HS2 (High Speed 2) is a GBP56 billion planned high-speed railway designed to enhance the UK’s north-south connections. It aims to increase the capacity and connectivity of the country’s rail network by offering a high-frequency, high-capacity, high-speed rail service.
As well as improving services and slashing journey times the high-speed railway is predicted to bring annual economic benefits across the UK of up to GBP15 billion.
What are the key features of HS2?
Linking London, Birmingham, Leeds and Manchester, HS2 will run as many as 14 trains an hour between the UK’s major cities in each direction, and estimates see the network carrying over 300,000 people every day.What is the current status of HS2?
Preparatory works for HS2 Phase 1, which includes the London Euston to Birmingham services, are underway with main construction predicted to start in 2019. The plan is for this phase to be ready by 2026. Phase 2, where the railway line splits and runs slightly northwest to Manchester and slightly northeast to Leeds, is due to be complete in 2033 but recent reports show this could be accelerated to 2030.
How will HS2 affect Manchester?
Designed to bring benefits to all regions of the UK, it is the Midlands and the North that are destined to do particularly well from this infrastructure investment. In Manchester, the heart of the Northern Powerhouse region, there will be HS2 trains pulling in at Manchester Piccadilly and Manchester Airport on completion. The project already looks set to impact the city in a number of different ways:
HS2 will deliver a significant and widespread improvement in connectivity. The London to Manchester route is expected to reduce its journey duration from 2 hours 8 minutes to just 1 hour 8 minutes, while the journey time from Birmingham to Manchester will be cut from 1 hour 28 minutes to only 41 minutes.
Greater connectivity and the resulting improved access to markets will ultimately result in an increase in productivity as well as economic growth. Greater Manchester is predicted to see a 19% improvement in business connectivity by rail and a 1.4% improvement in labour connectivity (Manchester City Council). Greater Manchester is expected to benefit from annual productivity gains of up to GBP1.3 billion per year. In Manchester (including the MetroLink area) improved connectivity is predicted to manifest in a GBP326 to GBP834 million increase in economic output.
A Changing Economy
Large investment projects provide stimulus for change. HS2 puts the spotlight on the Midlands and the North, supporting the transformation that is already occurring and adding appeal to corporate occupiers and investors, both within the UK and overseas.
Opening up markets in the north via HS2 will help to increase trade and competition. It may also cause business behaviours to adapt with potential reorganisation and restructuring, changing investment and location decisions and increased specialisation.
A project such as HS2 can also go some way to helping rebalance the UK economy, shifting the focus from London and the south by attracting businesses and services to regional cities. In Greater Manchester alone the GVA is expected to increase by GBP1.3 billion by 2040 with the advent of HS2, while predictions for the next five years see Manchester’s economy growing at a rate that is higher than the national average (Savills 2015).
Greater connectivity and a growing economy increase access to labour markets for businesses, and enhance employment opportunities for the region’s people. As business and investment enters a city, there is access to a higher volume of diverse, highly-skilled jobs. The Greater Manchester Combined Authority (GMCA) predicts that by 2040 HS2 is predicted to create 180,000 new jobs for Greater Manchester.
With lower set-up and labour costs than the capital, the saving opportunities for companies through moving or expanding outside central London are significant too. According to Oxford Economics this amounts to as much as GBP10,000 per person each year in office property costs, and the same again per person in staff costs. If more companies make the decision to answer the call of the north, there could be even greater impact on employment opportunities in the region.
Regeneration and investment
Within their 2016 Budget announcement, the UK government announced it would allocate GBP2.5 million of funding to the HS2 Growth Strategies for Manchester Piccadilly and Manchester Airport stations, with GBP1.25 million assigned to each station. The HS2 project is already driving investment into the station sites and creating a focal point from which to kick-start regeneration.
Manchester Piccadilly will be designed to function as a fully integrated transport hub that can form the central part of the area’s regeneration, actively supporting the development of the eastern side of Manchester’s city centre. This is an area that missed out on regeneration in the last economic cycle. It now has the opportunity to catch up. According to Manchester City Council, the redevelopment around Manchester Piccadilly station could provide 625,000 square metres of commercial floorspace, 100,000 square metres of retail and leisure, and 4,500 new homes.
The area surrounding the station has also been earmarked by the council for a major regeneration project to sit alongside HS2, which will include a new hotel as well as residential and commercial developments. This project is estimated to complete by 2023.
An expanding economy attracts people. Rising employment and a growing population increases demand for property, which in Manchester will put pressure on a housing market that already faces significant undersupply. Although development around stations will provide some additional supply, this is unlikely to meet demand, with house prices predicted to continue on their upward trajectory.
What about HS3?
HS3, also known as the Northern Powerhouse Rail (NPR) will connect Liverpool, Manchester, Leeds, Sheffield and Hull. According to research by Transport for the North (TfN), less than 10,000 people in the north can currently access four or more of the region’s largest cities within an hour. TfN’s evidence shows that this would rise to 1.3 million once HS3 is delivered.
The line was approved by government in March 2016, with GBP60 million in development funding allocated to the preparation of a route plan for the line. The proposals could see rail journey times drop to 20 minutes between Liverpool and Manchester from 46 minutes, and within 30 minutes between Manchester and Leeds from 48 minutes. TfN also noted that by delivering HS3, more than 40% of businesses identified as having the North’s prime highly productive capabilities (advanced manufacturing, digital, energy, and health innovation) would be within 90 minutes rail travel of four or more of its largest cities, compared with only 12% today.
The proposed arrival of the HS2 and HS3 is already benefitting Manchester’s regeneration and its economy. This boost in Manchester's transport infastructure further showcases the government’s commitment towards the Northern Powerhouse initiative and rebalancing the UK's economy. With encouraging prospects for employment and further investment, as well as rising house prices in the city, the positive impact of this transport infrastructure on Manchester is only set to pick up steam.