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HS2 cost projections and controversies still raise questions



Mark Thurston, CEO of HS2 Ltd until September 2023, at the M42 first bridge installation, source: HS2 Ltd Source: HS2 Ltd

Britain’s ambitious plans for a high speed railway network have hit the buffers before even getting out of the station. The project has been savagely cut back from the once sweeping network, connecting almost all of England’s cities, and maybe even reaching parts of Scotland. Now it remains as a project to link London and Birmingham, in a shuttle service that may or may not be beneficial to the rest of the rail network and the community at large. That though has not stopped the price of the railway still racing away on the fast line, as costs surge and plans for the railway evolve.

In a recent parliamentary update, Rail Minister Huw Merriman revealed a revised cost estimate for the completion of the HS2 high-speed rail project. That statement comes with the national economy in a difficult position, and the Autumn Statement budget due on Thursday this week. The backdrop of broken promises and still rising costs has sparked still further furious debate on the future of the project.

Billions still needed to complete reduced HS2 project

The irony of the HS2 project was not lost on civic leaders in the north of England. The UK Government, in the person of Prime Minister Rishi Sunak, finally cancelled the Northern Leg of the project, which would have directly connected Manchster to the line, while speaking at his ruling Conservative Party conference, held in Manchester. The savage cut back was stated as a money-saving exercise, but figures from the construction industry suggest that the hoped for saving will not materialise.

Money Pit? Station box construction at Old Oak Common in London for HS2

Broken promises are one thing, breaking the bank is quite another. According to industry sources, widely reported in specialist publications, the cost of completing even the reduced scope of HS2 is expected to range between 45 billion and 54 billion pounds (53-63 billion euro). Those estimates are significantly higher than the original outline costs for the entire HS2 project, even when those proposals included a network of lines connecting with the West Coast Main Line and new direct links to Manchester, Sheffield and Leeds.

Various economic challenges and how to solve the abandoned Euston question

The company formed by the UK Government to deliver the project – HS2 Ltd – has slightly lower cost estimates. However, the figures are far from trivial. HS2 Ltd’s current forecast for Phase 1 stands between 49 and 57 billion pounds (57 and 67 billion euro), based on 2019 prices. That marks a considerable increase from their previous estimate of 45 billion pounds (53 billion euro). However, there has been significant inflation in the UK economy since 2019, and the construction sector has seen prices rise even faster that the national average. UK inflation peaked at over ten per cent in 2021, and has only now begun to come down to more manageable levels. The HS2 company cites various challenges, including design performance, delivery productivity, consenting delays, and disruptions from the COVID-19 pandemic and the Ukraine War.

Portrait of Huw Merriman
Huw Merriman, minister for Rail and HS2. Possibly not the most enviable job in UK government right now

The main work civil engineering elements have experienced a substantial cost increase, adding almost two billion pounds (2.3 billion euro) to the budget. However, the project does still employ more than 30,000 individuals, which can be seen as a positive return on investment in the economies fo regional centres up adn own the 120-mile (192km) length of the project. Minister Merriman highlights that the estimated cost at completion was calculated before the decisions to cancel Phase 2 and alter the development approach at Euston – which has seen the proposed central London terminus all but abandoned as a hole in the ground. The Government has shifted Euston’s development responsibility from HS2 Ltd to a new private-led development company. The hope is that hiving off the cost will make HS2 more deliverable, and the Euston site more attractive to investors.

History repeating itself with undignified haste to sell assets

The rail minister Huw Merriman acknowledged concerns raised by local residents and the HS2 independent construction commissioner, Sir Mark Worthington. The pause in construction activities at Euston has led to uncertainties, frustrating and angering locals. The Government has said efforts are underway to explore ‘meanwhile uses’ to mitigate the impact on the community, mainly in the Camden area of central London.

HS2 Curzon 3 viaduct in Birmingham
Plans up in the air? First pier of the Curzon Three viaduct with the Birmingham skyline in the background. It’s unlikely HS2 trains will ever get further than this but, in railway development – like politics – never say never. HS2 Ltd image

In response to the cancellation of later phases, the Government is considering repurposing legislation intended for HS2 Phase 2b (the now cancelled section between Birmingham and Manchester) to expedite the delivery of their Northern Powerhouse Rail (NPR) project. This is a much-delayed and often-changed projects of works, which was originally intended to be a complimentary infrastructure project connecting a broad arc of cites from Liverpool to Newcastle. According to Government sources, around twelve billion pounds (about 13.6 billion euro) originally earmarked for HS2 spend will be reallocated to this project. Some sceptical observers point out that the source of this money may well depend on the sell-off from land already acquired for the abandoned HS2 project. That’s a scenario reminiscent of the infamous cull of uneconomic railways in the 1960s. Back then there was an undignified haste to dispose of railway assets before any meaningful opposition to their closure could be mounted. That sell-off is proceeding even faster than any HS2 service ever will, and has sparked a whole new round of acrimonious controversy. perhaps that will be the name applied to the first HS2 train.

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