“Essential to spreading prosperity”: An open letter from the rail industry on the importance of HS2

A field, along the route of HS2. Image: Getty.

Last Friday Friday, a coalition of executives from the rail and construction industries, organised by the Rail Industry Association, sent the following open letter to the government regarding the future of the HS2 rail link.

The Rt Hon Boris Johnson MP

Prime Minister, First Lord of the Treasury and Minister for the Civil Service

10 Downing Street

London

SW1P 4DR 

 

17 January 2020

Re: The importance of HS2 to Britain’s future prosperity

Dear Prime Minister, 

We are writing to you as senior leaders in the British rail and construction sectors to express our deep alarm at mounting recent media reports that put into doubt the future of HS2.  

We want to take this opportunity to reiterate not only the devastating impact any curtailment of HS2 would have on our industry, but the detrimental effect cancellation would have on UK Plc more widely in terms of jobs, manufacturing, investment and export potential. To date, we have very much welcomed the Government’s commitment to increased infrastructure spending and investment. However, by putting a project of such national importance at risk, future infrastructure plans will also be threatened, as will the Government’s desire to level up the UK economy. 

HS2 is essential to joining up the UK and spreading prosperity throughout the country. Latest figures show that the project is already supporting approximately 10,000 jobs, is set to support 15,000 jobs by year end and 30,000 jobs at peak construction and train building activity, as well as 2,000 apprentices. Were HS2 to be cancelled, job losses would be calamitous, as would the missed opportunity to train and upskill the next generation of young people who will deliver the future infrastructure and rolling stock projects that the Government is ambitious to complete.  


As the Government reaches its decision, it also needs to be mindful of the fact that the HS2 project is well underway. Indeed, it has been going for more than 10 years and contracts worth billions have been signed. The cancellation of a Government project so far progressed would be unprecedented in the history of British construction.  Should this happen, the industry will have to include additional consideration for risk when pricing for future contracts, to bear in mind the risk of the Government cancelling future projects in the middle of delivery. To put it as clearly as possible, future infrastructure projects will cost the Government more, should HS2 be cancelled at this stage. 

Finally, we often hear talk of replacing HS2 with other projects elsewhere. To be clear, there is no other ‘shovel ready’ project in the UK of a remotely comparable size. The Government’s commitment to infrastructure projects in the North of England is laudable, but these projects are many years behind HS2 in terms of readiness to begin work and most, like Northern Powerhouse Rail, require HS2 to be delivered to realise their full benefits. A hiatus of this duration in Government investment, at this time, would have a devastating impact on jobs in the sector and risk delaying the infrastructure revolution by a decade.

The project is essential, and irreplaceable, to the Government’s goal of fixing the north-south divide which has beset Britain for generations. We urge you to reach a final conclusion as quickly as possible. We urge you to save the jobs of 10,000 people already employed on the project. We urge you to get HS2 done.

Yours sincerely,

David Hughes, CEO, ABB Ltd     

David Barwell, Chief Executive, UK & Ireland, AECOM

Nick Crossfield, CEO, Alstom UK & Ireland

Mark Cowlard, CEO, Arcadis UK and Ireland          

 

Matthew Behan CEO, Barhale   

Matt Byrne, President, UK, Bombardier Transportation

Vincent Avrillon, Managing Director, Bouygues

Jean-Pierre Bertrand, CEO, Colas Rail Ltd               

Jim Brewin, UK Country Lead, Hitachi Rail

Tim Gray, Managing Director, Hitachi Information Control Systems Europe Ltd

Dyan Crowther, CEO, HS1 

Donald Morrison, Senior Vice President and General Manager for People & Places Solutions, Europe, Middle East & Africa, Jacobs

