HS2 – are the wheels finally coming off?

By Nick Waterman

The government has announced the timetable for the much-anticipated review into the entire HS2 project. Conducted by ex-HS2 chair Doug Oakervee, the wide-ranging examination will delve into the project’s finances, decision making and to quote the Prime Minister, “whether and how we proceed.”

A chequered history
From the robust opposition of residents and MPs along the route to the projected £100 billion price tag and delays to construction, the government has announced it wants a “blank sheet of paper” approach to the review.

What happens now?
The panel has only a couple of months to pull together its recommendations on the future of the project. Potential options include:

Option 1:
HS2 soldiers on.
Highly unlikely, given the emerging cost overrun and the unpopularity of the scheme in certain quarters.

Option 2:
Hard stop at Birmingham.
There’s a higher chance the scheme will be given the nod to continue its current phase to Birmingham before reaching the end of the line. This option would placate the business lobby and the Midlands Metro Mayor. However, this would send a clear signal to the other Metro areas that the government doesn’t consider them an investment priority. To counteract this, there would need to be robust alternative investment plans in place. With an election in the offing, upsetting the Northern cities might be a risky move for the Prime Minister to take, especially when they are becoming increasingly winnable.

Option 3: Pulling the plug.
Sounding the death knell for HS2 might seem the lesser of all evils but this option isn’t without its difficulties. Vast swathes of Birmingham and Euston which were earmarked for demolition have already disappeared from the map. The DfT’s own statement points to the various risks associated with cancellation which include financial penalties; the risk of legal action; 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. With the prospect of being mired in lengthy negotiations over land costs and compensation, this option could prove to be more expensive than letting HS2 continue.

Sizing up the panel
Perhaps as a way of distancing the government from any criticism of not having an impartial review, the DfT has opened the doors to a wide variety of views.

For the scheme
Demonstrating how seriously the DfT is taking this project review, seasoned transport bosses Michèle Dix and Sir Peter Hendy have been asked to join the review panel. Both heavyweights in their field, Dix and Hendy have played a significant part in transforming London’s transport system. Having them on the board is a clear sign that Grant Shapps is taking the views of industry professionals seriously.

Dix, as Managing Director of Crossrail 2, will want to weigh up the implications of not proceeding with HS2 and the impact that might have on Crossrail 2.

Patrick Harley, a Dudley Metropolitan councillor, will be keen to avoid a situation where the Midlands loses out on investment.

Against the scheme
Veteran London politics professor Tony Travers has been highly critical of the scheme, and as an advisor to successive governments on transport policy and infrastructure, his views carry particular weight.

Stephen Glaister, an Imperial College transport economist and former chair of the Office of Rail and Road (ORR), has previously said that HS2 has not been properly thought through and that the money would be better spent elsewhere.

Andrew Sentance, an economist, feels that HS2 is not the optimum solution for solving the UK’s regional transport issues.

Former CBI Director General John Cridland has been known to have mixed views on the project. Whilst largely supportive of rail infrastructure investment, he has described the increasing cost of HS2 as “a matter of concern” and called for a reassessment of the project’s value for money.

Lastly, Lord Berkeley, the former chair of the Rail Freight Group has accused HS2 Ltd of committing fraud. His position as Deputy Chair could prove crucial in the outcome of the final report.

Timing is everything
The final report will be submitted to the DfT later this year. This will give the Government time to analyse its findings and carefully decide what to do next. With the ongoing political uncertainty around Brexit and the likelihood of an early election, a badly timed and thought through announcement could prove to be pivotal in deciding the next Government.

But even as the review into HS2 gathers pace with today’s announcement, criticism has already begun to mount. Questions around the impartiality of the review were raised from the Stop HS2 group. Noting Oakervee’s appointment, the campaign group questioned whether a review by a former chair of HS2 could be described as independent. Criticism of the review has also come in from the main opposition parties as well as prominent business groups and trade unions.

How much weight Oakervee will afford to his colleagues’ views is uncertain but it remains highly likely that whatever the outcome of the report, HS2 will not emerge unscathed.

Nick Waterman is a Senior Executive in the Community Engagement team at Newgate.