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The National Infrastructure Commission’s Second Assessment, published today, says the UK must address our ‘slow economic growth and entrenched regional inequalities’, and that well planned and delivered, sustainable infrastructure can help us do this.

The Commission also underlines the role of transport, both within and between cities, in boosting productivity and says that we must take long term decisions and demonstrate staying power. It also recognises the power of local leadership in successful infrastructure delivery and calls for Government to move away from centrally allocated funding pots.

Needless to say, we welcome its findings.

There is more to infrastructure than railways, but it is clear that the recent HS2 decision is a major blow to our Core Cities One of the global strategic advantages of the UK is that we are a small nation. Our major urban areas are in close proximity and when properly connected can exhibit the benefits of agglomeration at a national scale, based upon the cities respective strengths.

At the heart of the Prime Minister’s justification for scrapping the northern half of HS2 were two arguments, that travel patterns were rising and HS2 was no longer affordable.

The National Infrastructure Commission challenges both of these. It says that while travel patterns may have changed, this has not weakened the case for long term investment and that we now have a ‘major gap’ in UK rail strategy that is likely to costs us all more in the long-run.

While there has been intense focus on the spiralling costs of HS2 there has been little discussion on the benefits of the investment.

The RSA’s recent UK Urban Futures Commission argued that government has “an in-built bias towards monetised benefits and towards incremental projects rather than those that are non-monetary, transformational or multi-dimensional, which have higher levels of uncertainty and are harder to model.”

HS2 Phase 2’s non-monetary benefits include:

  • Higher foreign investment into the UK, as it is a more attractive investment location due to better transport;
  • Dynamic clustering, where businesses relocate to be closer together, forming clusters around well-connected places and benefiting from knowledge sharing;
  • Workers moving to more productive jobs, in response to changes in transport costs, to areas that have higher productivity due to a variety of factors such as agglomeration and capital.
  • Dependent development, where property developers may react to the transport improvements from HS2 by upgrading housing stock, which could lead to regeneration;
  • Potential freight benefits that could arise from spare capacity generated by HS2.

When asked about HS2 at the launch of the RSA Urban Futures Commission, co-chair Andy Haldane said, “If I had my way, we would not be talking about HS2 being thin-sliced, but about HS3, HS4 and HS5”.

This reflected not only the scale of the opportunity from unleashing the potential of our cities but the key enabler of that being to vastly increase both public and private investment to address the decades long shortfall. A new approach to the fiscal rules that reflects the whole of the Government balance sheet would be the way to do that.