Paul Goodhand, Managing Director, Knorr-Bremse Rail Systems (UK) Limited

Mike Haigh, Executive Chair, Mott MacDonald Ltd

John Murphy, CEO, J Murphy & Sons Ltd

Kathryn Nichols, CEO, Nichols Group

Wayne Peacock, Managing Director Pandrol UK Ltd

Mike Hughes, Zone President, UK & Ireland, Schneider Electric       

John Whitehurst, Managing Director, Transport, Serco

William Wilson, CEO, Siemens Mobility Ltd

Raj Sinha, Managing Director, SSE Enterprise Rail

Nick Salt, CEO, SYSTRA Limited

Frank McKay, CEO, telent

Shaun Jones, Vice President, Thales GTS

Noel Travers, Managing Director, Unipart Rail and Unipart Manufacturing Group

Steve Cocliff, Managing Director, VolkerRail Group

Mark Naysmith, UK CEO, WSP   

Tim Jones & James Fox, Managing Director & Commercial Director, 3Squared Ltd

Pino De Rosa, Managing Director, Bridgeway Consulting Ltd             

Noel Dolphin, Managing Director, Furrer+Frey    

Malcolm Wilson, Managing Director, IPEX Consulting Limited           

Paul McSharry, Managing Director, Kilborn Consulting Limited

Richard Kelly, Managing Director, Loram Ltd        

Paul Priestman, Chairman and Designer, Priestman Goode Ltd

Rui Costa, Managing Director, SOMAFEL

Paul Costello, Managing Director, Wentworth House Rail Systems Limited     

Munir Patel, Managing Director, XRAIL Group

David Tonkin & Darren Caplan, Chairman & Chief Executive, Railway Industry Association         

Simon Babes, SME Group Chair, Railway Industry Association            

Mike Hulme & Justin Moss, Co-Chairs, Northern Rail Industry Leaders            

Professor Clive Roberts, Head of School of Engineering and Director, Birmingham Centre for Railway Research and Education, University of Birmingham          

 

 

Cc:          Grant Shapps, Secretary of State for Transport

                Sajid Javid, Chancellor of the Exchequer

                Andrea Leadsom, Secretary of State for Business, Energy and Industrial Strategy

                Rishi Sunak, Chief Secretary to the Treasury

                Douglas Oakervee, Chair, independent review of HS2

 
 
 
 

A new wave of remote workers could bring lasting change to pricey rental markets

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus. (Valery Hache/AFP via Getty Images)

When the coronavirus spread around the world this spring, government-issued stay-at-home orders essentially forced a global social experiment on remote work.

Perhaps not surprisingly, people who are able to work from home generally like doing so. A recent survey from iOmetrics and Global Workplace Analytics on the work-from-home experience found that 68% of the 2,865 responses said they were “very successful working from home”, 76% want to continue working from home at least one day a week, and 16% don’t want to return to the office at all.

It’s not just employees who’ve gained this appreciation for remote work – several companies are acknowledging benefits from it as well. On 11 June, the workplace chat company Slack joined the growing number of companies that will allow employees to work from home even after the pandemic. “Most employees will have the option to work remotely on a permanent basis if they choose,” Slack said in a public statement, “and we will begin to increasingly hire employees who are permanently remote.”

This type of declaration has been echoing through workspaces since Twitter made its announcement on 12 May, particularly in the tech sector. Since then, companies including Coinbase, Square, Shopify, and Upwork have taken the same steps.


Remote work is much more accessible to white and higher-wage workers in tech, finance, and business services sectors, according to the Economic Policy Institute, and the concentration of these jobs in some major cities has contributed to ballooning housing costs in those markets. Much of the workforce that can work remotely is also more able to afford moving than those on lower incomes working in the hospitality or retail sectors. If they choose not to report back to HQ in San Francisco or New York City, for example, that could potentially have an effect on the white-hot rental and real estate markets in those and other cities.

Data from Zumper, an online apartment rental platform, suggests that some of the priciest rental markets in the US have already started to soften. In June, rent prices for San Francisco’s one- and two-bedroom apartments dropped more than 9% compared to one year before, according to the company’s monthly rent report. The figures were similar in nearby Silicon Valley hotspots of San Jose, Mountain View, Palo Alto.

Six of the 10 highest-rent cities in the US posted year-over-year declines, including New York City, Los Angeles, and Seattle. At the same time, rents increased in some cheaper cities that aren’t far from expensive ones: “In our top markets, while Boston and San Francisco rents were on the decline, Providence and Sacramento prices were both up around 5% last month,” Zumper reports.

