Baby Ace: Cost of high-speed rail will soar unless politicians "bite the bullet"

By

Ray Massey

Costs of the controversial £50billion high-speed rail project will soar unacceptably unless rival political parties ‘get a grip’ on the slipping timetable, the Government trouble-shooter charged keeping with the scheme on track will argue on Monday.

But massive cost-cutting is ruled out and even modest savings to the taxpayer on the current HS2 budget will be squandered if political squabbling causes further delays, Sir David Higgins will insist in his major report outlining where savings and efficiencies can be made.

Politicians in Westminster must ‘bite the bullet’ and demonstrate ‘clarity’ over the scheme, speed up the passage of the Bill through Parliament, and stop wasting time arguing about HS2, he will demand when he delivers his report in Manchester.

Hefty outlay: The projected cost of HS2 has been rising ever since it was first mooted.

Continued political wrangling simply adds to the level of ‘risk’ which in turn push up the existing £50billion costs, he will argue amid fears that HS2 will become a political hot potato in the run up to next year’s General Election.

Sir David is understood to have identified savings of around £1.5billion – or around 3 per cent - in London alone if building work can be speeded up and the timetable made more robust.

But this liberated cash will be needed to fund a radical rebuilding of Euston Station – rather than just a revamp - leading to a decade of disruption from 2016 to put it on a par with the upgrade of King’s Cross.

But costs will not be ‘slashed’. There will be no ‘no gimmicks’, say insiders. Cost savings will be modest, ‘deeply responsible’. They will come from keeping to or beating a strict timetable rather than slashing the £16billion contingency fund – set aside to allow for unforeseen circumstances and unexpected over-runs.

Senior HS2 sources said it was akin to a family calling in builders for a house extension: ‘If you can give the builders certainty and a firm timetable, you can keep your building costs down.

‘If you mess them about and keep changing you mind, you increase the level of risk and uncertainty and will pay a much higher price. Delays add to costs. Clarity means lower costs. It’s that simple.’

The source added: ‘Political certainty delivers projects more cheaply.’

Revamp required: Savings identified by Sir David Higgins would be needed to fund a complete rebuild of the eyesore Euston station.

The source said there were plenty of examples from recent history of major rail projects whose timetables slipped and costs soared, including the Crossrail and Thameslink 2000 schemes.

‘People didn’t bite the bullet. Costs always go up if you don’t bite the bullet,’ they said.

Sir David is expected to support saving substantial time and money by building the second phase of the line from the North to the South, at the same time as the first phase is built from the South to the North.

However, this still requires Parliament to pass legislation for the second Y-shaped phase from Birmingham to Manchester and Leeds.

Australian Sir David, former chief executive of Network Rail and London Olympics supremo, took over as chairman of HS2 Ltd in January. His report was ordered by Prime Minister David Cameron, who is concerned about ballooning costs.

Sir David will argue that the scheme is ‘in the national interest’ but can only work with cross-party support as construction will carry across more than one Parliament. It will also lay down a gauntlet to minsters and Labour opponents alike.

The first phase of the high speed line from London to Birmingham is due for completion in 2026, with a second phase, taking the line on a Y-shaped route to north west and north east England, due to be finished in 2032/33.

Short circuit: HS2 will reduce journey times from London to Birmingham to just 49 minutes, while the journey to Manchester would take just 1 hour 8 minutes.

But the Government also suffered a blow when Transport Secretary Patrick McLoughlin admitted that the HS2 Hybrid Bill will now miss its target of being passed through Parliament before next year’s General Election.

Ministers sought first to sell HS2 on the grounds of slashing journey times in hi-tech trains carrying 1,000 passengers a time at speeds of up to 200mph. But as the recession began to bite and opposition increased from leafy Tory areas such as Buckinghamshire, the Chilterns and Warwickshire, ministers changed tack.

Now they justify the cost and the scheme on grounds of boosting capacity to reduce overcrowding on existing lines, and as a ‘catalyst’ for greater economic benefits to the North.

The region set to get a bigger slice of general rail spending by Network Rail, his report will argue. HS2 will also ‘relieve the pressure cooker’ and overcrowding on normal rail lines, such as the West Coast main line.

Last Autumn Labour’s Shadow Chancellor Ed Balls said a Labour Government would axe the scheme if costs increased, pledging ’no blank cheque’ – though Labour has since softened its tone.

Currently the estimated cost of HS2 is £50.1billion, of which £16.1billion is ‘contingency’. Of that total, £42.6billion is for building and track work, and £7.5billion for the actual trains.

Phase 1 from London to Birmingham is estimated to cost £21.4billion, of which £5.7billion is contingency. Phase 2 is estimated to cost £22.2billion of which £8.7billion is contingency. Some £1.7billion of the £7.5billion train cost is contingency.

Connectivity: HS2 would also significantly improve connections in the Midlands, with journeys to Heathrow, Leeds and Manchester significantly slashed.

Fares on the HS2 high-speed line must be affordable and ‘broadly comparable’ to those charged on other lines, say rail bosses amid fears that it will charge premium rates.

The Rail Delivery Group (RDG) representing the industry said ‘setting fares at the right level’ was one of its five key priorities for HS2 noting: ‘Prices should be broadly comparable with those on other sections of the network to ensure the new services are affordable and encourage more rail travel on HS2 and across the existing railway.’

Amid concerns that Sir David will recommend scrapping the proposed link between HS2 and HS1, rail bosses listed ‘plugging HS2 into the existing network’ as one of its priorities, noting: ‘The new and existing railway needs to be linked seamlessly’.

RDG general secretary Michael Roberts said: “HS2 must become the backbone of a growing railway if we are to meet the challenge of booming demand for extra passenger and freight services that Britain faces now and in the future.’

But Richard Houghton, of HS2 Action Alliance, said: ‘It really is time that all of the public and MPs voting on the upcoming Hybrid Bill woke up to the web of lies that the project relies on and the huge financial and environmental cost to the country for what is an ill-conceived and unnecessary vanity project.’