Will he, or won’t he? This week has been full of headlines about apparent government plans to axe High Speed 2 Phase 2b between Crewe and Manchester, and uncertainty about whether Phase 2a will be built between Birmingham and Crewe. What will Prime Minister Rishi Sunak announce, and when?
There have been claims that costs are running ‘out of control’, but if they are, there is little transparency about where and how. Inflation has hit Phase 1 of the route, which is under construction between Birmingham Curzon Street and Old Oak Common, West London, but the impact of this is unclear. It can reasonably be assumed to apply to work left to be done rather than the whole Phase 1 budget of c£45 billion. On cautious estimates of around £18 billion having been spent (the actual figure is almost certainly higher), construction inflation of 30% would add an extra £8 billion or so to the remaining work, assuming there are no unannounced engineering or financial shocks waiting to be revealed.
This is a significant amount, but it should be borne in mind that inflation also increases the value of the project’s benefits too. The cost and benefit increases are unlikely to be an exact match, but it seems likely the overall balance of benefits to costs should be broadly similar.
Work on Euston has rightly been paused due to costs of the station and oversite development rising to a predicted £4.5 billion. For a 10-platform station, this is clearly far too much even if it is the wider development which contributes most of the costs. It should be easily possible to build a functional terminus at Euston with – if necessary – fewer platforms but the ability to add them in the future at far lower cost. Work on Phase 2a has also been paused, which will add to its costs and defer the benefits.
As we report in our latest issue, a recent Network Rail study concludes that the outcomes are positive however capacity released on the West Coast main line by HS2 is used. This is the core purpose of High Speed 2, as former Strategic Rail Authority Chair Sir Richard Bowker has reminded people of this week. It should not be forgotten.
If the Government is minded to curtail HS2 to run between Curzon Street and Old Oak Common on costs grounds, it will have incurred almost all of the construction costs of Phase 1 to deliver virtually none of the benefits of faster and more frequent trains to Birmingham, Liverpool, Manchester and Scotland. There will be no ability to run more local and regional passenger trains on the busiest mixed use railway in Europe. It is hard to conceive of a more muddle-headed economic decision that could be made on HS2.
In the Government’s gift
Amongst the many odd aspects to all of this is that given that construction work has not started in earnest on Phase 2a and that Phase 2b to Manchester hasn’t even received Parliamentary approval, ‘out of control costs’ on these parts of the routes are firmly within the Government’s gifts to resolve. If it wants to spend less on these new railways, it has the power to revise plans accordingly. So far, it has shown no sign of doing so.
The reaction from the Midlands and North has been strong, with businesses and politicians queuing up to emphasise the need for HS2 to reach Manchester, and the damage to the regions’ economies. Both regions are united in their desire to see major infrastructure investment and economic regeneration.
If, as expected, the Prime Minister axes HS2 to Manchester, as The Yorkshire Post pointed out so eloquently, he will have broken promises made by successive Conservative administrations over the years. In a powerful editorial, it asked: ‘HS2 is no longer just about a piece of transport infrastructure but about trust. Can the North trust Westminster to deliver for their communities?’
What, if anything, he announces to compensate for the cancellation will be greeted with a very strong degree of scepticism about whether it will ever happen. Trust will have been forfeited.
His problem now is compounded by the fact that even if his Government commits to building HS2 to Manchester, there will be considerable doubt about the sincerity of that commitment following this week’s reports.
The Conservative Party’s annual conference is being held on October 1-4 at the former Midland Railway terminus of Manchester Central station, now a conference and exhibition centre. Given the shadow hanging over HS2’s Manchester extension, it is hard to imagine a less appropriate location to hold the conference.
Rishi Sunak has placed himself and the Government in a near impossible position on HS2. If he cancels the northern legs, supporters and opponents alike will surely be angered that what is built will not even be able to achieve its strategic objectives and that promises of levelling up have been broken. To unite supporters and opponents of the project against Government policy would be quite an achievement. For Mr Sunak, it will almost certainly be a Pyrrhic one.
It is time for consistency and clarity on the Government’s plans not just for HS2 but for our rail network as a whole.
