Are the Tories planning to cut Crossrail 2? And how can they deliver HS2 without it?

Euston station, the scene of the crime. Image: Getty.

At first sight, the transport section of the Conservative manifesto published yesterday looks rather bland compared to the drama elsewhere.

It pledges to continue “putting some £40bn into transport improvements across the United Kingdom over the rest of this decade” and to “continue our programme of strategic national investments, including High Speed 2, Northern Powerhouse Rail and the expansion of Heathrow Airport”.

The first response to this is relief. There are several ideas that have been floating around the Conservative Party and affiliated think-tanks for a while which would be less than great – from dropping the new Heathrow runway to the cancellation of the HS2 high-speed north-south rail link or George Osborne’s Northern Powerhouse project, via the privatisation of infrastructure operator Network Rail, through to the abolition of all rail subsidies and safety regulations.

Transport is a sector that’s all too likely to experience major reorganisations, funding and scope changes halfway through major projects based on political whims. Given the change in government focus after the Brexit vote, more radical changes to transport policy could have been on the cards.

The manifesto pledges greater government involvement in private-sector areas such as energy and banking, so it’s perhaps not surprising to see Network Rail privatisation disappearing from the picture. A sell-off would go against Theresa May’s desire to appeal to former Labour and UKIP voters as a break from the Cameron government’s City of London establishment.

Indeed, the one major project that does appear to have got the axe is a London one. The Crossrail 2 project, providing a new heavy-rail line between north-east and south-west London – which was included in the 2015 Conservative manifesto – isn’t mentioned at all this time round.

Take a look at what you could have won.

The Department for Transport was scheduled to report on the business case for the program that Transport for London has created by the end of this month, but has now delayed any decision till after the election. So things are looking shaky for the project’s future, despite its strong backing from the Mayor and TfL.

The obvious question is why. Crossrail 2 is one of the highest benefit/cost ratio (BCR) schemes going in the UK, with a BCR of 1:2.7, compared to about 1:1.8 for HS2 and about 1:2 for the Elizabeth Line (Crossrail 1) that’s currently being completed. (The Northern Powerhouse Rail scheme hasn’t even calculated one.)


Partly this is because of the nature of BCRs. Transport investment in London always shows up more productive in BCR terms than transport investment in the rest of the UK, because it’s a bigger, denser city containing more people who earn more money than people anywhere else. It’s also the only place in the country where all transport networks continuously run at or above capacity.

As a result, it’s easy to show how capacity enhancement projects will have benefits, because you can see exactly who will use them and what they’ll use them for. Regeneration and massive change projects require much more of a wing and a prayer outlook – and while “If you build it, they will come” may have worked for Kevin Costner, it’s hard to factor into economic appraisals.

So if the government wants to move away from its predecessor’s focus on London, it pretty much has to neglect high BCR London projects in favour of lower or incalculable BCR projects elsewhere – and accept the economic hit that will ensue if this means further crowding on the capital’s commuter lines.

There’s one problem with this for Crossrail 2, though. The current plans for HS2 – which have gone through parliament and detailed design, and are almost ready to start – rely on the new commuter line. The terminus for HS2 will be at Euston, which is on the north side of central London. It’s an hour’s walk from Euston to Westminster or to London Bridge, and the three tube lines connecting Euston directly with everywhere southwards are already well over capacity.

The biggest economic case for HS2, national showing-off aside, is that commuter routes to the north of London are saturated. Moving high-speed trains to a new line allows more commuter trains to run on existing lines – both by swapping them, and by improving the line’s capacity. (When all trains on a track go at the same speed, there’s room for more trains than there is if fast ones keep catching up with slow ones.) This increases the number of people who can be moved from northern suburbia into London.

But without Crossrail 2, everyone who arrives into Euston will then find it hard to get anywhere else. The commuters who HS2 has made room for will be using up the last vestiges of space on the Victoria Line; and the time benefits of the new line will seem irrelevant when you have to queue for just as long before you can get on the Tube.

Is this an unintended consequence that the Conservatives haven’t thought through? Is it an excuse to cancel HS2 after the election? Is the apparent disappearance of Crossrail 2 actually just a total red herring, or even an attempt to play hardball with TfL over funding splits? We’ll see – but the plans as they appear now just don’t seem to make sense.

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What do new business rates pilots tell us about government’s appetite for devolution?

Sheffield Town Hall, 1897. Image: Hulton Archive/Getty.

There have been big question marks about any future devolution of business rates ever since the last general election stopped the legislation in its tracks.

Not only did it not make its way to the statute book before the pre-election cut off, it was nowhere to be seen in the Queen’s Speech, suggesting the Government had gone cold on the idea. (This scenario was complicated further recently by the introduction of a private members’ bill on business rates by Conservative MP Peter Bone, details of which remain scarce.)

However, regardless of the situation with legislation, the government’s announcement in recent days of a pilot phase of reforms suggests that business rates devolution will go ahead after all. DCLG has invited local authorities to take part in a pilot scheme which will allow volunteer authorities to retain 100 per cent of the business rates growth they generate locally. (It also notes that a further three pilots are currently in operation as they were set up under the last government.)

There are two interesting things in this announcement that give some insight on how the government would like to push the reform forward.

The first is that only authorities that come forward with their neighbours with a proposal to pool all business rates raised into one pot across a wider geography will be considered. This suggests that pooling is likely to be strongly encouraged under the new system, even more considering that the initial position was to give power to the Secretary of State to form pools unilaterally.

The second is that pooled authorities are given free rein to propose their own local arrangements. This includes determining, where applicable, a tier split (i.e. rates distribution between districts and counties), a plan for distributing additional growth across the pool, and how this will be managed between authorities.

It’s the second which is most interesting. Although current pools already have the ability to decide for some of their arrangements, it’s fair to say that the Theresa May-led government has been much less bullish on devolution than George Osborne in particular was, with policies having a much greater ‘top down’ feel to them (for example, the Industrial Strategy) rather than a move towards giving places the tools they need to support economic growth in their areas. So the decision to allow local authorities to come up with proposed arrangements feels like a change in approach from the centre.


Of course, the point of a pilot is to test different arrangements, and the outcomes of this experiment will be used to shape any future reform of the business rates system. Given the complexity of the system and the multitude of options for reform, this seems like a sensible approach to take. But it remains to be seen whether the complex reform of a national system can be led from the bottom up. In effect, making sure this local governance is driven by common growth objectives, rather than individual authorities’ interests, will be essential.

Nonetheless, the government’s reaffirmation of its commitment to business rates to devolution and its willingness to test new approaches is welcome. Given that the UK is one of the most centralised countries in the western world, moves to allow local authorities to keep at least some of the tax revenue that is generated in their area is a step forward in giving places more autonomy over how they spend their money. That interest in changing this appears to have been whetted once more is encouraging.

There are, however, a number of other issues with the current business rates system which need to be ironed out. Centre for Cities is currently working on a briefing of the business rates system, building on our previous work in this area, and we’ll be making suggestions as to how the system can be improved.

Hugo Bessis is a researcher for the Centre for Cities, on whose blog this article originally appeared.

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