Sir David Higgins set to outline HS2 cost savings

The incoming chairman of HS2 wants to scrap a proposed link with the existing HS1 line as one of the cost-saving measures intended to shrink the project’s £44.6bn budget, according to a report in yesterday’s Financial Times.

On Monday Sir David Higgins is expected to set out his recommendations for building the high speed line, linking London to Birmingham, Manchester and Leeds, more cheaply.

According to the FT, his report is expected to identify at least £1.5bn of potential cost savings in London alone, which includes a recommendation to scrap the £300m-£500m north London link between HS2 and the existing HS1 line from London St Pancras.

Higgins is expected to recommend a full revamp of Euston station, HS2’s London terminus, paid for entirely using the property development profits of the prime 35-acre central London site, whereas earlier plans had budgeted £1.2bn of taxpayer’s money towards the cost.

But the report is expected to argue that the greatest savings can be achieved by shortening the construction period by starting work on both phases of the line – in the south and the north – as soon as possible, helping reduce costs by removing inflationary pressures.

This would also require MPs of all parties to work together to quickly push the two hugely complex “enabling” bills required to build the line through Parliament.

The government decided to split HS2 into two parts partly because of the complex planning process for large infrastructure projects in the UK, which requires primary legislation that can drag on for years.

The government recently admitted it would miss its target of getting the first Bill through Parliament before the next general election. Pushing the legislation beyond the election increases political uncertainty around the project, which could become a campaign issue.

The FT’s report comes a week after publication of a report from the High Speed Rail Industry Leaders Group, a lobbying coalition, which argued that cancelling HS2 would not bring any benefits to other rail or infrastructure.

The report Great Britain: connected or not estimates that if HS2 was cancelled, around 75% of the total budget would be used to write down government debt.

Of the circa £10bn capital spend remaining, the Department for Transport would only receive 20%, or £2bn, consistent with its current share of capital spending, and only a third of that (£0.67bn) would go to the national railways, the report claims.

The study predicts HS2’s cancellation would lead to worsening capacity problems, meaning projects to improve local lines would be cancelled in favour of work to create more train paths or lengthen trains and platforms on the West and East Coast Main Lines.

“Short-term fixes such as lengthening of trains will not be able to keep pace with the long-term increase in demand for rail,” said the report. “Congestion will worsen. There will be considerable pressure to increase fares, particularly at peak times, to manage demand and prevent overcrowding. The rest of our transport network will struggle when forced to take some of the strain. But the consequences don’t start and end with our transport network.

“By abandoning HS2 the UK would be sending a signal to the rest of the world, that it is unable and unwilling to undertake significant, large-scale infrastructure renewal. Investors and employers will be put off by the creaking infrastructure and lack of ambition to upgrade what is at its heart a Victorian transport system.”

The High Speed Rail Industry Leaders Group includes: Alstom, Atkins, Bechtel, CH2MHill, Hitachi, Keolis, Parsons Brinckerhoff, Railway Industry Association, Siemens and University of Birmingham.