Setting Regional Budgets for Rail Investment

A report by Greengauge 21

June 2021

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Overview

1. The approach taken for the North and the Midlands ...... 1

2. Setting equivalent rail budgets for the rest of England and Wales . . . . . 4 © June 2021, Greengauge 21, Some Rights Reserved .

3. Regional budget synthesis ...... 8 We actively encourage people to use our work, and simply request that the use of any of our 4. Discussion ...... 9 material is credited to Greengauge 21 in the following way: Greengauge 21, Title, Date 5. Sub National Transport Bodies ...... 12 www.greengauge21.net 6. Conclusions and Recommendations ...... 14

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Scotland

Overview North East

North West

Yorkshire and the Humber

In order to advise the The report can only be considered as a starting on the needs of the Midlands point for discussion. While we have drawn and North, the National Infrastructure on published NIC reports, the approach taken Commission (NIC) set out to determine what is our interpretation of that taken by the budget should be available for investment. NIC, and Greengauge 21 is solely responsible for the assumptions we make and set out East The Midlands and North account for 5 out in this report and any errors arising. Midlands of 9 English regions. The others are: , and South West Our view is that the NIC set out a persuasive England; accounts for the 9th. approach to the question of rail needs that West has a wider applicability and a continuing Midlands A question arising is this: what would be the relevance. For our part, we will look to engage Wales East rail investment budget for these remaining with the National Infrastructure Commission of England English regions—and for Wales—if the same in responding to its programme of work for the NIC methodology was applied to them? In this second National Infrastructure Assessment (NIA2). short report, we set out to answer this question. This will include a new baseline assessment of national infrastructure this Autumn before the London NIA2 recommendations are published in 2023.

South East South West

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 1. The approach taken for the North and the Midlands

The approach used by the NIC to establish an In summary, the NIC’s approach entailed: The result was that 57 per cent of the Strategic A key issue with this methodology is the allocation appropriate rail enhancement budget for the Transport enhancements budget from 2030/31 of the costs of HS2 and NPR . While Phases 1 and North and the Midlands was set out in a technical » Estimating planned (but not yet committed) onwards was allocated to road enhancements, 2a of HS2 now have Parliamentary Approval annex to their interim report of July 2020. It rail enhancements expenditure (for which and 43 per cent was allocated to rail . and are proceeding, Phase 2b—which is entirely was driven by the need to ensure that overall there is an expenditure line in the most within the North and Midlands—has not reached investment levels are made consistent with HM recent National Infrastructure Assessment for Next, the Midlands and North share of rail the Parliamentary Bill stage(s) that authorise Treasury guidance which sets a maximum level at Control Period 7 plus financial year 2029/30) enhancements was calculated . This used construction, nor is its funding confirmed . NPR 1.2% of national GDP. For the NIC, this is a ‘binding (ONS) projected populations for the Midlands is at a similarly early stage of development . fiscal remit’ and thus guides its overall National » Taking the Strategic Transport budget line and North regions as a percentage of total Infrastructure Assessments, which are periodically set out in the National Infrastructure projected population in England and Wales . The National Infrastructure Commission’s decision updated 1. As it says in its Interim Report: Assessment for 2030/1 onwards to 2045 . This allocated 44% of the England and Wales to allocate all of these costs, regardless of project This is a combined allocation for road budget total to the Midlands and North . approval status, to the Midlands and North we “Government should not be presented with a and rail, a portion of which needed to be questioned at the time . Their inclusion accounts proposed best option that is unaffordable or would allocated to strategic rail enhancements The full NIC calculation of annual and total for 83% of the developed rail enhancement crowd out investment in other infrastructure expenditures then added in budget lines budget for the Midlands and North . It could be priorities ”. In the technical annex on budget » This was calculated by subtracting expected for HS2 and Rail argued that allocating the full costs of both HS2 setting, it added: “The principle of balancing future requirements for road and rail (NPR)—the two largest rail projects that and NPR to the Midlands and North is a further spending on rail against other infrastructure renewals from the total Strategic Transport benefit the Midlands and North . The overall expression of the wish to re-balance national spend remains relevant . The Commission will budget to protect maintenance spending, calculation is shown in Table 1 below . infrastructure spend . And it means that only the not reopen other sections of its fiscal remit and then sharing the enhancements budget balancing 17% of enhancement expenditure was recommendations to fund strategic rail ”. between road and rail based on their average calculated on the basis of a per capita allocation . shares of enhancements expenditure across the period 2020/21 to 2029/30 2 .

