Current HS2 budget and timetable unrealistic says chair

Out-Law News | 05 Sep 2019 | 9:10 am | 2 min. read

The current budget and delivery timetable for the UK's planned national high-speed rail line, HS2, is "not realistic", according to the chairman of HS2 Ltd.

The scheme requires a total budget in the range of £72 billion to £78bn in 2015 prices, or between £81bn and £88bn in today's prices, according to an update provided to the government by HS2 Ltd chair Allan Cook. The project's current budget is £55.7bn in 2015 prices, or £62.4bn in today's prices.

Cook has also recommended that the line be opened on a phased basis, with Phase One becoming operational between 2028 and 2031 rather than the current estimate of 2026. Phase 2a, between West Midlands and Crewe, should be delivered to the same timetable, "subject to parliamentary approval". Phase 2b, connecting Crewe to Manchester and Leeds, should follow between 2035 and 2040, up to seven years after the current delivery estimate.

Despite the cost increases and delays, Cook's report to the government concluded that the economic and social benefits of the scheme had been "understated".

Hart Jonathan

Jonathan Hart

Partner

A valuable lesson has been learned in terms of being more open and transparent with the public when it comes to infrastructure project delays.

"The original plans did not take sufficient account of the compound effect of building a high-speed line through a more densely populated country with more difficult topography than elsewhere – and doing so whilst complying with higher environmental standards," Cook said in his report.

"Equally, the existing cost/benefit model, which was designed for smaller scale schemes, has proved inadequate in capturing the full transformational effect of HS2, particularly on changing land values. This transformation is already being demonstrated in Birmingham," he said.

Last month, transport secretary Grant Shapps announced an independent review of the "affordability, deliverability, benefits, scope and phasing" of HS2, led by former HS2 Ltd non-executive chair Douglas Oakervee, which is expected to report later this autumn.

Shapps said that he was presenting Cook's advice to the UK parliament, making only the necessary commercial redactions, to ensure that MPs "have the full picture" of both the costs and the benefits of the project.

Infrastructure law expert Jon Hart of Pinsent Masons, the law firm behind Out-Law, said that the publication "suggests that a valuable lesson has been learned in terms of being more open and transparent with the public when it comes to infrastructure project delays".

"The discussion around delay recognises the problems that have been experienced in relation to some of the packages for the project, stations, power and systems for infrastructure," he said. "The recommendation in relation to a 'phased opening' is entirely understandable in these circumstances but may require some additional challenging steps to be taken in terms of programming and technical commissioning arrangements."

"While Shapps' announcements confirm that the cost estimates for the project have increased, they do appear to suggest that the project will still be delivered and safeguard the investments that have been made so far, subject to the outcome of the Oakervee Review. There would appear to be some positive noises in relation to the phase 2a extension for the project beyond Birmingham to Crewe, the legislation for which is currently before parliament," he said.

In a statement to parliament, Shapps said that HS2 Ltd would continue its work on Phase One of the project while work progressed on the Oakervee Review. The Phase 2a legislation will continue to progress in the House of Lords.

"This will ensure we are ready to proceed without further delay for the main construction stage of Phase One in the event that the government chooses to continue," he said.