British rail line

Concerns over the future of HS2 amidst phase one progression

In over a decade since its inception, the HS2 project has survived multiple years of austerity and has tripled in its overall budget, reaching heights of £40.3bn for the first phase of London to Birmingham. Acting as the proverbial Twinkie of the rail sector, HS2 has survived the duration of 5 Prime Ministers in its lifetime, welcoming the sixth this week, after Rishi Sunak’s ascension to leader of the Conservative Party.

Due to the current economic climate with rising inflation, accompanied by Chancellor of the Exchequer Jeremy Hunt’s plans for major tax cuts, there are currently rumours circulating about the long-term survival of the HS2 project.

Recent reports are showing that the existing budget for phase one is on course to run “many billions” of pounds over the £40.3bn leading to the treasury asking for further potential cuts, according to an internal review. A recent report has been leaked to the financial times, addressing the budgetary concerns, claiming it would be “very unlikely” that the London to Birmingham price tag would be attainable. There is a built-in contingency budget which would stretch to £44.6bn if necessary, however it is projected in the report that there was only a 50 per cent chance that would be enough.

The budgetary concerns for HS2 have recently been echoed by Lord Tony Berkeley, who served as the deputy chair of the government-ordered review into HS2 which concluded earlier this year.

Lord Berkley stated:

“Based on the progress to date, compared with the budgets given by the permanent secretary to the DfT to the Public Accounts Committee, approximately £15bn has been spent or committed to the project date. Repurposing it and selling acquired land reduces the monies lost to £8bn, saving the taxpayer £147bn overall.”

These rumours and mass confusion over the future of HS2 have forced the Department for Transport to issue a statement in response, where a spokesperson responded saying:

“There are no plans to cancel HS2, this vital project is already well underway, significantly contributing to Britain’s economic growth and setting the foundations for additional schemes as Northern Powerhouse Rail.”

Currently hosting 28,000 people working on the project directly, as well as being accompanied by tens of thousands of additional jobs supported through the supply chain, HS2 is championed by its proponents as the gravy train of the rail sector, providing jobs and opportunities across the UK. Former Chair of HS2 Ltd Allan Cook recently warned of a cancellation to the project, arguing that it would endanger the job and infrastructure development, however Lord Berkeley countered this sentiment by arguing “it would do neither.”

Lord Berkeley expanded further upon this, saying:

“The moneys saved by cancelling the project can be put to far better use in the North of England, improving connectivity between, Liverpool, Manchester, Bradford, Leeds, Sheffield, and Hull. Such regional schemes would enhance these major cities encouraging local enterprise and development, neither of which is dependent on a new line to London. They can be built within the budgets set out in the IRP with change to spare.”

 Many argue that scrapping the HS2 project would have disastrous affects for local communities as the creation of jobs would rescind, whilst isolated areas would still require better interconnectivity. With the work already progressing on phase one, many fear it would be a massive waste of existing resources and time to scrap the project now.

Lord Berkeley rejects this notion as he believes that the current works can be “absorbed into the existing railway network or, in the case of the route between Warwickshire and Birmingham, used for new improved road or rail projects" and "land acquired by compulsory purchase can be returned to its original owners or sold off, thus recovering much earlier expenditure.”

As the UK embraces a new Government and Prime Minister, it is still unsure how their priorities align with the plans for HS2, so until their ideas for rail are outlined, we must sit in speculative anticipation.

Want to know more about the opportunities to become a key supplier to the UK rail industry? Attend TransCityRail and access an exclusive marketplace of buyers from Network Rail, HS2, Train Operators, Major Contractors, and all other tiers of the supply chain. For more information and to secure your place click here

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