Setting1 Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 1 Table 1: NIC budget set for the Midlands and North Rail Needs Assessment

Average annual 2020 2025 2030 2035 2040 Total expenditure expenditure –2025 –2030 –2035 –2040 –2045 2020/21 to 2044/45 (£million, 2019/20) (£million, 2019/20 prices)

HS2 4,600 3,900 900 – – 47,400 of which: Phases 3,800 400 100 – – 21,400 1 and 2a of which: Phase 2b 800 3,600 800 – – 26,000 A key virtue of the NIC budget-setting approach, Interestingly, even with the costs of HS2 and NPR Northern Powerhouse 200 1,200 1,700 1,700 – 24,400 in comparison with an unconstrained analysis fully allocated to the North and Midlands, the in which investments are ranked and selected NIC concluded that it would be right to test the 200 800 – – – 4,600 Enhancements (Control in terms of their cost benefit ratios, is that it can implications of the resulting £86 .2bn enhancement Period 7 + 2029/30) overcome the inbuilt bias towards investment in budget total shown in Table 1 against two further Rail Share of Strategic – – 1,550 2,130 2,120 29,600 London and its surrounds, where traffic levels, budget variants: £86 .2bn +25% and +50% . Even at Transport Fund congestion and benefits are generally higher . the +50% level, the NIC determined that it would enhancements Instead, monies within the fiscal remit for strategic not be possible to implement the whole of HS2 and of which: North/ 100 300 700 900 900 14,900 rail enhancements are allocated region by region NPR . The reason for this is that there are also a Midlands share on a per capita basis—and for named projects set of other rail enhancement investments which of Network Rail Enhancements and (HS2 Phase 2b and NPR), to the regions where the would not be fully covered by the 17% of budget Strategic Transport Fund benefits of the expenditure are primarily targeted . which is neither HS2 nor NPR . These investments rail enhancements would likely have a high priority and cover: RNA enhancements 4,800 5,400 3,300 2,700 900 86,200 budgets: » Trans Pennine Route Upgrade HS2 + Northern » Midlands Engine Rail Powerhouse Rail + North/Midlands » Electrification and other decarbonisation projects share of Network Rail Enhancements and Strategic Transport Fund » East and and rail enhancements enhancements

Source: https://nic .org .uk/app/uploads/RNA-Interim-Report-Final .pdf (Note, RNA is » Digital signalling programmes . an abbreviation for Rail Needs Assessment for the Midlands and North) .

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 2 While the National Infrastructure Commission (NIC) » What project budgets equivalent to those set reports set out the process, it is clear that it was for HS2 and NPR apply to the South and East? necessary to make key assumptions, with project cost estimates in many cases uncertain and at » Are their projects equivalent to Northern risk of significant inflation . Projects which cross Powerhouse Rail or Midlands Rail Engine arising regional boundaries were the subject of explicit in the wider south and east, or in Wales? simplifications, with 100% regional allocations designed to avoid the complications of sub-dividing budgets across regional boundaries . Overall, the NIC found that project cost estimates in many cases were uncertain and at risk of significant inflation .

The assumptions used in setting budgets for the Midlands and the North pose some interesting challenges for attempts to replicate the approach for other English regions and Wales, including these:

» Should part of the project spend for Phase 1 of HS2 be allocated to the South East and to London, where it will largely be incurred?

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 3 2. Setting equivalent rail budgets for the rest of England and Wales

Population-based allocations On this basis, using a population-based Table 2: English Regions and Wales population proportions 2020–2045 allocation, the following totals for rail A full set of regional allocations based on ONS enhancement expenditure apply to south North & Midlands South and East England & Wales projected populations over the period to 2045 are and east regions for the period to 2045: 4% North East 11% East of England set out in Table 2 opposite . Proportions for South and East England and Wales have been calculated » East of England £3 .577bn 12% North West 15% London by Greengauge 21 and set alongside the NIC’s » London £5 .137bn 9% Yorkshire & Humber 15% South East assessments for the North and Midland regions . » South East £5 .229bn 8% 10% South West » South West £3 299bn. 10% In Table 3 below, we set out a calculation following the approach used by the NIC in its and for Wales: £1 .755bn . 44% Total N+M 51% Total S+E assessment of the per capita element of the 5% Wales budget for the North and Midlands, using these Overall, this sums to a £19bn rail enhancement regional population-based proportions . budget . But there is a further element to consider . Source: Greengauge 21 calculation for S&E England and Wales, NIC for Midlands and North .

A key assumption made here is the rail proportion of future strategic transport fund enhancements . As in the NIC approach for the North and Midlands, it is assumed that this proportion (the rail share of rail plus highway enhancement budget) is unchanged from the modal allocations already set for Network Rail control periods and Highways England’s RIS2 programme .

