Government unable to explain how a cut-back HS2 will run a railway

Having been subjected to a plethora of cuts by the government, the HS2 railway is now so reduced in capability that its costs outweigh the benefits, according to an eviscerating report from Parliament’s Public Accounts Committee.

The PAC’s report is the latest addition to over a decade of scrutiny raising concerns around HS2’s management.

The Government has accepted that delivering only Phase 1 — the link from the edge of London to central Birmingham — will not be value for money, as its total costs significantly outweigh its benefits. The Department for Transport (DfT) told the PAC it was still better to complete Phase 1 – a calculation that excluded the £23 billion spent to date.

More damaging, the government’s cost-to-benefit ratio for the cut-back line had been flattered by including the £11 billion cost of cancelling the project as a benefit of the project.

The report concluded that the government no longer knows what the benefits of the HS2 line will be when it opens.

The sudden decision to cancel the railway north of Birmingham, made apparently by 10 Downing Street officials without consulting railway experts, has left the DfT unable to explain how the high-speed trains will operate as part of the rail network or how the HS2 line will connect to the West Coast Mainline.

HS2 as a shuttle (red) vs what was planned (grey)

The report noted that the cost-to-benefits ratios included completing HS2 up to Manchester at a minimum and that it’s cutting the northern section, which has severely affected the entire railway’s viability.

In essence, the line from London to Birmingham was the foundation needed to unlock the capacity that HS2 adds to the UK rail network. However, having just the foundations and nothing else leaves you with all the sunken costs but few of the benefits.

There’s long been the issue of rising costs, partly due to inflation and the shortage of planning ahead of work starting, but the report says that the of the difference between the 2020 estimate of £44.6 billion and now was about how the Main Works Civils contracts were manifesting. hS2 has said that the Government’s decision to let cost-plus contracts, with few incentives and penalties, had left HS2 without any real levers on contractors to do better in relation to schedule and costs.

The report also warns that decisions about funding HS2’s Euston station needs to be made urgently.

The government’s decision to change how Euston station will be built is dependent on attracting private finance to pay for it, but the report is highly sceptical that investment can be attracted of the scale and speed required to make Euston a success.

Dame Meg Hillier MP, Chair of the Committee, said: “HS2 is the biggest ticket item by value on the Government’s books for infrastructure projects. As such, it was crying out for a steady hand at the tiller from the start. But, here we are after over a decade of our warnings on HS2’s management and spiralling costs – locked into the costly completion of a curtailed rump of a project with many unanswered questions and risks still attached to delivery of even this curtailed project.”

HS2 is due to open between Old Oak Common and Birmingham between 2029 and 2033, with HS2 currently aiming for 2030 as the opening date.