Government plans to delay HS2 will cost the UK more in the long term, London business group warns
Delaying the construction of HS2 to save money will cost the UK more in the long term, a London business group has warned after reports the government is set to announce further delays to the already over budget and overdue project.
“Delaying construction of HS2 to save money is a false economy. Failing to invest now will likely increase costs over the long-term while also delaying the benefits for people and businesses across England,” Business LDN chief executive John Dickie told City PM
“The country needs this project to remain on track through swift and efficient delivery to drive long-term growth and decarbonisation. Slowing down construction of sections will do little to help levelling-up, particularly in the North.
“With shovels already in the ground, we cannot afford yet another delay. Ministers should not hit the brakes and instead seize this once-in-a-generation opportunity to create a world-class, high-speed, capacity-boosting rail line that will transform connectivity between England’s major cities.”
The comments come after reports the government will shortly announce delays to some sections of HS2 in a bid to cut costs.
The BBC said it understands this will primarily affect the high-speed railway between Birmingham and Crewe, and between Crewe and Manchester. However, it also cited sources indicating that some of the design teams working on the Euston end of the line would also be impacted.
HS2 has been dogged by criticism over its finances.
A budget of £55.7bn for the whole of the project was set in 2015.
But the target cost excluding the eastern leg of Phase 2b from the West Midlands to the East Midlands has ballooned to between £53bn and £71bn (in 2019 prices).
Rail minister Huw Merriman told the Commons last week that the government is “absolutely committed” to delivering HS2 but “cost pressures” must be examined.
Responding to the report that the project will be delayed, Prime Minister Rishi Sunak’s official spokesman said: “You will know there’s work already under way on HS2.
“Equally the rail minister has been clear we’re continuing to look at any cost pressures and ensure the project delivers value for money for taxpayers.”
HS2 Ltd chief executive Mark Thurston recently said the project has suffered a “significant” impact from inflation adding to the cost of building materials, labour, fuel and energy.
“We’re looking at the timing of the project, the phasing of the project, we’re looking at where we can use our supply chain to secure a lot of those things that are costing us more through inflation,” he told the BBC.
Conservative MP Simon Clarke, former chief secretary to the Treasury, described delaying the project as a “sensible decision”.
He said: “Having observed HS2’s progress as chief secretary, I have serious doubts as to value for money and cost control.”
Michael Fabricant, also a Tory MP, said he will ask the government whether the delay “marks the end of HS2 north of Birmingham” and if the “damage” done in southern Staffordshire – including to his Lichfield constituency – will be repaired.
He added: “Simply saying the project is delayed is not good enough.
“This project with the backing of Labour and the Lib Dems should never have gone ahead in the first place.
“Covid has encouraged remote working and even now regular rail commutes are down by 40 per cent on pre-Covid levels.
“The government are well aware this makes the business case for HS2 even less convincing than it was in the first place.”
But Andy Bagnall, chief executive for rail industry lobby group Rail Partners, said: “While inflationary pressures make infrastructure projects more challenging, it is critical for Britain’s economy and meeting net zero targets that large sections of HS2 are not delayed, which will ultimately increase the overall cost.
“We must address industry financial challenges across infrastructure and operations head on – not focusing solely on cost reduction, but also on driving revenues to close the financial gap and reduce the railway’s reliance on taxpayer funding.”
In October last year, transport secretary Mark Harper said the forecast for when HS2’s phases would be complete remained within planned ranges.
That involved Phase One – connecting London with Birmingham – opening between 2029 and 2033.
Services will initially start and end at Old Oak Common, west London, due to delays at Euston.
Harper said Phase 2a – extending the line from Birmingham to Crewe – was “on track” to be completed between 2030 and 2034.
The date range for the western leg of Phase 2b – connecting Crewe with Manchester – remained between 2035 and 2041, the Cabinet minister added.
No timetable has been set for when the eastern leg of that phase will open as it is at the early stage of development.
A planned extension to Leeds was shelved in November 2021.
The Department for Transport was contacted for comment.
City PM reporters and PA staff