Setting2 Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 4 Table 3: Allocation of rail enhancement budgets to south and east regions and Wales Major Rail enhancement East regions where much of the expenditure projects in the South and East (and some of the benefit) will accrue . But while Average annual expenditure (£million, 2019/20) this would inflate budgets for rail expenditure in the south and east, it would mean that the Period 2020 2025 2030 2035 2040 Total We need to consider whether there is a basis budget calculations for the rail needs of the North –2025 –2030 –2035 –2040 –2045 (£million, 2019/20 prices) for regarding any major rail enhancement and Midlands would need to be re-visited and Network Rail 200 800 – – – expenditure sum as being appropriate to add to reset downwards . And in any event, since HS2 Enhancements (Control these regional (and Welsh) budget totals, in the expenditure where it arises in the wider south east Period 7 + 2029/30) way that HS2 and NPR were treated in the Rail is already committed with construction underway, Rail Share of Strategic 1,550 2,130 2,120 Needs Assessment for the North and Midlands . it would not change the overall funding available Transport Fund enhancements for anything else in the wider south and east . The following projects have been considered: East (11%) 21 84 163 224 223 3,577 We conclude there is no purpose served London (15%) 30 121 234 322 320 5,137 » HS2 Phase 1/2a by re-allocating a South/East element South East (15%) 31 123 238 328 326 5,229 » London’s 1 and of a project that is already funded and South West (10%) 19 78 150 207 206 3,299 » Link proceeding: simpler to take it as a given . » Great Western Electrification Programme (GWEP) Total South & East 17,242 London’s Crossrail projects Wales (5%) 10 41 80 110 109 1,755 HS2 Phase 1/2a London’s Crossrail 1, costed by the NIC last year Source: Greengauge 21 calculation . HS2 Phase 1/2a (Euston––Crewe) at £18 .7bn, we believe should also not feature, but was priced in the National Infrastructure for a different reason . True there is some Crossrail Commission’s work on the Midlands & North expenditure in 2021/2 (current year), but the large at a net cost of £37bn .3 It could be reasonably bulk of its cost pre-dates the period of analysis, argued that a proportion of this amount (say half and there is no realistic option to choose not to of it) should be allocated to London and South proceed with the project at this late stage .

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 5 Crossrail 2 would have been considered in- But the situation has moved on since . As November The NIS explains that Crossrail 2 funding is already In short, it must now be assumed that Crossrail scope had the south and east regions been under 2020’s National Infrastructure Strategy makes being switched to a variety of other programmes, 2’s budget will not become available for possible examination in earlier years . In summer 2020, clear, Crossrail 2 is now frozen . Indeed, the including “£5 billion announced for buses and re-allocation in London or the wider South when the NIC prepared its overall budget of the Rail Strategy has already earmarked funds previously cycling over this Parliament … [and] … eight East for other, better rail (or other transport Needs Assessment work, it appears that Crossrail 2 set aside for Crossrail 2 . The thinking is that 4: city regions will also benefit from £4 .2 billion mode) investments . Its freezing and presumed was being regarded as an outstanding ‘commitment’ government investment in five year funding cancellation reduces the total rail infrastructure although there are no Parliamentary powers to “[in contrast with London] … in regional cities settlements for local transport starting in 2022– investment funding to be allocated to the southern/ build it . Crossrail 2 was treated then as a part of the . . access . . by public transport lags behind 23… City regions that will receive settlements, eastern regions and London which might have been budget rather than placed under an continental peers . This is why the government subject to appropriate governance, include as much as £15–20bn higher were it to still proceed . ‘urban public transport’ heading . Not all of its cost will invest in the North, Midlands and South Greater , Liverpool City Region, West (lately, around £40bn, but £26 .5bn included when West to help rebalance the UK economy . Midlands, , City Region, Meanwhile, we note that London’s transport NIC’s fiscal remit was set) would have been provided Tyne and Wear, West of England and Tees Valley ”. connectivity will shortly gain a huge boost for since up to 50% of its funding would have The government is continuing to address capacity from the (delayed) opening of Crossrail 1, been assumed (as per Crossrail 1) to come from issues in the capital, by financing the completion of While these allocations may only partly use up the with connectivity across the wider south- London (‘local’) sources . Its inclusion here in the Crossrail, but has agreed that Transport for London funding previously allocated to Crossrail 2, the NIC east benefiting from the combination of the regional assessments would have had a dramatic will stop development on Crossrail 2 . This frees also points to a series of upcoming Government and Crossrail 1 projects with their impact on budgets for London and surrounding up investment to raise the performance of public strategies 5, and these could draw on any remaining intersection at Farringdon in central London . shire counties (Surrey and ) . transport networks in the regional cities towards ex-Crossrail 2 funding and be incorporated in London’s gold standard.” (emphasis added) the next Spending Review . They include: the Union Connectivity Review, the Integrated Rail Plan (where it might be used to deliver the +25% over baseline budget case for the Midlands and North), the transport decarbonisation plan and the electric vehicle charging infrastructure strategy .

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 6 East West Railway Great Western Electrification

Implementation of the East West Rail link is The GW electrification programme remains underway, although only some planning powers incomplete, with parts of the programme to serve and consents have so far been obtained . It is , Bath and outstanding 6 . It is unclear judged to be in-scope here, and it carries a budget what budget remains for these works, but it would estimate of £5bn in 2019 prices . This amount be right to add an allowance for them into the should therefore be added to the south/east total, regional allocations . For simplicity, we have added a split between the South East and East of England nominal £1bn to the budget for . regions . EWR is a project that is recognised in the National Infrastructure Assessment, and this In summary, there are two budget additions treatment is exactly analogous to the process to make for major rail investments: £5bn to that the NIC used for its North & Midlands Rail cover the expected cost of EWR and £1bn for the Needs Assessment for . completion of the GW electrification project.

