Out-Law News 2 min. read

Chancellor reaffirms Coalition's commitment to HS2

The Chancellor of the Exchequer has reaffirmed the Coalition Government's commitment to HS2, the proposed national high speed rail link, following several negative stories about the scheme in the national press.

In an interview on the BBC's Andrew Marr show on Sunday George Osborne said that there was a "big contingency" in the £42.6 billion budget for the project, despite reports of spiralling costs. The Treasury's role in HS2 is being managed by Commercial Secretary Lord Deighton, who led the team that delivered the Olympic Games, he said.

"As we demonstrated with the Olympic Games, we can deliver these big projects actually sometimes under budget," he told the programme.

"I'm passionate about this project because, time and again, we have this debate in our country about how we're going to bring the gap between north and south together, about how we're going to make sure that our growth is not just based in the City of London. High Speed 2 is about changing the economic geography of this country, making sure the north and the midlands benefit from the recovery as well," he said.

However, Osborne would not be drawn on whether the Government would increase its investment in the project if the costs were to exceed it budget. The quoted £42.6bn figure contained a £14bn "contingency", he said.

Last week, business body the Institute of Directors (IoD) called on the Government to abandon the project, claiming that its members did not think the plans were good value for money. It published the results of a survey of its members shortly after economic think tank the Institute of Economic Affairs said that the cost of design changes and additional infrastructure to appease opponents of the line could add up to £30bn to the final costs of the project.

"The big battle for HS2 is going to be fought in Parliament when the Hybrid Bill is submitted in December," said infrastructure law expert Patrick Twist of Pinsent Masons, the law firm behind Out-Law.com. "In advance of that, the opponents have been flying kites with ever more lurid colours suggesting that the project costs are out of control and that the line is quite unnecessary."

"In the face of this the Chancellor has been wholly resolute in confirming the Coalition's commitment to HS2. The argument that it will help bridge the North-South divide is being linked to the capacity constraints of the existing infrastructure as the main reason for building the line, rather than the time savings," he said.

The initial London to Birmingham phase of HS2 is scheduled for completion in 2026. It will cut journey times between the two cities to 45 minutes, with trains running at up to 250 miles per hour, according to the Government. A proposed second phase of the project envisages the construction of an onward 'y network connecting the line to Manchester and Leeds, as well as a spur to Heathrow Airport, by 2033.

New legislation is due to be introduced to Parliament later this year which will allow development and construction work to begin in 2017. If approved, the proposed High Speed Rail (Preparation) Bill will allow for quicker construction and design expenditure, and give Parliamentary authority for ecological surveys and other preparatory work to take place. The Bill would also allow for compensation payments to property owners living along the route.

According to the latest estimates, the project is expected to cost £42.6bn with an additional £7.5bn for rolling stock. 

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