BRITAIN’s prime minister, Mr Rishi Sunak, ended weeks of speculation on October 4 when he made the widely-trailed announcement that his government had decided to scrap the High Speed 2 (HS2) project with the exception of Phase 1 that is currently under construction between London and Birmingham.
The government says that a total of £36bn will be saved by not building Phase 2a from Birmingham to Crewe, Phase 2b from Crewe and Manchester, and the eastern leg of Phase 2b that was originally intended to run from Birmingham to Leeds but was cancelled north of East Midlands Parkway in 2021.
The safeguarding legislation protecting the route of Phase 2a from other development was to be formally lifted within weeks and that for Phase 2b amended by summer 2024 to safeguard any land required for the Northern Powerhouse Rail project. Land acquisition for Phase 2a was to be halted immediately and any property no longer required for HS2 will be sold.
The £36bn in savings will be reallocated under a programme known as Network North, which is mainly intended to deliver faster journey times, increased capacity and more frequent, reliable services across the north and Midlands of England.
Basic details of Network North, which Sunak says will mark “a new approach to transport in our country,” and his government’s rationale for cancelling HS2, were set out in a command paper presented to Parliament by the secretary of state for transport, Mr Mark Harper, last month.
In his foreword to the command paper, Sunak says “the facts around HS2 have changed. Costs have more than doubled. It has been repeatedly delayed. The pandemic has significantly changed the travel patterns it was originally designed to serve.
“In short, HS2 traps enormous sums of money that could be far better spent elsewhere,” Sunak writes.
According to the command paper, HS2 was originally expected to cost a total of £20.5bn in 2012, but this figure had climbed to £44.6bn by 2022. It also quotes a PwC analysis of 2016 giving an upper construction cost estimate for Phase 1 of £383m per mile, compared with £127m for a comparable line in Europe with a high proportion of tunnels and viaducts and the international average for less complex high-speed infrastructure of £44m.
Following a three-month investigation, The Sunday Times has reported that staff at HS2 Ltd were instructed to keep cost estimates artificially low, with those raising concerns over this practice dismissed from the company. A former senior cost analyst at HS2 Ltd, Mr Stephen Cresswell, told the newspaper that he made repeated attempts to alert the company’s fraud department, the National Audit Office and ministers to the fact that real information on costs was being held back until after the Department for Transport (DfT) had given approval to start work.
Whistleblowers allege that senior management at HS2 Ltd had an incentive not to provide accurate cost information because the project might have been scrapped if parliament had known to what extent the budget was escalating. “There was a clear intention to conceal information that should have been made available to parliament and the public which in itself went to the very heart of the viability of the project,” says Mr Doug Thornton. He was dismissed as director of HS2 Ltd’s land and property department after raising concerns that the number of properties that would need to be acquired in order to build Phase 1 had been seriously underestimated.
“In short, HS2 traps enormous sums of money that could be far better spent elsewhere.”
Rishi Sunak, Britain's prime minister
HS2 Ltd denies any wrongdoing and told The Sunday Times that its internal fraud unit is now investigating allegations that cost overruns were deliberately concealed.
In any case, the command paper says that the cost:benefit case for building HS2 has considerably weakened. The original assessment suggested that the project would return £2.30 in economic value for every £1 invested by the government. Now, the benefit could be as low as 80p for every £1 of taxpayer funding, with the estimated benefits falling “disproportionately” on London and southeast England.
The command paper points to changes in travel patterns following the Covid-19 pandemic, which it says have altered the demand projections on which the case for building HS2 was first made. The 2019 business case found that 53% of the benefits would come from business travel, while the command paper quote figures from the National Travel Survey that show business travel by rail in 2023 at 53% of pre-pandemic levels in 2019, compared with 97% for leisure travel and 58% for commuting.
Phase 1 and Euston
There are currently 350 active construction sites on Phase 1, employing 28,500 people, and half of the tunnel boring machines required for the extensive tunnelling between London and Birmingham have been launched and over 22.4km of new tunnel has been completed.
The government intends to complete Phase 1 as planned. There will be stations at Old Oak Common and Birmingham Interchange, and branches to central Birmingham and Handsacre, near Lichfield, where HS2 trains for Manchester, Liverpool and Scotland will join the existing West Coast Main Line (WCML).