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 7 3. Regional budget synthesis

The equivalent budget for the wider south east, Table 4: Rail enhancement budgets for South and East England and Wales south west and Wales, based on this analysis, is set out in Table 4 opposite . One major project Region/Nation Share of Network Major Projects: East Total budget is taken into account—East West Rail, (population share of Rail CP7 Budget and West Rail and GW allocated 70:30 to the East of England:South England & Wales) rail share of Strategic electrification (£bn) East regions, and a nominal £1bn is allocated to Transport Enhancement Budget (£bn) GW electrification programme completion (for simplicity, entirely to the South West region) . East (11%) 3 .6 3 .5 7.1 London (15%) 5 .1 5.1 Overall, the rail enhancement budget for the four South East (15%) 5 .2 1 .5 6.7 southern & eastern English regions plus Wales, using what we judge to be a similar methodology to that South West (10%) 3 .3 1 .0 4.3 used by the NIC for the North and Midlands rail needs Total South & East 17.2 6.0 23.2 assessment, totals £25bn for the period to 2045 . Wales (5%) 1.8 1.8 Overal total 25.0

Source: Greengauge 21 analysis .

Setting3 Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 8 4. Discussion

The approach used here is an attempt at mimicking We note that much of the investment in the The pattern of regional differentiation and likely In the Midlands and North Rail Needs Assessment, the calculation used for the English northern and Midlands and North is likely to be taken up by scale of benefits is not, however, the reason the NIC seemed to be comfortable with the midland regions . It allocates rail enhancement major new rail lines, needed to overcome historic why the overall rail enhancement budget has possibility of funding at a +25% level above budgets up to 2030 and the rail share of strategic weaknesses in the inherited, largely unmodernised, been calculated to be so much lower for the baseline . This adds £21 .6bn to rail enhancement transport budgets thereafter on a per capita pro network . Network limitations in the North and southern/eastern regions plus Wales (although funding for the North and Midlands . If a similar rata basis . It provides £17 2bn. for rail enhancement Midlands were seen by the NIC as inhibiting the it helps explain why the Midlands and North treatment was made for the regions of the South schemes in the southern and eastern regions to scope for an overlapping set of major cities to should be accorded higher levels of investment and East, London and Wales, based on the analysis 2045 and £1 8bn. for Wales in the period to 2045 . expand their labour markets . Taking aside London, funding) . New lines are, of course, expensive, here, additional funding at a rate of 25% over where new network capabilities are shortly to but, taken in the round, they are simply baseline would add £6 .25bn . If the parallel to be To these totals, we added in an amount—much­ come on-stream, the other English regions (and less needed in the south/east and Wales . drawn is based on the need for ‘levelling up’ at smaller than that allocated to the North and Wales) under examination here have fewer and a regional/devolved nation level, then London, Midlands—for major projects: in this case, for less-clustered areas of major urban development . the South East and East of England regions East West Rail and for the outstanding part of The type of contribution that rail investment can Baseline rail investment budgets would probably be excluded . Additional funding the GW electrification project . This generates a make is therefore likely to be less overall than and 25% and 50% increases at a +25% rate would, however, add £1 .1bn to total rail enhancement budget of £23 .2bn for the the NIC found for the North and Midlands . South West England’s rail enhancement budget southern and eastern English regions and £1 .8bn allocation and £0 .6bn to the allocation for Wales . to Wales for the period out to 2045 . This total of But there are some sub-regions in the South The £86bn baseline budget set by the NIC for the £25bn may be contrasted with the £86bn level and East where similar circumstances to those Midlands and North was found to be insufficient set by the NIC for the Midlands and North . in the North & Midlands do arise—a prime to meet the costs for completing HS2 and building example being the overlapping city catchments NPR without impacting other important priorities . of the Bath/Bristol–Newport–Cardiff–Swansea corridor across the Severn Estuary where the need for rail investment that can help relieve the overloaded has been identified .7 The Solent area might be another Setting4 Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 9 As noted earlier, the allocation of the strategic Climate change and In the past, there has been a tendency in the UK Electrification priorities set historically to the transport budget elements followed the NIC rail electrification to focus rail electrification on the busiest lines busiest routes may have made sense in past, assumption of no change in the balance between since business cases were based largely on the but such approaches now are unlikely to deliver highways and railway spend proportions . This scope to reduce costs—lower fuel/energy and train the best balance of expenditure against the de- assumption would now be questioned by many In practice, the key question for rail investment maintenance costs . As a consequence, London has carbonisation obligations the country has set itself . across the transport planning profession because over the period to 2045 will likely centre on a near-fully electrified national rail network, and Neither will budgets set on a pro rata to population plans for major highway enhancement cannot be electrification . While there is some potential the South East (especially) and the East of England basis . What is needed is a prioritisation of longer expected to help achieve carbon reduction targets, for a hydrogen/fuel cell approach, its intrinsic regions benefit from a lot of existing electrified distance lines, especially those that can attract whereas investment in improving rail services energy costs are high, power/weight ratios are rail lines into London . But, the East of England, for a modal switch away from road use – away from that lead to reduced use of diesel/petrol-powered unappealing and travel range is limited . This is example, also has some key electrification gaps longer distance car use and long-distance HGVs . road vehicles could help reduce overall transport true for heavy road vehicles (HGVs and buses) as including its strategic cross-country freight routes sector carbon emissions . Further rail expenditure a well as rail .8 Battery-equipped trains are quite to the nation’s largest container port at Felixstowe For the Midlands and North, the NIC noted three could therefore be allocated to some extent at the suitable for decarbonising train services over and the diversionary categories of generic rail enhancement project expense of highway investment, but this should, shorter distances, but range limitations again freight route through Lincoln . In comparison, which it said would need to be prioritised, if we suggest, be a matter for the sub-National rule this approach out over longer distances . South West England and Wales have been very necessary ahead of specific schemes such as the transport bodies to determine (see next chapter) . substantially neglected in this policy application, Trans-Pennine Route upgrade and the Midlands as have cross country railways in general . Rail Hub . It foresaw the following investment priority needs for the Midlands and North:

