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HS2 worried about long-term Brexit impact

HS2 Ltd’s director of finance and operations has said he is “worried” about the long-term impact of Brexit on the £56bn high-speed line project.

Speaking at annual conference of The Chartered Institute of Public Finance & Accountancy (CIPFA), Clive Heaphy told delegates that in the short term there is not real risk to the project, “as we’re still going through the parliamentary process”.

“But I’m worried about the long-term impact,” he said, adding that there are concerns about what the EU referendum vote will mean to how HS2 engages with European markets and “the price differentials and tariffs that could potentially be coming our way”.

Heaphy also cited concerns on the long-term impacts of inflation, something HS2 has no control over but will have to be aware of.

“We have very high demand for steel and concrete and we’ll need to watch those prices very carefully,” he said. “We need to talk to Treasury about the mechanisms that we can protect the prices. It has added extra work and more of a challenge.”

During his presentation, Heaphy discussed the many benefits that HS2 will bring to the country, as have been said by many before him.

IMG 20160714 095004

He did note, however, that the project is still on time. But a recent National Audit Office said that HS2 is already behind schedule and could fail to deliver phase 1 by the 2026 target date, with problems including uncertainty about financing, lack of staff and the need for further analysis.

Last week, Sir David Higgins revealed revised plans for the South Yorkshire section of HS2’s phase 2 route, stopping at Sheffield Midland instead of Meadowhall and saving approximately £1bn. Britain’s most senior civil servant, Sir Jeremy Heywood,  has also been conducting a review of HS2 and looking at the project’s costs.

Earlier this week, the then transport secretary Patrick McLoughlin, who has now been replaced by Chris Grayling, defiantly said that HS2 will be completed on time and is more needed than ever following the UK’s vote to leave the European Union.

Although Heaphy’s presentation to CIPFA delegates didn’t focus on the challenges of the project, in an answer to a question from the floor he cited major challenges as being the “immensely long planning process” in the UK, and mobilising the supply chain for multi-billion pound contracts.

Recently, HS2 revealed that the nine companies in the race to win at least one of seven HS2 main civil engineering contracts worth up to £11.8bn have been invited to tender. Beth West, commercial director at HS2 Ltd, also wrote for RTM on the need for a step change in how the supply chain works to deliver the project.

Just after the EU referendum vote, members of the supply chain told RTM that major rail projects like HS2Crossrail 2Northern Powerhouse Rail, and the continued renewal of the network will be “vitally important” to the country’s ability to compete on the global stage

But Lord Berkeley, a member of RTM’s editorial board, said Brexit may put the future of HS2 is in doubt.

(Image: c. European Parliament)

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Graham Nalty   15/07/2016 at 13:24

The real worry is that there are many details in HS2 that do not make sense. There is the very high cost of rebuilding Euston, yet HS2 will not connect directly HS1 or Heathrow airport. Terminal stations are no longer considered best practice for high speed lines, yet HS2 trains will stop at terminals at London, Leeds, Manchester and Birmingham. Parkway stations are known to be totally useless in creating jobs in the cities they are meant to serve. Yet Derby, Nottingham and Stoke on Trent are to be served only be remote parkway stations. The new plans for South Yorkshire do not have a satisfactory solution for the Birmingham -Sheffield - Leeds HS2 services. Making the Sheffield stop commercially attractive for cross country operators will add up to an extra £1 billion to the cost. The high cost of tunneling in the Chilterns could be avoided by using the M1 route promoted by High Speed UK. We could start by building the Sheffield - Leeds section of HS2 between the existing stations to boost the Northern Powerhouse economy, but better connectivity between northern cities is far more important than faster journey times to London.

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