Comment: A critical year for HS2’s prospects beyond Birmingham

With HS2 under the spotlight at two Parliamentary committee hearings in December, Philip Haigh examines the plans for a reset in 2025.

2025 will be a make-or-break year for High Speed 2.

The project needs a comprehensive reset, according to the Department for Transport, which could not tell MPs of the Public Accounts Committee on December 19 how much Phase 1 (London-Birmingham) would cost.

DfT Permanent Secretary Dame Bernadette Kelly told the committee that she had no agreed cost estimate for HS2. The figure she had from HS2 Ltd of £54 billion-£66bn was not assured, she said, which means that it’s not a figure with which DfT agrees.

Her frank admission puts into perspective comments from Rail Minister Lord Hendy at the earlier Transport Select Committee on December 11, when he replied to a question about Phase 2 by saying that Phase 1 must be fixed first.

This strongly suggests that Phase 2’s fortunes - whether the HS2 plan or the version proposed by West Midlands and Greater Manchester mayors - rest with HS2 Ltd properly delivering Phase 1.

Yet the DfT recognises the looming capacity problems of the West Coast Main Line - particularly north of Handsacre, where Phase 1 joins the classic network. Hendy said that rail industry predictions showed a shortfall “in the next ten, 15, 20 years”.

He added: “How we fix that, the way in which we fix it, and how it relates to the rest of the new railway infrastructure that everybody wants to see in the Midlands and the North is something that we have to work through as a whole and find a way of dealing with it.”

The plan for fixing it has been Phase 2a, which was a 43-mile section of line taking Phase 2 onwards from Fradley to Crewe.

It’s a decade since David Higgins (HS2’s chairman at the time) recommended accelerating the benefits of HS2’s second phase by bringing forward the line to Crewe. It’s four years since Parliament granted legal powers to build it.

The benefits included space along the entire southern half of the West Coast Main Line for regional and freight services, and for faster journeys earlier than originally planned from London to northern cities including Manchester and Liverpool, as well as Glasgow.

The previous government ditched the plan in October 2023. Since then, the two mayors of Greater Manchester and the West Midlands have developed an alternative plan that uses the same route.

Alan Over is the DfT’s senior responsible owner (SRO) for HS2. He told the Transport Committee that “trying to improve the West Coast Main Line will be enormously disruptive”.

He continued by saying that the DfT needed to look at whether “we can achieve capacity improvements through smaller interventions, starting with rolling stock and how we use that, then moving on to small capacity increments, and then potentially contemplating bigger capacity improvements”.

At the Public Accounts Committee, he repeated his point about smaller-scale infrastructure investment and optimised rail services. When challenged by one committee member that this sounded like a “sticking plaster”, he admitted that such investment would “delay the problem, not solve it”.

Over’s admission suggests that the DfT has not forgotten the disruption, budget-busting cost and late delivery of the West Coast Route Modernisation in the late 1990s and early 2000s, which produced a 125mph WCML for Virgin’s Class 390 Pendolino electric multiple units but failed to bring about the 140mph running that Railtrack promised and for which Alstom and Virgin had designed the ‘390s’.

Only weeks into his job as HS2 Ltd Chief Executive, Mark Wild joined Kelly and Over in front of the Public Accounts Committee. He explained that HS2’s problems fell into three areas, which went back to the project’s early days.

Construction started too early, he said, before HS2 had mature designs and permission to build them. This refers to ministers’ haste to get shovels into the ground, and to the fact that despite having parliamentary approval to build the line, HS2 needed local council approvals for its detailed designs.

Secondly, the contracts that HS2 signed with its major contractors for civil engineering works (known as MWCs) left all the risk with HS2, which then did not manage those risks. The contracts reimbursed all costs to the contractors.

Wild’s third factor was that the 2019 baseline on which HS2 planned its works was no longer viable. Activities along the route were no longer in synchronisation, which meant that productivity had fallen.

Fixing these problems lies at the heart of the reset that Kelly mentioned, and it is something that Wild estimates will take all of 2025 to achieve.

