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HS2 likely to create polarisation of high-skill jobs in London, LSE finds

Better high-speed rail (HSR) links could lead to highly skilled managerial jobs being “geographically polarised” in London, research conducted by the London School of Economics (LSE) has found.

The university looked at the effect that the implementation of high-speed routes had had in France and used the findings to outline what lessons could be taken in the UK as high-speed rail routes are expanded.  

LSE researchers found that the easier and faster distribution of managers across different sites of a business allowed by HSR had increased profit margins by 0.6 to 0.8 percentage points for many businesses.

However, they also discovered that HSR led to increases in production jobs being “almost compensated” by the transfer of managerial jobs from affiliates to headquarters.

“This contributes to geographical job polarisation and the clustering of high-skill (managerial) jobs in the largest cities, in particular in the capital city (Paris) where a large fraction (35%) of headquarters are located,” the report said. “The same phenomenon would most likely occur if London, in the UK, became connected via high-speed rail to the northern part of the country.”

The LSE also estimated the overall cost of geographical dispersion for multi-site businesses. It was found that when distances between the sites of businesses were cut down by HSR, production capacity went up by 4% in service and transport, and around 2% in manufacturing, retail and trade.

Today’s report trails yesterday’s commitments from Theresa May to drive forward with plans for HS2 during the unveiling of her party’s manifesto.

HS2 is expected to transform the infrastructure and economies of many regions in the UK. Last week, RTM reported that its technical director Andrew McNaughton had refuted reports that the project was lagging behind schedule and over budget as he told an audience at Railtex that the project had not gone off the rails.

This was despite claims from some, including Lord Berkeley, that HS2 was sure to run out of money before it was finished.

And ongoing issues with procurement for the project, including CH2M withdrawing from the phase 2b civils contract, led many to believe that the planned project would struggle to be finished by its original deadline of 2033.

Nevertheless, in April high-speed rail leaders stated that HS2 should be viewed as not only a national asset, but something that could be a global export for the UK.

Top Image: Ewan Munro

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Andyb   19/05/2017 at 12:07

France is a much bigger country where high speed rail saves much greater travel time vs conventional rail. Most Northern Cities serviced by HS2 will only see small journey time reductions and so the skills polarisation is likely to be much less noticeable (especially due to the cost of travel in the UK and cost headquartering in London)

Jbzoom   19/05/2017 at 12:53

Paris has always been the commercial centre for French business. The growth in high skill jobs in Paris and the decline in some TGV destinations come from the growth in commerce and decline in manufacturing in the French economy. There is little evidence to suggest French companies deliberately shifted jobs to Paris.

Lutz   20/05/2017 at 11:37

This is nothing new; this has been highlighted right from the start and is a well understood impact of enhanced connectivity between asymmetric economic centres. It is all a bit out of date though: Many businesses have been moving to video-conferencing etc to cut costs, with lower margin businesses now enforcing it via cost controls for meetings with customers as well.

Michael Wand   20/05/2017 at 11:57

HS2 will bring central Birmingham inside an hour's commute of central London. Someone explain how this will grow Birmingham.

Graham Nalty   20/05/2017 at 19:07

This perhaps reinforces the argument of those who say that rail investment should now be concentrated in the Midlands and North. The massive increase in estimated costs of HS2 Phase one, coupled with its propensity to benefit London more than the north as shown by this report, demonstrates quite clearly that HS2 Phase one should be very critically examined and funding held back in favour of making sure that transport is improved not only between the major cities of the North, but also within those cities. Those who suggest that HS2 should be a global export for the UK need to clarify in much greater details how hat might happen. How many of the companies contracting for HS2 are going to put all the work to UK employees? We hear of companies who build trains in the UK with high tech parts being shipped from their factories in other countries. Can they clarify exactly how the expertise of UK people can be sold overseas when we buy in that expertise from other countries.

John Burns   21/05/2017 at 08:54

`Nevertheless, in April high-speed rail leaders stated that HS2 should be viewed as not only a national asset, but something that could be a global export for the UK.` Whatever that BS means. HS2 will be 70 year old French technology when completed, while Japan, China, etc are doing, and looking at improving, linear monorail. Other countries wanting HS2 will look `not` to the British to design and engineer it. Others are far more experienced at HSR than the British. Would an merging nation chose HSR when the energy costs skyrocket over 155mph?

John Burns   21/05/2017 at 09:07

@Jbzoom TGV in France has overtly displayed that being connected fast does not spread the wealth around the country. It does the reverse. Wealth moves to the centre. I think it was the old economist Ricardo who highlighted this. There is evidence to suggest French companies expanded in Paris while the branches in the provinces contracted. The only HSR that makes sense in the UK is from Liverpool to Hull (HS3), extended at each end to North Wales and Newcastle. It also acts as a linear hub for the whole UK network and releases capacity for the Port of Liverpool. HS2 is a waste of resources. Capacity on the WCML south of Rugby I hear them shout. The London-Birmingham train can be diverted back onto a modernised Chiltern line - where it once was.

David   22/05/2017 at 17:12

Err, John, the Chiltern line is pretty full now. And even more so when EWR finally comes around.

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