HS2 review team gets to work

High-Speed Rail

The government’s review into the future of HS2 is considering a huge range of questions, including the capability of HS2 Ltd to lead the project, the likely costs and benefits of the project, the realism of the business case, and the impact of building only bits of the network.  

The review’s terms of reference were published last week alongside details of the review team. One of the most eye-catching appointments is that of the Labour peer Lord Berkeley, a fierce critic of HS2, to serve as deputy chair. 

Review team chair Doug Oakervee told The Times last week he did not want to see HS2 abandoned. “I would have thought it would be a sad day if we scrapped it. It’s about how we deliver it and what’s delivered. There is a need to increase capacity in the rail network.”

Oakervee will present a report this autumn to transport secretary Grant Shapps, the Prime Minister Boris Johnson, and the chancellor Sajiv Javid. Shapps has said the Government plans to make a decision on the project’s future before the end of the year. The timetable could, however, be impacted by Brexit and a possible General Election.

Johnson has ordered the review into the project to build a Y-shaped 225mph railway from London Euston to Birmingham and onto Manchester and Leeds. The project remains officially costed at £55.7bn in 2015 prices, but Johnson himself said recently that he expected the final cost to be “north of £100bn”.

Phase 1, from London to the West Midlands, is supposed to open in late-2026, with the West Midlands-Crewe line (phase 2A) following in late-2027, and the Crewe-Manchester and West Midlands-Leeds lines (phase 2B) in late-2033.

It is widely believed that phase one will be delivered years late. The Government announced winners of two-stage design and build contracts for phase 1 in July 2017 but has yet to give notice to proceed to construction. Contractors are reportedly unable to deliver the project within the available funding envelope.

HS2 has already consumed vast sums of public money. The DfT said this week that HS2 Ltd had spent £4.7bn up to 31 March this year, and the DfT had spent a further £3.3bn on land and property acquisition. The overall spend is put at £7.4bn because £600m of the above spending is VAT, which is not classed as part of the overall cost to the taxpayer.

The review will consider: 

• whether HS2 Ltd is in a position to deliver the project effectively, taking account of its performance to date and any other relevant information
• the full range of benefits from the project, including: capacity changes, both for services to cities and towns on HS2 and which will not be on HS2; economic transformation, including whether the scheme will promote inclusive growth and regional rebalancing; environmental benefits, in particular for carbon reduction in line with net zero commitments; the risk of delivery of these and other benefits; and whether there are alternative strategic transport schemes that could achieve comparable benefits in similar timescales
• the full range of costs of the project, including:whether HS2 Ltd’s latest estimates of costs and schedule are realistic and comparable to other UK infrastructure; why any cost estimates or schedules have changed since the most recent previous baselines; whether there are opportunities for efficiencies; the cost of disruption to rail users during construction; whether there are trade-offs between cost and schedule; and whether there are opportunities for additional commercial returns for the taxpayer through, for example, developments around stations to offset costs 
• what proceeding with phase 1 means in terms of overall affordability, and what this means in terms of what would be required to deliver the project within the current funding envelope for the project as a whole 
• whether the assumptions behind the business case, for instance on passenger numbers and train frequencies, are realistic, including the location and interconnectivity of the stations with other transport systems, and implications of potential changes in services to cities and towns that are on the existing main lines but will not be on HS2 
• for the project as a whole, how much realistic potential there is for cost reductions in the scheme as currently planned through changes to its scope, planned phasing or specification, including but not limited to: reductions in speed; making Old Oak Common the London terminus, at least for a period; building only Phase 1; combining Phases 1 and 2a; different choices or phasing of Phase 2b, taking account of the interfaces with Northern Powerhouse Rail
• the cost of reprioritising, cancelling or de-scoping the project, including: contractual penalties; the risk of legal action; sunk costs; remediation costs; supply chain impact; and an estimate of how much of the money already spent, for instance on the purchase of land and property, could be recouped
• whether and how the project could be reprioritised. In particular, whether and, if so how, Northern Powerhouse Rail (NPR) (including the common sections with HS2 Phase 2b) could be prioritised over delivering the southern sections of HS2; 
• whether any improvements would benefit the integration of HS2, NPR and other rail projects in the north of England or Midlands
• any lessons from the project for other major projects 

Review chairman Douglas Oakervee served as chairman of HS2 Ltd from 2012 to 2013 and was chairman of Crossrail Ltd from 2005 to 2009, overlapping with Boris Johnson’s time as London mayor. 

Deputy chair Lord Berkeley has been one of the fiercest critics of the project. He has championed the work of quantity surveyor Michael Byng who says HS2’s costs have been wildly underestimated.

Earlier this summer Berkeley said the problems with HS2 were “ten times worse” than those of London’s Crossrail project (LTT 19 Jul). “The evidence of cost overruns, cover-ups and, I must say, fraud and worse [on HS2] are rampant even before the permanent construction work has started,” he told the House of Lords. Berkeley set out proposals to dramatically cut back HS2 last December (see panel, left).

Oakervee and Berkeley will be supported by a panel comprising: 

• Michèle Dix, Transport for London’s managing director of Crossrail 2, a project that interfaces with HS2 at Euston;
• Stephen Glaister, emeritus professor of transport and infrastructure at Imperial College London, and a former executive director of the RAC Foundation and chairman of the Office of Rail and Road. He is a long-standing critic of HS2 and in 2012 said: “By going with HS2 the Government is essentially sidelining many better value schemes” (LTT 20 Jan 12).
• Patrick Harley, the Conservative leader of Dudley Council
• Sir Peter Hendy, the chairman of Network Rail
• Andrew Sentance, an economist, who retired as PwC’s senior economic adviser last October
• Andy Street, the Conservative mayor of the West Midlands Combined Authority. The Guardian reported him as having said: “HS2 … will literally unite the country and drive regeneration in the Midlands and the north. Turning back … would be unthinkable.” 
• John Cridland, chairman of Transport for the North, and a former director general of the Confederation of British Industry
• Tony Travers, professor in practice at the department of government, London School of Economics. The Guardian quoted him as having said: “If the same money – whether it’s £50bn or £70bn – were available for public transport in London, Birmingham, Manchester and other cities it’s hard to believe it wouldn’t be better used there.”

Each panel member will focus on a specific area of interest, and will feed in to and be consulted on the report’s conclusions, without having a right of veto in the event that consensus cannot be reached. The DfT will provide support to the review.

Shapps said last week: “The Prime Minister has been clear that transport infrastructure has the potential to drive economic growth, redistribute opportunity and support towns and cities across the UK, but that investments must be subject to continuous assessment of their costs and benefits. That’s why we are undertaking this independent and rigorous review of HS2.”