“I would request the time and space to do this,” he asked of the MPs.

HS2 Ltd Chief Financial Officer Alan Foster told MPs that renegotiating the main works contracts would follow, together with work to align incentives.

Asked how feasible a renegotiation would be, he admitted that it would be a compromise between HS2 and the contractors, but that it would include variations which made them work better for both parties.

He added that all the chief executives of HS2’s major contractors had said they were willing to work with HS2 Ltd.

Wild said that resetting HS2 gave the opportunity to fairly allocate risk. He said he wanted contractors to be secure and profitable, but with better value for money and productivity for HS2. By resetting the programme’s schedule, HS2 Ltd would no longer be making sub-optimal decisions and would be able to bear down on costs, he claimed.

Civil engineering is only one part of HS2. In the wake of earth shifting, concrete pouring, and the teams building tunnels and viaducts come contractors installing rail systems such as track and overhead wires, as well as others building stations.

Wild said that experience from Crossrail (now the Elizabeth line) showed the need to cleanly complete civils before systems integration. HS2 needed to drive the civils teams to deliver exactly what the integration teams need, he said.

The reset should also shift HS2 costs into 2024 prices rather than using 2019 prices, which make no account for recent construction inflation.

Kelly cautioned MPs that this switch would see HS2 costs increase, but said it was a technical adjustment rather than a real rise in what the line would cost.

Taking HS2’s estimate of £54bn-£66bn and applying ordinary CPI (Consumer Prices Index) inflation since 2019 gives a figure of £68bn-£83bn. Whatever the revised figure is will feed into DfT’s revised business case for the project, as will the results of Wild’s reset.

Kelly told MPs there would be a revised business case for HS2 with its benefits based on capacity and wider growth, although she admitted to the challenges of evaluating the full benefits of major projects such as HS2.

Euston looks set to remain outside HS2’s budget, with Kelly telling the Public Accounts Committee that DfT wants to see private funding for the HS2 station.

Public funding looks set to deal with Network Rail’s share of any future Euston station.

And Over told the PAC there could also be money from development receipts to public land at Euston and tax increment finance, which he said Camden Council has shown it was willing to contemplate. In total, this could come to £6bn, although Over said he could not say what the mix would be between the different elements.

While Hendy told Parliament in a written answer on December 16 that Euston’s HS2 station would be built with six platforms (supporting a service of ten trains per hour, he said), Over told the PAC that DfT was making provision for another three to four platforms.

He explained that DfT had still to decide how active that provision would be, noting that six platforms was sufficient for the planned service unless there was to be a major expansion in the future.

By this, he means whether ministers decide to take HS2 beyond the West Midlands. Previous work by HS2 on indicative service patterns showed ten Euston departures every hour sending three trains to Birmingham Curzon Street using entirely HS2 tracks, three to Manchester Piccadilly that use conventional line beyond the West Midlands, as well as two for Liverpool Lime Street, one for Preston, and one for Scotland.

Adding Phase 2a to Crewe produces the same 10tph pattern. Adding Phase 2b onwards from Crewe to Manchester allows for HS2 services between Birmingham and Manchester to run without using conventional tracks.

Euston’s need for more HS2 capacity kicks in strongly with any reinstatement of the eastern leg to Leeds. This would add two direct HS2 services from Euston, in addition to one for York and two for Newcastle every hour using both HS2 and conventional tracks, giving Euston a total of 15 trains per hour.

More pressing than HS2’s eastern leg, ministers must decide on the fate of any high-speed line to Crewe. Over told the PAC that half the land needed was already owned by the government, while its powers to buy the rest expire in 2026.

Meanwhile, Wild expects his reset to occupy 2025. If he’s successful in putting Phase 1 back onto an acceptable budget and schedule, he’ll have little time in which to convince ministers to authorise the line further on to Crewe before that land deadline.

And without Crewe, there’s no chance of reaching Manchester, let alone resurrecting Leeds. 2025 really is make or break.