The command paper says that completing Phase 1 will have “a transformative effect on rail capacity,” and according to an internal DfT estimate, will provide up to 250,000 seats a day across high-speed and conventional inter-city services, triple the current daily demand as estimated by WCML inter-city operator Avanti West Coast. Paths on the WCML will also be released, increasing capacity for more long-distance commuter services and freight trains.
“But the project cannot continue on as it has done before,” the command paper says, and the government plans to make changes “quickly and decisively” at project organisation HS2 Ltd in order to ensure the rest of the programme is delivered “as cost-effectively as possible.” This will include bearing down on costs and only delivering what is essential, embedding “a singular focus on cost control” at HS2 Ltd and its supply chain, and being prepared to “take difficult decisions on contracts, scope and benefits” to keep Phase 1 within budget. The government will provide strengthened governance and control, “with increased oversight and reduced delegation.”
Phase 1 will still have its central London terminus at Euston, rather than terminating at Old Oak Common in the western suburbs as had been suggested, but the command paper says this project will be stripped back to deliver a station that can be opened to traffic as soon as possible while radically reducing its cost. A new six-platform station will be built, but responsibility for delivering the project will be removed from HS2 Ltd and handed over to a new development company that will be expected to attract investment from the private-sector beneficiaries of the planned Euston development zone that could create up to 10,000 new homes.
Network North
The command paper says that “every single penny” of the £19.6bn previously committed to HS2 in the north of England will be reinvested in transport in this region, including bus and road projects. Rail spending will include £2bn for a new station at Bradford and a new connection to Manchester via Huddersfield, and £3bn to upgrade and electrify the Manchester - Sheffield, Sheffield - Leeds, Sheffield - Hull and Hull - Leeds lines. An upgrade of the Cumbrian Coast Line from Carlisle to Barrow-in-Furness is also promised, in order to provide a half-hourly service between Carlisle and Whitehaven and accommodate “major” freight demands from a new coal mine.
Nearly £4bn in additional funding will be provided for local transport in the six city regions of northern England. The command paper says this could fund projects such as extending the light rail networks in Sheffield and Manchester, potentially taking Manchester Metrolink to Heywood, Bolton and Wigan. Separately, £2.5bn has been allocated to deliver a new “mass transit metro” in West Yorkshire, which could eventually comprise up to seven lines connecting Leeds with Huddersfield, Wakefield, Bradford and Halifax.
The government also promises to reopen railway lines to passenger traffic, including the line from Sheffield to Stocksbridge and build new stations at Haxby on the York - Scarborough line, at Waverley between Sheffield and Gainsborough, and at Ferryhill in County Durham.
The funding saved by not building HS2 in the north will sit alongside the existing government commitment to provide £12bn to improve connections between Manchester and Liverpool and build Northern Powerhouse Rail as planned, “including high-speed lines,” although the government says it is open to suggestions from local leaders of other ways to achieve these objectives with the £12bn funding.
In the Midlands, a total of £9.6bn will be reinvested. This will include £1.75bn to fully fund the Midlands Rail Hub upgrade programme centred on Birmingham, doubling capacity and frequency while connecting 50 stations with a catchment of over 7 million people including Nottingham, Leicester, Nuneaton, Tamworth, Worcester, Malvern, Hereford, Gloucester and Cheltenham. The command paper says that the Nottingham - Newark route will also be upgraded, enabling London - Nottingham trains to be extended to Yorkshire and northeast England and cutting direct journey times between Nottingham and Leeds.
The government guarantees to provide £1.5bn for the new East Midlands City Region, which could fund projects such as extending the Nottingham light rail network to Gedling and Clifton South. Over £1bn of additional extra local transport funding is promised for the West Midlands City Region, while passenger reopening projects in the Midlands to benefit include Leicester - Burton-on-Trent, Oswestry - Gobowen and Stoke-on-Trent - Leek.
The full £6.5bn saved by the government’s new strategy for Euston will be spread across every other region in England and Wales, according to the command paper, with a further £350m to be spent on accessibility improvements at up to 100 stations.
