The government’s preferred route for HS2 leaves questions unanswered

Following hot on the heels of the government’s decision to back a third runway at Heathrow, last week the Department for Transport confirmed its preferred route for the HS2 line north of Birmingham.

To the west, the line takes in Manchester airport via Crewe before continuing to Manchester city centre, where a new station is planned next to Manchester Piccadilly. A connection will also be created to the West Coast Main Line allowing HS2 services to continue to Glasgow and Edinburgh.

A second spur will run north from Birmingham to Sheffield - although the terminus is yet to be confirmed - and then on to Leeds. The plans include a link to the existing East Coast Main Line to allow services to continue to York and Newcastle.

The announcement has inevitably provoked howls of protest from communities that will be affected by the line but stand to see few benefits from its construction. On the other hand, businesses and public sector leaders in the cities involved have welcomed the news. But what does the property and development industry make of it?

Birmingham bonus

Certainly, the announcement has got agents in Birmingham excited. After years of under-investment in the city’s infrastructure, the feeling is that HS2 will lead to a renaissance in its fortunes - and that isn’t just about the better connections to London.

“Birmingham’s placement at the epicentre of three branches of the HS2 line, easily connecting it to the north and the capital, will significantly transform the city,” says Matt London, director at Colliers International’s Birmingham office.

“We are already seeing a rise in the number of big corporates, such as HSBC, relocating operations outside London, and the news [about HS2] will further encourage investors, occupiers and workers alike to consider Birmingham as a truly viable, and even preferable, option.”

Similar sentiments abound in Leeds and Sheffield. “As the ‘northern powerhouse’ property market has been dominated by Manchester, confirmation that major new transport links are coming to cities like Sheffield should help ensure that businesses, retailers and residents start to see these cities as a real alternative,” says Matthew Scrimshaw, head of the north region at Lambert Smith Hampton.

If ever there was a time for linked-up thinking, it is now - Walter Boettcher, Colliers International

There are still issues to be resolved in Sheffield, however - not least the fraught matter of the ultimate location of the HS2 station. The original idea was for the station to be located at Broadgate Estates’ Meadowhall shopping centre on the edge of town, near the M1. The option faced a barrage of opposition, with critics arguing that HS2 should instead call at the existing station in the city centre.

The city centre option gained momentum when HS2 chairman Sir David Higgins backed the proposal. It was given further impetus when Sheffield landed a deal worth £1bn of Chinese investment into the city centre in July.

Key in progressing the region

The government has now said its preferred option is a spur running into the city centre, with the main route running east of Sheffield - and a final decision is expected next year.

“Given that Sheffield has attracted a recent Chinese commitment for substantial investment in regenerating the city centre, it would be madness for the HS2 route to bypass the centre,” says Walter Boettcher, chief economist at Colliers International.

“Transport hubs along the length of HS2 are key in progressing the regional development agenda. If ever there was a time for linked-up thinking, it is now.”

So the consensus is that the confirmation of the preferred route north of Birmingham is giving investors and occupiers greater confidence, even if there are still a few details to be ironed out. However, many in the north argue that, while welcome, HS2 will be insufficient if the government’s ambitions for a northern powerhouse are to be realised.

A London of the north

The idea for the northern powerhouse is that, if viewed as a single economic entity, the great cities of the north have a critical mass that could one day provide a counterweight to London. As things stand, however, the quality of the north’s transport infrastructure renders the idea laughable.

For instance, at the moment a thrusting Liverpudlian entrepreneur wishing to meet a potential business partner in Sheffield faces a dilemma. By road, the journey is only 78 miles, but takes around two hours in good traffic. The train service is even worse, with the quickest journey taking one hour and 42 minutes - an average speed of around 45mph.

For this reason, business and civic leaders in northern cities are pushing hard for the delivery of a third high-speed rail service - HS3 - to run cross-country from Liverpool to Hull, taking in Manchester, Sheffield and Leeds on the way.

HS2 must go hand in hand with plans to connect the north’s cities via HS3 - Ed Cox, IPPR North

The idea has received the backing of the National Infrastructure Commission and received a boost in March when then chancellor George Osborne committed £60m for scoping works for a line between Manchester and Leeds, with the aim of reducing journey times to 30 minutes (the fastest trains currently take 49 minutes).

“HS2 is an important piece of the puzzle in connecting the north and rebalancing the economy, but it must go hand in hand with plans to connect the north’s cities via HS3,” says Ed Cox, director at the Institute for Public Policy Research (IPPR) North.

“It’s both, not an either/or. Government spending on infrastructure has been cut by a quarter since 2010 and is less than 2% of GDP - half that of most other developed nations. Now more than ever the north needs the catch-up cash to prosper post Brexit [vote].”

Scrimshaw goes further. He argues that without HS3, the arrival of HS2 could actually accelerate the brain drain from northern cities to London - which would run entirely contrary to the northern powerhouse agenda.

“For the northern powerhouse to thrive and succeed in the long term, we still believe that the government’s money should be spent on HS3,” argues Scrimshaw. “I fear that HS2 will further drain the north of its most talented human capital.

“By focusing on connectivity within the region, rather than connecting northern powerhouse cities to the capital, HS3 will prevent the most talented employees from being lost to London, while further stimulating our regional economy.”

Quite apart from the massive investment needed to fund HS3, extra cash is also needed for more localised transport improvements. “If HS2’s benefits are to be maximised beyond the square mile around its major hubs, then it depends on it being well connected into the local networks within and across the towns and cities it is being built to serve,” says Martha Grekos, partner and head of planning at Howard Kennedy.

Part of the solution is making better use of new but tested technologies. While some northern cities no doubt require investment in heavy infrastructure, which is inherently expensive, elsewhere gains could be made by introducing smart payment systems to ease the flow of passengers.

“As a result, a contactless travelcard system similar to the London Oyster card is currently being pursued by Transport for the North.

“This would enable, encourage and speed up transfers between transport modes, as well as immediately stimulate improved accessibility between city regions within the northern powerhouse,” says Scrimshaw. “Current levels of commuting [via public transport] are shockingly minimal.”

So the announcement on HS2’s route north of Birmingham has been broadly welcomed by business in general and the property sector in particular. However, it isn’t the end of the line. If the government’s stated ambition of rebalancing the economy away from London and the South East is to be realised, a far richer network of transport improvements is required.

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