The leaked Oakervee Review means we must demand answers on the soaring costs of HS2
The leaked Oakervee Review and Lords Economic Affairs Committee both agree that the regional growth and economic benefit of HS2 must be assessed to determine if the project should be scrapped, writes Lord Forsyth.
The future of HS2 hangs in the balance.
With soaring costs, competing rail investment priorities and the Government's new agenda for the regions, serious questions are being asked about its viability. This week's leak of the Oakervee Review demands answers about the overall cost of the project, its impact on regional growth and its design specification.
The Lords Economic Affairs Committee shares these concerns and raised them in its May 2019 Report, Rethinking High Speed 2. It identified three main areas of concern: the Government’s priorities for rail investment; the flawed process used to evaluate the project; and the Government’s unwillingness to consider sensible cost reduction measures.
It is increasingly obvious that HS2 is a poor answer to the UK’s real rail investment needs and requires a major rethink. It does little to help commuters travelling into cities in the north of England, where investment is so badly needed right now after years of neglect. The main beneficiaries from increased rail capacity that may result from HS2 will be London commuters who use the West Coast Main Line. HS2 was described to us by independent rail consultant, Chris Stokes, as a “very expensive way of dealing with the Milton Keynes-Euston commuter peak”.
We heard evidence from several representatives of northern regions who argued that both HS2 and rail investment in the north of England – through the Northern Powerhouse Rail Programme – were crucial to the region.
Reflecting on this evidence, the Committee made specific recommendations to reduce the cost of the project and to urgently prioritise improvements to rail infrastructure in the north.
HS2 Phase 2b and Northern Powerhouse Rail should be combined into a single programme to allow investment to be prioritised where it is needed most, and funding for the Northern Powerhouse needs to be ringfenced and brought forward where possible. Otherwise, the north of England will continue to be short-changed by the Government’s plans.
The cost of HS2 could rise to as much as £106 billion, according to both the leaked Oakervee Review and the figures estimated in Lord Berkeley’s dissenting report. Even Sir Terry Morgan, the former chair of HS2 Ltd, told us that “nobody knows yet” what the actual cost of HS2 will be.
Considering the escalating costs, the Committee came to two specific recommendations. First, the Government should review the potential cost savings from reducing the maximum speed of the railway—currently being built to accommodate trains travelling at 400 kilometres per hour, faster than the maximum operating speed of any railway in the world.
Second, the Government should remove the redevelopment of Euston station from the scope of Phase One and terminate the line at Old Oak Common instead, providing passengers with fast access to the Elizabeth Line into central London.
We were also concerned by the questionable methodology and evidence the government used to calculate the value of travel time and the estimated benefits of HS2. The methodology used was neither robust nor rigorous and we questioned why the estimated benefits of HS2 are reliant on data that is 15-20 years old.
It is no surprise the leaked Oakervee Review concluded that “further work” is needed to assess the scheme’s impact on regional growth and that it is “hard” to see what economic benefits will result from building it. We came to similar conclusions in our report last year and called for new analysis of the project’s real benefits to be published urgently.
The scale and cost of the HS2 project is enormous. It is therefore right that the Government is agonising about whether it should be scrapped. If the project is to go ahead, the Government needs urgently to get a grip on costs and then show that the enterprise will provide value for money for the regions and not merely further entrench the economic divide that exists between north and south.
Lord Forsyth is a Conservative Member of the House of Lords.