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Archive for February 2012

Seats, not track

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HS2 is in no way a substitute for efficient operations management on the existing railway. In Standing Room Workshop, I suggested that crowding on Milton Keynes/Northampton commuter services from Euston was largely a result of rolling stock shortage. This seems to be borne out by today’s announcement that

London Midland and First TransPennine Express have placed orders with Siemens for new Desiro electrical multiple units.

The new trains will delivered between the end of 2013 and the middle of 2014.

Ten class 350/3 electrical multiple units will be used by London Midland to strengthen existing commuter services into London and along the West Coast Mainline.

First TransPennine Express will introduce a further ten class 350/4 EMUs onto services on the West Coast Main Line linking Manchester Airport to Edinburgh and Glasgow.

It’s unfortunate that yet more of these uninspiring, overweight, 20th century, German-built, trains are having to be hastily ordered, seemingly because of London Midland ineptitude in forward planning. There really needs to be a move to 21st century rolling stock designs, which could support national objectives for recyclability, low energy consumption, and rebalancing the domestic economy.

Written by beleben

February 29, 2012 at 3:08 pm

Lifted and shafted

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At a House of Commons reception organised by Birmingham council, leader Mike Whitby told MPs that he had “personally secured jobs at Longbridge after building links between the city and China”, according to Jonathan Walker of the Birmingham Post.

Coun Whitby told the reception that his efforts promoting Birmingham in China had paid off following the collapse of MG Rover in 2005.

The carmaker was bought by Chinese firm Nanjing Automotive – which in turn was taken over by Shanghai-based SAIC – which could have shifted all production to China.

He added: “And then sadly we had the demise of Rover. And Nanjing automotive company purchased the MG mark. There were fears that Nanjing would “lift and shift” the Rover operation, moving machinery to China to build cars there, he said.

“But because we then said this city is going to reach out and welcome in, they saw a rationale for being here.

“Eventually they were taken over by SAIC. And I went to Shanghai and I made an appeal to their directors and said: ‘you see in Birmingham a city that has a vision, which is underpinned by what we call a Big City Plan’. Clearly they saw that we had the vision to drive forward this city.”

He added: “And now in fact SAIC actually does make cars in Longbridge and employs 300 people that are engineers and designers and their European headquarters are there.”

I don’t think Mr Whitby’s account is accurate. The vast majority of the Longbridge plant has been reduced to rubble. SAIC does not “make cars in Longbridge”, it just runs a small scale assembly operation. And Nanjing/SAIC did “lift and shift” the whole Rover operation, moving machinery to China to build cars there.

Written by beleben

February 28, 2012 at 4:02 pm

Paradise lost

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No paradise: generic office buildingsWith the construction of Birmingham’s Inner Ring Road (Queensway) in the 1960s and 1970s, the area around Baskerville House in the city centre was altered beyond recognition. At some point in the early 1970s, the original plans to redevelop the Paradise Circus area were abandoned, and after the completion of John Madin’s Central Library, building work stopped.

Within a few years, the city council was deprecating its own masterplan, and describing the Inner Ring Road as a “concrete collar“. When Centenary Square was chosen as the site for a new central library — Francine Houben’s Library of Birmingham — it was claimed that the Madin library at Paradise Circus was structurally unsound. By demolishing it, the city centre could be transformed, with the creation of new vistas from Centenary Square to the council house and town hall.

I never bought the spin that the Madin library was structurally unsound, or that its demolition was intended to improve the urban environment or accessibility of the city centre. It always seemed much more likely that the site of the library complex was earmarked for whatever redevelopment would generate the most rent and rate income, i.e. lowest common denominator office/hotel/retail development.

In July 2011, the Birmingham Post reported that the city’s debts had doubled as a result of projects such as the Houben library and Birmingham Gateway. No other major English city has higher per capita borrowing.

Birmingham council and Argent (the developer of Brindleyplace) own large parts of Paradise Circus, and signed a two year exclusivity agreement in February 2009 “to prepare the way for the potential redevelopment” of the site. So, last week, it was not too surprising to find what the council had in mind: a collection of closely spaced generic office buildings, to maximise rental and rates income.

One of the major costs for the project will be the massive infrastructure investment and it is hoped that this will be funded through tax increment financing or TIFs. This effectively allows the project – which is being supported by the city council as a major landowner on the site – to borrow against the future business rates that would be raised by the scheme.

At the moment the site raises £1.5 million every year in business rates but the completed project would see this rise to around £20 million a year. The scheme will also be enhanced by falling within a proposed enterprise zone which offers various relief from tax and regulation.
The project is being led by Gary Taylor, a former managing director of Argent who recently launched his own development company called Altitude, as well as Argent project director Rob Groves, both of whom are quite clear about the challenges the site offers, both technically and reputationally.

Surely, if reputation were a key issue, Argent would not have put forward such a cynical proposal. Judging by plans put forward by other developers to create 21st century slums at Icknield Port, the crevice between aspiration and reality is turning into a chasm.

At the time of writing, the Paradise Circus development website states that the ‘recently extended’ February 2009 exclusivity agreement “binds the City Council and Argent to agree to negotiate solely with each other and not involve other parties”. Which is curious, because Altitude Real Estate LLP, established in 2011, appears to be a new party in the situation. According to Altitude’s website, its (ex-Argent) directors Gary Taylor and Stephen Tillman

will take forward Argent’s existing schemes at Paradise Circus in Birmingham and Ffos-y-Fran in Merthyr Tydfil, South Wales, fully supported by Argent which will retain a part ownership in both schemes. They have secured options to fully acquire Argent’s interest in Paradise Circus and also on assets in Argent’s residential land business which was set up by Tillman and colleague Robert Bolton.

