HS2 on brink after leaked report warns cost may hit £106bn
THE future of HS2 was thrown into serious doubt last night after a report suggested the cost of the high-speed rail link could reach £106billion.
That would be more than triple the orginal £32billion estimate.
Senior cabinet ministers, including Chancellor Sajid Javid, were said to be ‘lukewarm’ over the project, while the Transport Secretary Grant Shapps admitted the Government faces a ‘massive decision’.
A draft of a report on HS2’s future, being drawn up by a former HS2 Ltd chairman on the orders of Boris Johnson, warns that it is ‘hard’ to see what economic benefits the scheme would deliver. Worse still, the draft, leaked yesterday, states that the 250mph, Y-shaped rail network linking London to Birmingham, Manchester and Leeds would not be fully completed until 2040 – seven years later than scheduled.
The revelations triggered fresh doubts over the future of HS2. The Prime Minister and senior ministers will decide within weeks whether to go ahead with the scheme, scale it back or scrap it.
Abandoning the project, on which £8billion has already been spent, would cause fury among business and regional leaders and could undermine the Tories’ claims to be ‘levelling up’ the country. It could also damage the party’s hopes at the West Midlands mayoral contest in May. However, many MPs now oppose it amid fears that costs could spiral even further. A group of Tory MPs have written to the Prime Minister, who has previously been sceptical about HS2, calling for its immediate cancellation.
The project is likely to come under further scrutiny later this week, with the expected publication of a highly critical review by the National Audit Office.
Yesterday Mr Shapps admitted that civil servants were exploring alternatives. These could include part of the route not being high speed. He told Sky News: ‘We will come to a conclusion on this quite shortly. It is worth taking the time to get that decision right. It is a massive decision for the country.’
Proposals for HS2 were first announced under Labour in 2009. In 2012 the cost was put at £32billion but by 2015, this had soared to £56billion.
Yesterday’s leaked draft, of a report being prepared by former HS2 Ltd chairman Doug Oakervee, highlighted a ‘considerable risk’ that the project could cost up to £106billion, despite a report four months ago by current HS2 Ltd chairman Allan Cook that set out an estimated cost range of £81billion to £88billion.
The draft concluded that the Government should ‘ on balance’ press ahead with the mammoth project but warned it was hard to see what economic benefits it will deliver. It also suggested the second phase of the line, north of Birmingham, could be paused for six months to give planners time to see whether costs could be reduced by mixing new high-speed lines and conventional tracks.
Fears over the future of HS2 have sparked heated debate. Cabinet ministers including Matt Hancock, and Baroness Morgan are said to support the scheme, while Priti Patel and Andrea Leadsom have criticised it in the past. A group of Tory backbenchers, including several of the MPs in northern seats that the party took from Labour at the general election, are demanding the cancellation of the project. A delegation is expected to meet Mr Johnson next week.
Alex Stafford, who won Rother Valley, told Radio 4’s The World At One: ‘The North is not linked up enough between the towns, villages and cities. Why do we need to get to London slightly faster when we cannot even get to our nearest town in under two hours on public transport?’
James Grundy, who won Leigh for the Tories last month, said he would rather money was spent on upgrading the rail line connecting Manchester and Liverpool.
Banbury MP Victoria Prentis, who is leading the group of HS2 opponents, said: ‘We are concerned. We want shovel-ready infrastructure projects delivered in the North now. Quite frankly, the prospect of HS2 going to Leeds by 2040 is not cutting it for us.
‘We are also very worried about the seemingly open-ended cost.’
Dame Cheryl Gillan, Tory MP for Chesham and Amersham, said: ‘This project is already overdue, it has almost quadrupled in price, is poorly managed and is not good value for the taxpayer. It is about time somebody put it out of its misery and actually took up some of the excellent projects... that will improve the economic prospects throughout the country, including the North.’
Tory MPs who support HS2 are understood to be organising their own letter to the Prime Minister.
Construction bosses warn that scrapping the project could cause ‘irreparable damage’ to their industry, stifling hopes of an industrial renaissance’ in the Midlands and the North. In a letter to Mr Johnson they said: ‘Just as the original railways built by the Victorians are still in use today, HS2 is not just a “once in a generation” project, but a multi-century investment.’
Andy Burnham, Labour mayor of Manchester, warned that any scaling back of the HS2’s northern section would relegate commuters in the North to second-class citizens at a time when they are already suffering a dire service from northern rail operators.
Downing Street refused to comment on the leaks. The Department for Transport said a final decision on HS2 will be taken ‘shortly’.
‘We want projects delivered now’ ‘Not good value for the taxpayer’
FIRST it was £32 billion, then £56 billion, then, as recently as last year, £88 billion.
Now we learn the estimated cost of the HS2 rail network has soared to £106 billion – before a yard of track has been laid.
This raises some profoundly troubling questions. How could costs have risen so much in such a short time?
Who’s to say they won’t rocket even higher in the 20 years before the line is due for completion?
And is there a point at which the benefits of this scheme no longer justify the costs?
There’s no doubt that Britain’s rail infrastructure needs radical modernisation.
Equally, if Boris Johnson is to fulfil his promise to ‘ level up’ the North and Midlands – to whose voters he owes his election triumph – regional links must be vastly improved.
HS2 is a grand project. But is it the best and most cost-effective available?
Should we focus on less extravagant ways of boosting the existing system, especially across-country in the North, which may be just as beneficial?
Difficult decisions lie ahead. But they must be made soon.
To carry out a proper cost-benefit analysis, Transport Secretary Grant Shapps first needs a realistic idea of how much HS2 will cost. Back- of-the- envelope guesstimates that spiral ever upwards simply won’t do.