A leaked report has suggested that the embattled HS2 railway project could see costs rise even further to £106 billion – from the £88 billion expected last year.
Although the leaked extracts, reported in the FT don’t detail why costs are rising, that the report also calls for delays to the second and third phase of the railway gives a good indication – delays cost money. Often an awful lot of money.
If the first phase of HS2 is built — and the rest of railway is delayed for a few years, then a hike in the cost of the final project of this sort of magnitude would not be unexpected. The best way to avoid the cost increases is therefore to simply get on with it as swiftly as is reasonably possible.
The cost was always expected to rise from the headline numbers when the project was announced, as it was almost pulled out of the air when far too little ground preparation had taken place. The costs have risen by more than people expected, but is that the fault of an overly expensive railway, or an under-estimate by political masters hoping for a vote winning project.
To put the numbers into context though – with the full railway phased to be delivered between 2017 and 2040 — 23 years, that’s £4.6 billion per year.
Network Rail will spend double that over the next few years alone just maintaining the existing railway. So the costs while eye-wateringly high as a headline are surprisingly modest when looked at the duration of the spending and how much is spent on the railway each year already.
Not to mention as a chunk of national spending, which in 2019 will be around £765 billion – so HS2 is 0.6% of government spending, and then it’s paid back from rail fares and increased economic activity.
The review into HS2, and the leaked extracts are looking at the value of the project and whether alternatives could be offered.
In an ideal world, as the main purpose for HS2 is to increase overall capacity on the railway, especially the overcrowded commuter lines, then upgrading the existing railway would be the perfect solution. However, previous rail upgrades show that trying to bolt modern onto Victorian rarely works, costs even more than HS2 and creates years of delays.
The review is thought to suggest building HS2 to Birmingham then pausing to see if it’s viable to bolt the rest of the upgrade onto the existing railway lines.
Network Rail’s chief executive, Andrew Haines has told the Department for Transport that upgrading the existing infrastructure would result in a timeframe he described as “absurd”. A previous study suggested 15 years worth of alternate weekend line closures — effectively rendering the rail network inoperative most weekends for over a decade.
The other controversy that broke at the same time as the projected additional costs is the Oakervee review which had been due to be published last year but still hasn’t been. The government says that the report is still a draft and needs finishing. One of the review team, Andrew Sentance said that contrary to government comments, the report was ready to be published last year, and was generally favourable to the HS2 project.
Business leaders, not usually known for wanting to waste money on frivolous projects are also keen for the project to go ahead, thanks to the economic benefits to the country, and particularly to the northern cities which struggle with slow and unreliable services, and for which HS2 is essential to support other local rail upgrade projects.
And their support is due to the biggest benefit from HS2 — not the fast line between cities, but the huge capacity gains on the existing railway when the intercity trains are taken off those older lines to create space for more commuter services.
More trains that are less crowded carrying more commuters into Manchester, Birmingham, and London.
A short term decision to delay HS2 today would compel the next couple of generations of commuters to daily journeys with noses in each others armpits. Our collective grandchildren wont appreciate that.