Higgins reminds politicians they hold key to HS2 cost cutting

HS2 chairman Sir David Higgins threw the ball firmly back in the court of politicians when he published his HS2 Plus report on Monday. His review of the project concluded that the £50.1bn budget was “enough” but obvious major savings that could be made from the £16bn contingency pot in large part relied on a swift and efficient progress of HS2 legislation through Parliament.

“Put simply, the shorter the timescale, and the more certainty about the timescale, the lower the costs will be. Less inflation is imported into the project and contractors can achieve greater economies of scale because they can plan ahead,” he said. 

“The key variable is the length of time that legislation will take; that is a matter for Government and Parliament…..Additional time spent debating the legislation will translate into extra uncertainty about the construction timescale – and therefore about its cost.”

The HS2 indicative budget, including contingency in brackets, stands at:

Phase One - £21.4bn (£5.75bn) plus trains £3bn (£0.977bn)

Phase Two - £21.2bn (£8.7bn) plus trains £4.5bn (0.723bn)

Total £50.1bn (£16.1bn)

In his speech in Manchester to launch the report Higgins highlighted the two different challenges of HS2. For Phase One from Birmingham to London it was capacity relief; for Phase Two it was connectivity – between the north and London but also between the northern cities themselves. The big win for the project would be rebalancing the economy, he said, highlighting that there are no FTSE companies as yet based in Manchester or Leeds.

“HS2 has the potential to transform the North. We need to co-ordinate HS2 not just with the existing network, but also with the plans for its improvement during the time HS2 will take to be built.

“That opens the door to the north not just becoming more attractive to businesses that want to escape the pressure cooker of commercial property prices in the south but also to the north beginning to harness the full potential of its skills base, its universities and its diverse identities.”

His proposal in the HS2 Plus report to accelerate the northern benefits by effectively taking Phase One 43 miles further to Crewe has already been accepted by Transport Secretary Patrick McLoughlin.     

HS2 Plus – Higgins' main points plus McLoughlin’s responses

Higgins: Accelerate Phase Two by taking the line 43 miles further than planned in Phase One to a new transport hub at Crewe. This could be completed by 2027, six years earlier than planned. It would bring together road and rail services for the region as a whole and allow faster services sooner to Manchester, the rest of the North West and to Scotland.

McLoughlin: “I am commissioning HS2 Ltd and Network Rail to undertake work to allow both these proposals to be considered in detail as part of my consideration of the public consultation responses to Phase Two.”

Higgins: More comprehensive redevelopment of Euston to drive local regeneration and access private investment cash.  A level deck station design enabling access from one side of the station to the other would better connect the local area and create potential for considerable over-site development. It would need to be designed to accommodate Crossrail 2.

McLoughlin: “I agree that more can be made of Euston station. I will ask HS2 and Network rail to develop more comprehensive proposals for the development of Euston….This work should include proposals for the Euston Arch which should never have been knocked down and which I would like to see rebuilt.”

Higgins: Cancel the HS1-HS2 link. It is cost effective but an imperfect compromise because of the effect it would have on existing passenger and freight services and the local community.  HS2 platforms at Euston to HS1 at Kings Cross will be the equivalent of transferring from one terminal to another at Heathrow. The £700M would be better spent considering an alternative.

McLoughlin: “I intend to take the necessary steps to remove the link from the (HS2) Bill and withdraw the safeguarding of this section of the route …I will commission a study into ways to improve connections to the continent that could be implemented once the initial stages of HS2 are complete.”

Higgins: Integrate HS2 phase two into Network Rail CPR6 (2019 spending period onwards). This would expand the route’s role in improving east west connectivity in the north to maximise its impact on the northern economy.  Necessary would be a more ambitious plan to link Manchester and Leeds and further electrification and line speed improvements across the north, integrated with HS2 from Liverpool to Hull. “If that is done successfully then legislation to enable Phase Two could be introduced as early as 2017, with significant benefits to the North sooner – up to three years earlier than currently planned.”

McLoughlin: “I am commissioning HS2 Ltd and Network Rail to make recommendations before our response to the Phase 2 consultation.”

Higgins: No cutbacks in planned mitigation measures or compensation. "I am conscious of the price – financial, physical and emotional – that HS2 will demand from the country, from communities and from individuals. That is why I have rejected any thought that the project should cut back on planned mitigation measures, whether noise or environmental. Those will continue. It is also why I support the Government’s proposed approach to property compensation. We need to be clear about the impact of the project, as well as its benefits, and address the consequences of that impact, as we are."

Higgins: No reduction in cost in Phase One because of uncertainty over legislative timetable. The Phase One budget of £21.4bn plus £3bn for trains (including contingency) is right. Government and Parliament are crucial to cost control. The key variable is the length of time that legislation will take. “Additional time spent debating the legislation will translate into extra uncertainty about the construction timescale – and therefore about its cost. That is why, in considering the first phase, I consider that it would be irresponsible to reduce the substantial contingency.”

McLoughlin: “HS2 is a project that will be built over many parliaments and will serve people for many generations. We must design it carefully and build it correctly.  The government is keen to rise to the challenge and we hope that Hon Members on all sides of the House will do the same.”

Higgins: Phase Two budget stands up when linked to Network Rail plans. The £21.2bn already set aside plus money to be allocated as part of Network Rail’s two control periods running from 2019-2029 should form the basis for a fully integrated plan for the north.

Higgins: HS2 has an important role to play in altering the north south divide. Businesses are focused in London attracting investment in infrastructure. But “there seems to be a growing disparity with infrastructure spend in the rest of the country which is widening – not closing – the economic divide.” The aim should not be to make London poorer or to spend less on infrastructure in the capital but enable the other regions to grow as well.

Higgins: HS2 cannot be seen as the funding solution for development at Old Oak Common in West London. An HS2 station there with an interchange to other rail lines will be a catalyst for comprehensive redevelopment of the area but the Mayoral Development Corporation there must be properly resourced with people and funding and given appropriate powers to see through at least 20 years of development. Decisions are required on existing rail depot locations and are needed on London commuter connectivity – including North/West London lines and and West Coast connection to Crossrail.

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