» Ongoing electrification (£15bn)—potentially, part of ‘infrastructure programmes for decarbonisation’ (priced at £18bn) » Digital signalling (£3bn) » Early wins (£2bn) .

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 10 The rail network of the South and East is While Network Rail has set out a decarbonisation In tackling the need for the electrification of Overall, these priorities are poorly addressed by much more extensively electrified than that strategy, the DfT policy on the subject is awaited main lines, the lessons of previous electrification population-based allocations, as here, but need serving the North & Midlands . Nevertheless, (it is due shortly) . For rail, much will depend projects, some of which have seriously to be taken up by the National Infrastructure there are some electrification gaps . on where priorities are set, with the question overshot budgets, will need to be learned . A Commission in taking forward updates to its rail of decarbonising freight a particular issue . ‘discontinuous approach’ may be appropriate investment allocations going forward . Modal transfer A group of three interconnected in places where electrification implies costly to improved, decarbonised (electrified) rail routes inter-regional links: In Wales, electrification is minimal, yet route adjustment to historic structures, for instance . would reduce the call for investment funding for distances over main lines (Cardiff-West Wales, charging points for road vehicles and for national » Basingstoke–Reading/Oxford– (serving the North Wales Coast and Newport-Crewe) In summary, rail electrification expenditure grid strengthening (because rail use per passenger- the key container port of Southampton) are lengthy and cry out for at least partial is of importance to the South West, to Wales mile or per tonne-mile is less energy intensive) . electrification . The same is true for the South and (especially for freight flows) to the East of » , Marylebone– West, where electrification of Bristol/Newbury- England, but of less importance to (the largely The allocations set out here for rail investment Banbury–Birmingham Penzance (route length 298 miles) is likely to be electrified) South East England (where some infill in the South West and Wales (and probably the a high priority . Another key focus should be the schemes would be useful) and of virtually no East of England too, when account is taken » East West Rail (partly under construction) primary NE/SW . As argued in significance to London (where there remain a few of the need for additional budget to cover the Oxford––Cambridge earlier Greengauge 21 reports, electrification of the very short electrification gaps to be addressed) . East West Rail project) will need to be increased -Bristol Parkway line (74 miles) could to cover the likely costs of electrification and the main lines of the South West: be regarded as an infill project, that in association associated improvements for longer distance with an expanded Midlands Rail Hub (included main line and strategic freight routes . » Bromsgrove(Bristol)––Plymouth–Cornwall in the NIC’s Rail Needs Assessment) could serve » Newbury– to bring better balance to the ‘Y’-shaped HS2 network, making it a more valuable ‘X’ shape .9 Key strategic long-haul freight routes

» Felixstowe–Nuneaton

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 11 5. Sub National Transport Bodies

