaments so it is absolutely essential with that time horizon that you have cross-party consensus. It is a fundamental element of what we need to deliver the project. Clearly, there has been a lively debate but we are lucky to have cross-party consensus. The Labour Party has reaffirmed its support and the coalition is strongly supportive. But this needs to be sustained over a long period or there is a risk to the project otherwise.”

In the areas which will benefit economically, there is public support for HS2. In other places that will suffer in terms of the environment, for example, there is vociferous discontent. Given that there have already been a number of challenges in the courts and the opposition in the shires, do you expect further legal challenges from pressure groups?

“The place to have these debates is in parliament and the parliamentary process will provide an opportunity for people to have their say. Challenging HS2 through the courts is not the best way forward. We are awaiting a ruling from the Supreme Court but we are confident that what we have done to date does comply with the law. We are relatively confident of a successful outcome from the hearing. The real issue is that big projects should be debated through a democratic process in parliament and that’s what we will be doing shortly.”

A lot has been made of the project supposedly creating thousands of UK jobs. However, doesn’t European Union procurement law mean that the contracts for the trains, the tracks and everything else may go to another member state with a greater level of expertise in manufacturing? Or firms in other nations that might be able to deliver a less expensive tender bid?

“We will be procuring on a competitive basis and complying with the law. Obviously, we want to achieve best value for money for the taxpayer but we want to recognise the real opportunity that HS2 offers for jobs for people in the UK. We are predicting that at its peak in the late 2020s, there will be about 50,000 jobs in the building and operation of HS2. What we want to do is to ensure that British businesses and individuals are in the best position to compete for those jobs.

“For example, at the moment we have a stand at the Skills Show in Birmingham trying to talk to schoolchildren and young people about the opportunities that will be available; we are trying to inspire them to go into the technical areas where we will be offering jobs on HS2. We are doing a lot of work to prepare the ground so that British businesses can compete when the time comes. We have spoken to 800 people from 600 organisations about our early thinking on procurement.”

So far HS2 has been talked of as a national project and, indeed, that is the impression you have given me in our conversation today. But is HS2 connected to the Trans European Network for Transport and European Union policy in any way?

“Well, the development of HS2 has not been driven or guided by any European elements but obviously we will be looking at EU funding opportunities as time goes on. But the policy genesis has not come from Europe; it has come from the need to deliver extra capacity in this country. High-speed rail is the best way of doing that and this is how the project has evolved.”

We know that most of the £50bn budget will come from government but will you be considering international investors and Private Finance Initiative-style deals in the future, given the constraints on the public purse at a time of economic crisis?

“Certainly for the bulk of the civil engineering and the railway itself, we would expect most of that to be funded by the public sector. The sheer scale of this is such that you would not be able to get a PFI for the basic structure of the railway. There might be other opportunities on rolling stock or what we’re doing with stations where you could have elements of a PFI-type model and we definitely wouldn’t want to rule those out.

“Although, we do recognise that for a project of this size and complexity it is largely going to have to be funded up front from the public purse. Once it is built though and is operating then a concession might be sold and that revenue might then be ploughed back into the project or used to fund future phases of the project. There are options to look at in the future.”

And are we likely to see freight trains running on HS2 or will it be strictly passenger carriages only?

“We are really planning as a passenger railway. There is no physical reason why freight couldn’t operate on it but we see it as a high-frequency passenger service running through the daytime so that we can use the night as our maintenance period. There are benefits to freight though because HS2 will be taking services off the existing railway, freeing up paths and access for freight on those lines.”

From both the personal and the management perspectives, it must be tough to manage a project with such long timelines. How on earth can you generate excitement and public interest when the project is decades away from completion and you yourself will probably hand over the job to someone else before the lines are open?

“Not at all, it is fantastically exciting to be involved in the early stages of a project when you can help shape it. Phase two might not be open until the early 2030s but that economic benefits in terms of jobs start flowing much sooner than that. Even starting now, we will only have this open just in time for that capacity crunch I mentioned earlier so there even though it’s a long-term project there is urgency there.”

Just going back to the benefits-cost ratio, which it is claimed is 2.3 to 1, and taking into account Lord Heseltine’s recent comments about the hidden benefits that cannot be modelled at an early stage – do you think the 2.3 figure is understatement? Are people underestimating the positives?

“Yes I do, I don’t think it captures all of the benefits but we have to use the same methodology that is used on other projects as a benchmark but the standard methodology doesn’t capture everything. A transformational project like HS2 could actually change where people set up businesses and where they live and that is not captured in the standard model. The 2.3 to ratio assumes that things remain exactly the same but that is implausible and ignores the economic rebalancing effects of HS2. It is difficult to get at the wider effects but it is clear that the benefits-cost ratio doesn’t capture everything.”

In that case, is there something pessimistic within the British psyche that makes us talk about these big projects as white elephants whereas in other parts of the world they might take a more go-getting and positive approach when pursuing transformational ideas?

“It is difficult to judge but there are a lot of well-developed local lobby groups that have established themselves in this country and it is difficult to get people to envisage what it will be like in 10, 20 or 30 years if you don’t undertake these long-term investments. That is something we need to work on.”