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Proposed Chinese investment in HS2 link shows country's "enthusiasm for UK infrastructure", says expert

Out-Law News | 09 Jan 2014 | 3:01 pm | 2 min. read

China's state-owned railway company has proposed investing in connections between the new national high speed rail link, Birmingham Airport and other towns in the West Midlands, according to press reports.

China Railway Group, a Hong Kong listed subsidiary of the China Railway Engineering Corporation, has written to Birmingham City Council offering to finance the project, according to the Birmingham Post. The plans would involve reopening a line between Solihull and Whitacre Junction which was closed in the 1930s and reinstating passenger services from Walsall to Water Orton through Sutton Coldfield. It is anticipated to cost £280 million, the paper said.

Infrastructure expert Patrick Twist of Pinsent Masons, the law firm behind Out-Law.com, said that although the Government had made it clear that the costs of HS2 itself would be met from public funds; the interest from China was a "very interesting development".

"The interest shown by the China Railway Group in investing in connections to HS2 around Birmingham Airport and the proposed HS2 Birmingham Interchange Station will be very welcome to the Government," he said. "It's a clear signal of the enthusiasm in China for investing in UK infrastructure."

"All indications are that the Coalition plans to develop HS2 itself with public funds and, following completion, to recover some of the costs by letting a long-term concession to run the railway. It is widely recognised that improving local connectivity to the proposed stations is central to maximising the economic benefits which will flow from construction of the high speed line. If related projects such as this can be funded without recourse to public sector funds, that will go a long way to ensuring that HS2 does a lot more than simply connecting up the stations themselves," he said.

Completion of the initial London to Birmingham section of HS2, which is planned to be built in two stages, is currently scheduled for 2026. 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. According to the latest estimates, the project is expected to cost £42.6 billion, of which just over £14bn is contingency; with an additional £7.5bn for rolling stock.

According to Alan Marshall, one of the local businessmen behind the Birmingham scheme, the proposal would prevent those travelling to the airport from elsewhere in the West Midlands from having to change at the overcrowded New Street station. The scheme also envisages the creation of a new international terminal at Whitacre where passengers could check in for flights at the airport or train services to continental Europe, via the Channel Tunnel.

In its letter to Birmingham City Council, China Railway Group set out its "formal expression of interest" to work with the authority, airport and other regional stakeholders to "design, construct and finance" the project, according to the Birmingham Post.

"We have followed the publications prepared to develop Birmingham Airport and to improve the connections by public transport to it," the letter said. "We have also noted the comments made in the recently published Parliamentary Transport Select Committee report on HS2 railway line suggesting the need for additional rail links to its passenger hubs."

"We write to express our formal interest in making long-term investments in the region, including investment in the development and enhancement of Birmingham Airport, and in the development of the railways of the region to connect with the proposed HS2 High Speed line," the letter said.

A report commissioned by HS2 Ltd from accountancy firm KPMG found that HS2 could generate £15 billion of annual regional productivity growth in the UK. In October, non-partisan group the Independent Transport Commission said that UK cities needed to begin planning how to connect local and regional services to HS2, and recommended that the Government provide "seed funding" to help them "harness the opportunities" from the line.