In England, it now seems that the various In the south and east, there are five SNBs » Western Gateway regional—sub-national—transport bodies are not English Regional (alongside London) and they comprise: to be granted formal budget-setting status . But Transport Bodies Area covered: Bath and North East Somerset, they will still have an important advisory role on » England’s Economic Heartland BCP Council (Bournemouth, Christchurch & transport budget allocations, and all of them have There are currently eight sub-national Poole), Bristol, Dorset, Gloucestershire, North either produced or are in the process of producing (or regional) transport bodies in England. Area covered: Bedford, , Somerset, South Gloucestershire and Wiltshire . Outside London their membership is formed regional transport strategies . These are probably Cambridgeshire, Central , , from a mix of local highways authorities, now the more relevant areas for developing regional Local Enterprise Partnerships (LEPs), local Hertfordshire, , , Of these five SNBs, theEnglish Economic rail transport budgets than the historic regional airports, Highways England, Network Rail Oxfordshire, Peterborough and Swindon Heartlands maps least readily onto the standard definitions we have used in the analysis presented and Department for Transport. They also English planning regions: it covers parts of the here . But they don’t map straightforwardly work closely with Chambers of Commerce » Peninsula Transport East of England and South East England, but also onto the standard planning regions . and other business interests. While they are parts of the East Midlands (Northamptonshire) normally led by local authority leaders, there Area covered: Cornwall, Devon, and South West England (Swindon) . Its is very little input, if any from the voluntary Plymouth, Somerset and Torbay geography was intentionally set by the Oxford- or social and environmental sectors. Cambridge arc, and some authorities have an Source: https://transportactionnetwork .org . » Transport East associated, rather than full, membership status . uk/campaign/regional-transport-bodies/ summary-of-regional-transport-bodies/ Area covered: Essex, Norfolk, Suffolk, Peninsula Transport and the Western Gateway Southend-on-Sea and Thurrock are adjoining regions which form two logical subsets of the South West region—a sort » Transport for the South East of ‘near west’ and ‘far west’ arrangement . Transport East covers East Anglia and lies Area covered: Berkshire Local Transport Body, entirely within the East of England region . Brighton & Hove, East Sussex, Hampshire, Isle of Wight, Kent, Medway, Portsmouth, Southampton, Surrey, West Sussex Setting5 Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 12 Transport for the South East is in effect the We chose not to attempt an allocation to the South East England region minus areas north of sub national body areas in this report for this the Thames (Oxfordshire & Buckinghamshire) . reason and because of the indeterminacy of some parts of their coverage, and because parts Whatever regional structures are used, the of two SNBs have already been accounted for as geography of the national rail network can be part of the East Midlands budget allocation in an uneasy fit . The English Economic Heartlands, the NIC’s work on the Midlands and the North . built around the Oxford-Cambridge Economic But this is an area to which further analysis arc, is handily centred on East West Rail, but could usefully be applied if the SNBs wished to cuts across multiple London radials: the East & adopt the NIC-style approach adopted here . West Coast Main Lines, the Midland Main Line, the Chiltern Main Line, and a key catchment of the too . This and the other sub national bodies make good sense in terms of shared economic interest, however .

In some cases—such as for Peninsula Transport and the Western Gateway—budgets could be readily developed, split out from the South West regional allocation presented here . But, just as is the case with HS2 going northwards from London, rail investment on routes going westward from London gives rise to questions of expenditure in one region generating benefits in the next region .

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 13 6. Conclusions and Recommendations