Specific rail projects to be funded from this allocation will include improvements in southwest England, such as restoring passenger service to Wellington and Cullompton on the Bristol - Exeter line, and building 8km of track to reconnect Tavistock with the national network. In East Anglia, Ely Junction north of Cambridge will be remodelled to increase freight capacity to the Port of Felixstowe by six trains a day, while doubling the frequency of passenger services on the Ely - King’s Lynn and Ipswich - Peterborough routes.
Government funding for the West of England Combined Authority will be increased by £100m. The command paper says that this could be used to extend the proposed MetroWest commuter network to Weston-super-Mare, Taunton and Exeter, or enable the authority to start capacity and passenger facility enhancements at Bristol Temple Meads station, provide step-free access across the network and complete electrification between Temple Meads, Bristol Parkway and Chippenham.
Finally, the command paper’s list of projects concludes with the electrification of the 202km North Wales Main Line from Crewe to Chester and Holyhead, which will receive an “unprecedented” £1bn to bring parts of north Wales within an hour of Manchester and provide more punctual and reliable journeys for passengers.
Industry reaction
While these promises of additional investment were welcomed in the regions concerned, reaction to the cancellation of HS2 Phase 2 was overwhelmingly negative, and was described as simply unnecessary and squandering the benefits of Phase 1 by Mr Darren Caplan, chief executive of Britain’s Railway Industry Association (RIA).
“The government cites cost as its main reason for scrapping Phase 2, yet it should be remembered that this was the government’s own scheme, built to its own specifications,” he says. Changes to project scope and timing that were “entirely of the government’s own making” had added considerable cost and delay, he says.
Caplan believed that cancelling Phase 2 sent “a terrible signal” to potential overseas investors that Britain “simply cannot deliver large national transport infrastructure schemes.” And the implications of the government’s change of policy at Euston were particularly unclear for companies holding existing contracts.
“The cancellation of the northern section means less capacity for rail freight and ultimately more lorries on our roads.”
Andy Bagnell, chief executive of Rail Partners
“Already, multinational railway businesses will be making plans to rationalise their workforces and investments in a way that will be detrimental to the country’s rail supply sector,” he says.
Mr Andy Bagnall, chief executive of Rail Partners, says “a decision of this magnitude will have consequences felt for generations by the rail industry, its supply chain, passengers and freight customers.
“While reinvestment in other regional rail schemes is a significant consolation, the decision to reduce investment in rail and divert funds to road schemes feels counter-intuitive as we look to attract people to move away from carbon-intensive modes of transport.
“The cancellation of the northern section means less capacity for rail freight and ultimately more lorries on our roads, with businesses seeking to decarbonise their supply chains limited in their options to move good off the roads and onto rail,” Bagnall said.
The High Speed Rail Group (HSRG) described the decision to cancel Phase 2 as “a devastating blow to our industry and our whole economy.”
“For 15 years we have worked with the government to develop this project - their project - taking it from a concept to construction. Companies have invested in people, skills and equipment on the back of it with some even relocating in anticipation of it being completed.”
Turning to the issue of increasing project costs, HSRG pointed out that inflation has been “rampant” in the British economy and has impacted the construction sector far more than most. “But the principal cause of any real-term cost increases lies in the chopping and changing of the project’s scope,” HSRG said. “As any project manager will tell you, the cheapest way to deliver is against a fixed scope without constant changes.
Not building new infrastructure all the way to Manchester is “a recipe for disaster,” according to HSRG. It believes that high-speed services joining the existing network beyond Birmingham will create a huge bottleneck, making rail connectivity to northern England worse than it is today.
In its Second National Infrastructure Assessment published on October 18, the National Infrastructure Commission said that the government’s decision leaves a major gap in the Britain’s rail strategy around which a number of cities have based their economic growth plans. “It is not yet clear what the exact scope and delivery schedule is for the proposed new rail schemes,” the commission says. “A new comprehensive, long-term and fully-costed plan that sets out how rail improvements will address the capacity and connectivity challenges facing city regions in the north and Midlands is needed.”
The commission says that changes in travel demand have not weakened the case for long-term investment. “The largest cities are likely to require more capacity on their public transport networks to support economic growth over the next 20 to 30 years, and that is true even if home and hybrid working remain above pre-pandemic levels.”
