HS2’s benefits squandered

A recent report by the National Audit Office (NAO), titled ‘HS2: update following the cancellation of phase 2’, has concluded that the Department for Transport (DfT) does not know how to maximise the benefits of HS2 now that phase 2 to Manchester has been cancelled. It notes that most of HS2’s original benefits were from the now-cancelled phase 2. Furthermore, HS2 Ltd estimates that once HS2 services start there will be a 17% reduction in passenger capacity.

Without HS2 phase 2, there remains a capacity issue that the DfT will have to resolve by either pricing passengers off rail or providing additional rail infrastructure which would create major disruption unless a new line was built.

The DfT is currently developing a train service specification to maximise the benefits of the current HS2 scope. This is considering options to run longer HS2 trains by lengthening platforms at Crewe or Preston where trains formed of 2 x 200-metre units could be split. The NAO report does not mention the Pendolino proposal described elsewhere in this issue.

With HS2 services expected to commence between 2029 and 2033, there is an urgent need for action to ensure that HS2 services will at least provide the same number of seats as conventional services.

Reduced phase 1 scope

After the phase 2 cancellation, the DfT had to decide how much of the ongoing HS2 work needed to be stopped or changed. The general principle is to stop work that is no longer needed unless it would cost more to stop it. It was decided to retain the current rolling stock design and fleet size as changes could lead to significant additional costs and operational issues.

In some cases, the decision was to continue with committed work. For example, Birmingham Curzon Street station will be completed with seven platforms, though tracks will only be provided at three platforms. Some decisions have yet to be taken such as whether to retain passive provision for a connection to a future eastern HS2 leg.

Closing down phase 2

HS2 estimates that closing down phase 2 will take three years and cost up to £100 million. This includes restoring land where over a thousand boreholes have been drilled.

£429 million has been spent on land and property along the phase 2 Manchester route of which £224 million was for phase 2a between Handsacre and Crewe. As at the end of June 2024, HS2 has sold none of this land. It is estimated that disposing of this phase 2 land and property will take several years.

Euston

The HS2 cutback decision included the requirement to reset the design of HS2’s Euston station. The DfT is currently developing revised requirements for a six platform station though no decisions have been taken on its scope, funding, or governance. Although it is considered that much of the rescoped station could be funded privately, such private finance is not expected to be available for several years. Furthermore, it will take two to three years to set up a development corporation for the wider Euston quarter. The DfT has yet to set a revised date for the start of HS2 services from Euston.

The NAO report notes that the decision to proceed with tunnelling from Old Oak Common to Euston is needed this summer to avoid much higher future costs.

HS2 costs

Up to the end of March 2024, £30.1 billion (in 2019 prices) has been spent on HS2, with £27.8 billion spent on phase 1. HS2’s estimate of final cost is £45 billion to £57 billion, though the DfT considers it should be lower than this. The report identifies reasons for HS2’s high costs which include contract incentivisation, HS2 contract management, estimates, design, and consents.

It also notes that costs have risen for reasons outside of HS2’s control, for example, inflation, Covid, Brexit, and the war in Ukraine. In addition, HS2 considers that an annual funding constraint imposed between 2023 and 2025 has increased costs by £1.9 billion to £3.1 billion.

Image credit: HS2