Out-Law News 2 min. read

New HS2 head to report on how to reduce the costs of the project

The Government has asked the new head of HS2 Ltd, the company that will deliver the new national high speed rail network, to set out how the project can be delivered earlier and for a lower cost.

Prime Minister David Cameron told the CBI's annual conference that Sir David Higgins, current chief executive of Network Rail and former head of the Olympic Delivery Authority (ODA), would "make absolutely sure we drive every extra bit of cost out of this that we can".

Higgins has been asked to consider how to cut costs and speed up delivery of the £42.6 billion project, through better planning and early engagement with industry. His report, which is due to be presented to the Transport Secretary before the second reading of the Hybrid Bill in March, will also build on the work of the HS2 Growth Taskforce and consider how the project can be used to deliver non-financial benefits including jobs and economic growth.

Higgins will join HS2 Ltd on a part-time basis on 1 January 2014 before taking up the post full-time from March. Transport Secretary Patrick McLoughlin said that his appointment was as a result of his "world class record on infrastructure delivery".

"As chief executive of the Olympic Delivery Authority, he ensured the UK Olympic Park was built on time and on budget," he said. "That is why I have commissioned Sir David in his new role to report to me by March on how the HS2 project can be brought in under budget and how it can best maximise the benefits for all parts of the country."

"The new north-south line is essential to free up capacity on the existing rail network and bring economic growth to the whole of the country, but I want to ensure that we get these benefits at the best price not any price," he said.

The initial London to Birmingham section of HS2 is currently scheduled for completion in 2026, and will cut journey times between the two cities to 45 minutes, according to the Department for Transport (DfT). 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 to Heathrow Airport, by 2033.

The project continues to have the support of the leaders of England's three main political parties despite an increase to its budget in June; although Shadow Chancellor Ed Balls has threatened to withdraw Labour's support if costs continue to rise. According to the latest estimates, the project is expected to cost £46.2bn with an additional £7.5bn for rolling stock. This includes a £14bn 'contingency', which the Government's latest business case for the project makes clear cannot be used without the "explicit agreement" of the DfT and Treasury.

Infrastructure law expert Chris Hallam of Pinsent Masons, the law firm behind Out-Law.com, said that there was "plenty of scope" for cost savings, whether driven by Higgins' expertise or by industry itself.

"The budget for Phases 1 and 2 of HS2 includes £14bn worth of contingency, so there is plenty of scope for cost savings. With Sir David Higgins in the driving seat the project will benefit from the experience and expertise gained from the successful Olympics construction projects. It is also likely that the industry will help to drive cost savings; for example by making the most of developing technologies and practices in BIM, and taking advantage of know-how from the ongoing Crossrail packages of works," he said.

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