Written by beleben

February 27, 2012 at 4:31 pm

Unexpected candour

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Back in 2008, Centro’s chief executive Geoff Inskip wrote to the Birmingham Post, explaining that plans to extend the Midland Metro tramway remained a top transport priority.

The business case for the Phase One extensions through the Black Country and from Snow Hill to Five Ways is very strong, confirmed by an independent study by the CEBR which shows that the significant and lasting economic benefits that the new lines will bring to the region undoubtedly stack up.

This includes the creation of up to 5,300 jobs and a boost to the West Midlands economy of £178 million a year — as well as providing a major tool in managing congestion.

In fact, the “independent” CEBR (Centre for Economic and Business Research) study mentioned by Mr Inskip was commissioned by Centro itself — but it didn’t explain how building a few kilometres of tram line would create thousands of permanent jobs across the West Midlands.

The existing 20.2 km Midland Metro, between Birmingham and Wolverhampton, only carries 5 million passengers annually (a third of what Centro had forecast) and there has been no growth in usage since its opening in 1999. By 2011, cost increases and the recession had cut Midland Metro expansion down to a few hundred yards in Birmingham city centre.

When bus re-routeing is included, the curtailed Stephenson Street tram extension is costed at £143 million, and Centro’s priorities have shifted to ‘Birmingham Sprint’ bus rapid transit, and long distance high speed rail. It turns out that CEBR has an opinion on HS2, and it’s unexpectedly candid — and ‘off-message’.

You can imagine that a programme that involves spending £36 billion will find a large number of vested interests supporting it. And indeed supporters of high speed rail have been vociferous in their support for the proposed HS2 high speed rail link. But looking at the economics issues dispassionately, the sums don’t add up. CEBR has checked the demand forecasts, the economic case and the financial sums carefully.
Our analysis is that the benefit cost ratio is only 0.5 rather than the official and implausible 2.0. The financial deficit which will require a government subsidy is likely to be £18 billion rather than the official claim of £14 billion. This seems a major waste of money when spending is being cut and taxes raised.
If the project goes ahead it will be a triumph for spin and vested Interests over economic good sense.

Written by beleben

February 24, 2012 at 1:18 pm

Buses on the skids

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Ian Mulheirn’s paper Osborne’s choice, published on 20 February by Robert Skidelsky’s Social Market Foundation, asked, “what can be done to boost the economy without borrowing more”?

This paper makes the case for five specific growth-friendly consolidation measures […] These include:

• Halving higher rate tax relief on pension contributions, saving around £6.7 bn annually.

• Capping maximum ISA holdings at £15,000, saving around £1 bn per year.

• Rolling Child Benefit into the existing tax credits system, saving some £2.4 bn each year.

• Cutting Winter Fuel Payments and free TV licenses to better-off pensioners, saving 1.7 bn per year.

• Scrapping free bus travel for the over 60s, saving around £1 bn annually.

Recycling £15 bn per year raised through such measures into infrastructure capital spending from 2012-13 would return the capital budget to around £63 bn in that year, just short of the level it was planned to be at for that year at the time of the 2008 Budget.

The SMF website listed various responses to Mr Mulheirn’s proposals, and there was coverage in the national press. Rather than discuss all the proposals in this blogpost, I’ll focus on the press favourite: bus passes. The Express headline was ‘BUS PASS BAN WILL HELP BOOST ECONOMY‘ and the Daily Mail’s was ‘Strip OAPs of free bus passes and winter fuel allowance to save £3bn a year, says leading think tank‘.

According to Mr Mulheirn’s paper,

Since 2008, the Exchequer has funded free bus travel for those over the age of 60. This perk is now estimated to cost around £1 bn per year.

It is unclear what the multiplier effect of this spending is, since the state effectively reimburses transport providers for any lost revenue. What is clear, however, is that there are more growth-enhancing uses for this money and that
there are higher priorities for this spending in the long-run. The policy should now be scrapped.

My guess is that a large proportion of pensioner bus travel is discretionary, and in the absence of concessionary passes, would not take place. As a result, the axing of passes could have some ‘interesting’, and doubtless unintended, consequences. For example, in the West Midlands, concession passes have been progressively extended, and now account for about one third of public transport use in the county. So they shore up a bus network which has seen massive declines in patronage over the last fifty years.

Income from concessionary travel is a determining factor in the quantity of local public transport across England and Wales. It follows that abolition of pensioner passes would likely be accompanied by a major, um, growth-unfriendly contraction in metropolitan public transport services.

Written by beleben

February 23, 2012 at 1:25 pm

Welcome to ZiLondon

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On BBC Newsnight last year (broadcast date 26 July 2011) Will Self savaged the boosterism and elitism of the 2012 London Olympic Games. One of the most disgusting manifestations of London 2012 elitism is the network of ZiL lanes planned for the exclusive use of Olympic freeloaders and shysters.

As well as uncovering details of the Games’ rigged ticketing system, a Channel 4 Dispatches television show (broadcast a few days ago) found evidence that people could be buying access to the ZiL lanes. If there isn’t vigorous public opposition to private lanes for Olympic nonentities, they could end up as permanent fixtures under the banner of road pricing.

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February 17, 2012 at 4:30 pm

HS2 is about speed, not capacity (part two)

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Table 10 from the January 2012 HS2 updated Economic Case shows that time savings (to business users) are assessed as being far more valuable than crowding relief (to all users). In other words, the economic argument — if such a thing could be said to exist — is about speed, not capacity.

HS2 Ltd, 'Benefits to transport users' January 2012

HS2 Ltd forecast, Jan 2012 update: 'three per cent shift from air travel'The update also shows a revised forecast for modal shift from air travel, down to just 3% of HS2 ridership. The pie chart previously used by HS2 Ltd gave a 6% figure for shift from air.

Written by beleben

February 16, 2012 at 5:06 pm