The south and east regions of England – broadly In summary, these differences are: » in the wider south east, the current rail network Overall, we conclude that the NIC-style approach those that lie below a diagonal line drawn from is centred on London . Nearly all lines have been to identifying rail needs helps achieve a move away the Severn estuary to the Wash – have been » the pattern of large cities with strong city electrified, and many have been modernised too, from allocating transport budgets to places where examined, along with Wales, in an exercise which centres providing the basis for expanding with much improved central London stations . congestion (and so project benefits) are highest, has sought to apply an equivalent methodology regional economies is not replicated in the The soon-to-open Crossrail and Thameslink which in the past in practice has meant, for the to that used by the National Infrastructure wider south and east or Wales to anything like combination should transform connectivity rail sector, investment in and around London . Commission in its December 2020 report where a similar extent .10 Instead, London dominates across London and the surrounding regions Using a regional population-based approach it set out a rail enhancement budget for the and while its rail commuter network has is fairer . But it remains poor at addressing the English North and Midlands . Our aim was to been essential in creating Europe’s largest » there are some routes where electrification emerging biggest challenge the transport sector take a first step towards equivalent ‘Integrated single labour market, a lot of investment has remains needed in the wider south now faces, decarbonisation, because of the uneven Rail Pans’ for these regions, or for each of the gone into bringing this network up to date east, including those which serve the coverage of electrified railways across the nation . sub-National transport bodies they contain . busiest container ports were rail freight » the North and Midlands have extensive but movements are diesel powered at present Some of the challenges ahead are not as Following the NIC’s assessment of a rail largely unmodernised (and unelectrified) great as for those regions north of the Severn- needs budget for the North and Midlands, we rail networks that are not fulfilling » in the South West and Wales, there is Wash diagonal: much of the rail network made allowances for future rail investment their potential to support the growth minimal electrification or modernisation in the south east is already electrified . on a per capita basis for the South and East of a set of large city economies of main lines and major stations, a regions . We noted that, south of the Severn- situation that will need to be rectified Wash diagonal, there is much less planned and » the need for better connectivity across the North available rail enhancement expenditure than for and Midlands is only partially addressed by the » new lines (high-speed or otherwise) regions to its north . But we also identified the HS2 scheme . HS2 and other major schemes are much less likely to feature . noticeably different needs for rail investment involving new lines as well as upgrades are likely in the regions we studied in comparison with to feature in the upcoming Integrated Rail Plan those arising in the North and Midlands . Setting6 Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 14 Budgets by region (and nation) The NIC, when it comes to update its National » key cross country freight routes—Felixstowe– There are many other projects that could be Infrastructure Assessment, will also need Nuneaton, Southampton-West Midlands and funded by this longer term rail enhancement The English region by region national to take into account the emerging views possibly East West Rail too—and the key NE- budget, including infill electrification schemes rail enhancement budgets out to 2045 from the Union Connectivity Review, which SW cross country passenger route including and other smaller scale projects including—as we have assessed are as follows: is pointing towards a need for better cross- Birmingham–Bristol (needed to create the the NIC identified for the North and Midlands— border rail links between England and both more valuable ‘X’ formation from HS2) some ‘quick wins’ . But it would not support » East of England £7 1bn. South and North Wales (as well as Scotland) . major new lines, such as further high-speed » London £5 .1bn » the unelectrified main lines of South routes, or new large-scale inter-regional » South East England £6 .7bn West England, Wales west of Cardiff and links such as Northern Powerhouse Rail . » South West England £4 .3bn The policy agenda for along at least parts of the North Wales transport is shifting to coast, as well as from Newport to Crewe and for Wales, £1 .8bn . address climate change along the Wales-England border . These could be increased by +25%, if the There is also a network resilience question in approach that looks likely for the Midlands/ A very significant proviso in considering the relation to climate change . In the case of the South North is followed—at least for those regions/ appropriateness of these allocations is the extent West, budget might also need to be allocated to nations that share the need for levelling up and to which electrification and decarbonisation create a second main line between Exeter and where rail could contribute more to economic challenges that arise across the regions could Plymouth, to mitigate the effects of climate change performance, and this means to the South be met by them . Budgets, as of April 2021, (sea level rises and more extreme weather events) West and Wales, for which the budgets would are not yet set for these challenges 11, but that make the existing coastal route via Dawlish become £5 4bn. and £2 .4bn respectively . the regional allocations of rail investment vulnerable . This is probably the UK’s number one budgets identified here could be largely transport priority in terms of investment needed for consumed by this area of investment . This climate change adaptation . The so-called ‘northern could address the lack of electrification of: route’ was costed at £875m in 2014 by Network Rail .

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London Wales Wales

The budget assessed for London to 2045 is nowhere The London super-region (East of England The analysis here has included Wales because it We developed a budget for Wales of £1.8bn near sufficient to cover a major project such as + South East England + London) formed the is a part of the NIC budget geography not covered for the 2020–2045 period. Clearly Transport Crossrail 2 (now ‘on ice’, with a projected budget of geography of BR’s Network South East, and in the Midlands and North work of 2020 . Currently for Wales (TfW) is best placed to develop c £40bn) . But London has proven capable of raising on this basis it would have a rail investment Transport for Wales has a number of ambitious its own priorities having confirmed a its own funding sources for rail project investments budget of £18 .9bn for the 2020–2045 period . But programmes underway, under a ‘Metro’ heading, budget allocation of around this level. to match central Government contributions, and there is little virtue in planning at this ‘super most significantly for South East Wales, but also As with the English SNB areas, there is scope to increase this budget if TfW is TfL is subject to separate budget provisions under region level’ currently . Unlike with the North for North Wales and potentially, Swansea Bay/ prepared to reduce its highway investment 13 a city/metropolitan heading . Meanwhile, for and Midlands, there are no rail projects in the West Wales too . Strategic rail investment is a budget (and the opposite also applies). London, it would be worth looking for medium size wider south east at present that cannot be major outstanding concern . With the prospect projects, such as Crossrail 1 extension to Ebbsfleet examined better at a regional or a SNB level . of rail investment in part being used to replace In practice, funding allocations for Wales, rather than fresh ‘mega’ rail projects . Orbital cross- the planned Newport M4 bypass, there is good since devolution, have continued to use connections in outer London, for example, as being reason to consider a higher rail enhancement Barnett formula allocations. While these implemented across the Paris City region, would budget than shown here, based on a switch are population based, they do not provide a proper needs-based assessment. In the be worthy of support because of the greater scope of spending from strategic roads to rail .14 case of rail investment in Wales, it may to replace car use and a wider decarbonisation be that a new stream of funding emerges policy . Some of these may fall, however, under a from the current Union Connectivity Review city metro budget, and utilise light rail or busway headed by Sir Peter Hendy (for instance for technologies, rather than conventional rail . Others electrification of the North Wales Coast main may prove essential to support HS2 opening plans . 12 line), and, as we would recommend here, from a decarbonisation of transport fund that centres on electrification and improvement of longer distance railways as an inescapable part of the necessary policy mix.

