Summary
Our 2015 report The Economics of High Speed 2 raised a number of questions that the Government needed to answer on High Speed 2. Four years later, these have yet to be answered satisfactorily. This report addresses the unanswered questions on priorities for rail investment, the method used to appraise the High Speed 2 project and ways to reduce its cost.
Priorities for rail investment
In 2015 we asked the Government to consider whether investment in rail infrastructure in the north should be prioritised over High Speed 2. But no assessment of the relative merits was carried out and over £4 billion has been spent already on the first phase of High Speed 2, which will run between Birmingham and London and has little benefit for northern cities. The second phase of the project, which will improve journey times between Leeds and Sheffield and alleviate pressure on some local services in the cities the new line will serve, awaits Parliamentary approval and is not expected to be complete until at least 2033.
The Government’s priority for investment in British rail infrastructure should be the north of England. People travelling into northern cities are reliant on overcrowded and unreliable services. There has been a doubling of demand for local rail travel into central Manchester in the last 15 years but only a 50 per cent increase in passenger capacity. And many local services rely still on ‘Pacer’ trains, introduced by British Rail in the late 1970s, which were built cheaply using frames from Leyland National buses, to a design considered old fashioned for the rail network a century earlier.1
Rail connections between northern cities are poor. It takes just under an hour and a half to travel the 75 miles between Liverpool and Leeds by train, around the same time it takes to drive between the two cities. By contrast, it takes around two hours and a quarter to travel more than 200 miles between either city and London by train.
We are far from convinced by the Government’s claim that the whole High Speed 2 project will be built within the £55.7 billion budget. The costs do not appear to be under control: Sir Terry Morgan, the former chairman of HS2 Ltd, told us that “nobody knows” what the final cost of the project will be. We are concerned that if costs overrun on the first phase of the project, there will be insufficient funding for the second phase and the northern sections of the new railway will not be built. The northern sections of High Speed 2 must not be sacrificed to make up for overspending on the railway’s southern sections.
High Speed 2 and Northern Powerhouse Rail
There is a plan—the Northern Powerhouse Rail Programme—to address comprehensively rail infrastructure improvements in the north through new lines and upgrades to existing lines. These works will not however begin until the mid-2020s and the whole programme is not expected to be completed until the end of the 2030s.
We regret that construction of High Speed 2 started in the south rather than the north. If construction on the first phase of High Speed 2 had not started already, we would be urging the Government to prioritise rail links between northern cities, rather than improving links with London which are already good.
Representatives from northern cities said that the Northern Powerhouse Rail Programme could not be completed without the second phase of High Speed 2 being built. The planning and construction of Phase 2b of High Speed 2 and Northern Powerhouse Rail should therefore be treated as one programme. Decisions on the timing of works should be made according to the needs of the rail network in the north: work could begin on improving connections between northern cities without having to wait for the second phase of High Speed 2 to be constructed fully. In any case, funding for Northern Powerhouse Rail should be ringfenced and brought forward where possible.
Appraisal method for High Speed 2
The existing appraisal process for large infrastructure projects such as High Speed 2 is inappropriate. The appraisal method takes insufficient account of the transformative effect on local economies that the new railway may bring and it places too much emphasis on travel time savings. The estimated benefits of the project are very sensitive to demand forecasts for High Speed 2, particularly demand from business travellers, and the monetary value placed on travellers’ time. But the evidence behind both assumptions is unconvincing.
We are concerned this appraisal process has driven the decision to build a railway to operate initially at a maximum speed of 360 kilometres per hour, faster than any railway operates in the world at present.2
A new appraisal of the business case, which takes account of the issues raised in this report, is essential and the final decision to proceed with the High Speed 2 project should await that assessment. Given the substantial sum of money already spent on the project, that assessment should be published urgently.
Reducing costs
New analysis of the project is needed. With less emphasis on reducing journey times, the Government could reduce the cost of the project by designing a railway with a lower operating speed. A lower speed would provide the opportunity for a less expensive route alignment, reducing the need for tunnelling. Despite this Committee’s recommendation to do so in its 2015 inquiry on High Speed 2, the Government has not explored the cost saving that could be achieved from this option.
The cost of the project could also be reduced if the London terminus of the new railway was at Old Oak Common in west London rather than Euston station (which requires expensive tunnelling underneath London). Again, despite this Committee’s recommendation in 2015, this option has not been examined properly since 2010 and that analysis has not been made public. With the Elizabeth Line (the new west-east railway line across London being constructed under the Crossrail programme) due to provide a fast connection between Old Oak Common and central London, it is not clear why an expensive redevelopment of Euston to accommodate High Speed 2 is necessary.
Notwithstanding the result of that assessment, Old Oak Common should be the London terminus for Phase 1 (London to Birmingham) and Phase 2a (Crewe to Birmingham) of the project. This will also permit an earlier start on the northern sections.
1 Simon Bradley, The Railways: Nation, Network and People, (London: Profile Books Ltd, 2015) pp 233–234
2 ‘World’s Fastest Bullet Train Starts High-Speed Tests’, Bloomberg, 10 May 2019: https://www.bloomberg.com/news/articles/2019–05-10/world-s-fastest-bullet-train-starts-high-speed-tests-in-japan [Accessed 10 May 2019]