In San Francisco, some property owners have begun offering a month or more of free rent to attract new tenants, KQED reports, and an April survey from the San Francisco Apartment Association showed 16% of rental housing providers had residents break a lease or unexpectedly give a 30-day notice to vacate.

It’s still too early to say how much of this movement can be attributed to remote work, layoffs or pay cuts, but some who see this time as an opportunity to move are taking it.

Jay Streets, who owns a two-unit house in San Francisco, says he recently had tenants give notice and move to Kentucky this spring.

“He worked for Google, she worked for another tech company,” Streets says. “When Covid happened, they were on vacation in Palm Springs and they didn’t come back.”

The couple kept the lease on their $4,500 two-bedroom apartment until Google announced its employees would be working from home for the rest of the year, at which point they officially moved out. “They couldn’t justify paying rent on an apartment they didn’t need,” Streets says.

When he re-listed the apartment in May for the same price, the requests poured in. “Overwhelmingly, everyone that came to look at it were all in the situation where they were now working from home,” he says. “They were all in one-bedrooms and they all wanted an extra bedroom because they were all working from home.”

In early June, Yessika Patapoff and her husband moved from San Francisco’s Lower Haight neighbourhood to Tiburon, a charming town north of the city. Patapoff is an attorney who’s been unemployed since before Covid-19 hit, and her husband is working from home. She says her husband’s employer has been flexible about working from home, but it is not currently a permanent situation. While they’re paying a similar price for housing, they now have more space, and no plans to move back.

“My husband and I were already growing tired of the city before Covid,” Patapoff says.

Similar stories emerged in the UK, where real estate markets almost completely stopped for 50 days during lockdown, causing a rush of demand when it reopened. “Enquiry activity has been extraordinary,” Damian Gray, head of Knight Frank’s Oxford office told World Property Journal. “I've never been contacted by so many people that want to live outside London."

Several estate agencies in London have reported a rush for properties since the market opened back up, particularly for more spacious properties with outdoor space. However, Mansion Global noted this is likely due to pent up demand from 50 days of almost complete real estate shutdown, so it’s hard to tell whether that trend will continue.

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus, but many industry experts say there will indeed be change.

In May, The New York Times reported that three of New York City’s largest commercial tenants — Barclays, JP Morgan Chase and Morgan Stanley — have hinted that many of their employees likely won’t be returning to the office at the level they were pre-Covid.

Until workers are able to safely return to offices, it’s impossible to tell exactly how much office space will stay vacant post-pandemic. On one hand, businesses could require more space to account for physical distancing; on the other hand, they could embrace remote working permanently, or find some middle ground that brings fewer people into the office on a daily basis.

“It’s tough to say anything to the office market because most people are not back working in their office yet,” says Robert Knakal, chairman of JLL Capital Markets. “There will be changes in the office market and there will likely be changes in the residential market as well in terms of how buildings are maintained, constructed, [and] designed.”

Those who do return to the office may find a reversal of recent design trends that favoured open, airy layouts with desks clustered tightly together. “The space per employee likely to go up would counterbalance the folks who are no longer coming into the office,” Knakal says.

There has been some discussion of using newly vacant office space for residential needs, and while that’s appealing to housing advocates in cities that sorely need more housing, Bill Rudin, CEO of Rudin Management Company, recently told Spectrum News that the conversion process may be too difficult to be practical.

"I don’t know the amount of buildings out there that could be adapted," he said. "It’s very complicated and expensive.

While there’s been tumult in San Francisco’s rental scene, housing developers appear to still be moving forward with their plans, says Dan Sider, director of executive programs at the SF Planning Department.

“Despite the doom and gloom that we all read about daily, our office continues to see interest from the development community – particularly larger, more established developers – in both moving ahead with existing applications and in submitting new applications for large projects,” he says.

How demand for those projects might change and what it might do to improve affordable housing is still unknown, though “demand will recover,” Sider predicts.

Johanna Flashman is a freelance writer based in Oakland, California.