Setting Regional Budgets for Rail Investment | May 2021 Previous Next Greengauge 21 | 16 Who should determine regional For the Midlands and North, the National We recommend that the Sub National Bodies This report represents a first attempt at a budget rail enhancement budgets? Infrastructure Commission considered not just a (SNBs) should be given a formal advisory role estimation process at SNB level . The budget baseline budget—as we have sought to replicate in setting rail investment priorities and budgets. allocations could – and we suggest should Setting budgets for a 25-year period—as the here—but also +25% and +50% variants of the They should develop budgets using the work – be developed for use by the sub national NIC did for the Midlands and North—is of value . baseline budget . In the case of the English South that the NIC carried out for the Integrated Rail transport bodies which are producing transport Plans based on such budgets need to be, as the and East, and Wales which have smaller baseline Plan Rail Needs Assessment as a template. strategies across England . In doing this work, NIC suggested ‘adaptive’—that is, responsive to budgets, the impact of equivalent variant budget SNBs will need to work closely with Network changes in circumstances in the years ahead . But uplifts would be less marked . But along with re- Like the NIC, the SNBs could then avoid the old Rail and DfT in a constructive partnership . the flexibility this implies need not detract from balancing spend across strategic roads and rail, problem of generating a lengthy project wish-list, Greengauge 21 would welcome an opportunity the virtues of setting longer term investment such variants could also be contemplated—and with the focus instead being on ranking priorities to discuss this report with all of these parties . budgets, which include the opportunity to plan most especially for regions and sub-regions where within budget ranges . It is clear both from the NICs ahead for efficient project delivery and the ‘levelling up’ has a clear resonance as in the North report on the North and the Midlands, and the Without the input from SNBs, DfT/Network Rail encouragement of wider private sector investment . and Midlands . This applies most self-evidently assessments that we have made, that real choices will not be able to tailor rail investment priorities to Wales and the South West (especially for the will need to be made . The SNBs would need to work to address identified regional and local challenges . Peninsular), and we showed that £1 .7bn could be closely with Network Rail and the Department for Equally, without the rail sector’s knowledge added to the rail enhancement budget for Wales/ Transport in fulfilling their representative functions . of wider plans and operational realities, the the South West at a +25% over baseline budget level . SNBs risk promoting unrealisable ambitions .

No doubt the views of the National Infrastructure Commission would be of importance on this matter .

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1 . The Commission’s binding fiscal remit requires it to 8 . Electrification of some sections of motorway/main road has demonstrate that all its recommendations for economic been trialled in Sweden and Germany, but this is not seen as infrastructure are consistent with, and set out how they being a likely solution except for specific flows (for instance can be accommodated within, gross public investment in Hamburg–Lubeck, where there is a significant road-based port economic infrastructure of between 1 .0 per cent and 1 .2 per access container traffic) . cent of GDP each year between 2020 and 2050 . While the 9 . See http://www .greengauge21 .net/wp-content/uploads/ allocation for the North And Midlands as calculated in the Rail Beyond_HS2WEB .pdf . The Bromsgrove-Bristol Parkway line lies Needs Assessment implies overall investment expenditure up partly in the West Midlands, partly in the South West region to the 1 .2% limit in the period to 2035, thereafter there is some headroom, allowing for as yet unallocated sums in areas such 10 . Although Swansea-Cardiff-Newport-Bristol-Bath was as responses to the climate crisis . noted as an example of where overlapping city employment catchments overlap, in the manner that is widespread across 2 . The rail share of enhancements was calculated to include the North and Midlands . expenditure on Network Rail enhancements including Control Period 6, Northern Powerhouse Rail and the central section 11 . See UK must begin ‘immediate’ rail electrification to hit of East West Rail . The road share included expenditure on net-zero goals | Construction News, April 22nd, 2021 Highways England enhancements including Road Investment 12 . TfL believes that additional Crossrail trains are needed to Strategy 2 (RIS2), and the Oxford to Cambridge Expressway support the planned additional 6 train/hour service to the new (which has since been largely abandoned) . HS2 station at . 3 . While this sum formed a key component of the NIC’s £86bn 13 . See http://www .greengauge21 .net/the-first-passenger- baseline budget for the Midlands and North, it was deemed to railway-in-the-world-and-whats-needed-next/ be a commitment and out of scope for strategic assessment . 14 . https://gov .wales/south-east-wales-transport-commission- 4 . See National Infrastructure Strategy ‘Fairer, Faster, Greener’, final-recommendations . National Infrastructure Commission, November 2020 p35 . Note that urban public transport funding does not fall under the NIC’s fiscal remit . https://assets .publishing .service .gov . uk/government/uploads/system/uploads/attachment_data/ file/938049/NIS_final_web_single_page .pdf 5 . Ibid, p95 . 6 . The Cardiff-Swansea extension was dropped, but see http:// www .greengauge21 .net/the-first-passenger-railway-in-the- world-and-whats-needed-next/ 7 . This might build on ideas from the Welsh Government’s Burns Commission as picked up in an interim statement of the Union Connectivity Review .

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