On Monday, Sir David Higgins is due to launch a report into HS2 called ‘HS2 Plus’, which is intended to mark the sixth relaunch of the beleaguered project. Besides trying to invigorate more support from the Northern Cities which would see more economic activity dragged away from them toward London, the Australian who delivered the Olympics for four times the original budget of £2.4bn, and oversaw the increase of National Rails debt is due to say he can deliver HS2 for less money by reducing its connectivity and ignoring the fact that inflation exists.
It has been heavily trailed that Higgins is due to cut the final cost of HS2 by building the Northern section at the same time as the Southern section. Besides that being completely impossible, even if more corners are cut of Phase 2 of HS2 than have been cut on Phase 1, no inflation has even been added to the projected costs of HS2, which are still being calculated on 2011 prices, meaning that any claim that the £42.6bn cost of building HS2 can be cut by building it more quickly is completely fraudulent.
It has been trailed that Higgins will propose removing the link to the Channel Tunnel through the London Borough of Camden, at a saving of £1.5bn, which reasonably equates to the cost of compensation which would be required in just Camden without the HS1-HS2 link.
If inflation had been added onto the original £42.6bn cost of HS2, then saying it could be built quicker could bring that down. However, inflation has never been added to any costs involving HS2, so saying the costs can be brought down by building it more quickly are completely false, because all costs are still based on 2011 prices. In fact, when HS2 Ltd calculated forecasts for electricity price increases which showed they would go up 87% in 18 years, the decided to ignore them when calculating the running costs for HS2.
Using the exact same formula which HS2 Ltd are using to calculate inflation and GDP growth when they talk about the benefits of HS2, the 2011 costs should be multiplied by a minimum 27.7%, which would but the pre-cut £42.6bn costs of HS2 at £54.4bn at 2014 prices, or with a £1.5bn cut, £52.5bn.
It is also completely impossible to start building Phase 1 and Phase 2 together, unless Phase 1 is stopped right now, due to the length of the Parliamentary process required for either phase.
The question which has been missed is whether or not local authorities, passenger transport executives or local businesses will have to pay for HS2 stations. In the case of Crossrail, the DfT did not pay for the majority of the project: that was made up via direct contributions from the Greater London Assembly, additional business rates paid by local businesses, and Transport for London.
Stop HS2 Campaign Manager Joe Rukin said:
“Like everyone else from the Westminster Bubble who has tried to con the public with HS2, David Higgins will deliver on fraudulent spin. He will talk of benefits which won’t be delivered without HS2, because there is a strong vested interest lobby saying it is HS2 or nothing. When ‘HS2 or nothing’ is offered, people will be blagged into taking HS2, no matter how bad an idea it is or how much it will cost.”
“So far the only thing which seems to have been proposed to cut the costs of HS2 is to make it an even worse plan than it already is, by cutting the link to Europe. The reality is that any talk of cost-cutting is fraudulent in the extreme because HS2 Ltd are still working on 2011 prices. You need three years of inflation to get to today, with two decades of increases before the buffers hit Leeds and Manchester. Using the same rules HS2 have used to calculate the supposed benefits of HS2, you need to add at least 27.7% to any cost they come up with, but they won’t do that, because it’s all about bigging up the benefits and playing down the costs, because with HS2 it’s spin all the way.”
“David Higgins wants to say that building HS2 quicker will reduce the costs, but that doesn’t work because the costs of HS2 have never included inflation. Building Phase 1 & Phase 2 together can simply never happen. While corners have been cut on Phase 1, there is simply no way to cut more corners more quickly on Phase 2 to catch up with Phase 1. The idea might make good headlines, but the Parliamentary process, which will take years simply means what he is saying to make headlines and try and get support is totally impossible.”
Penny Gaines, Chair of stop HS2 said:
“From the reports so far, it looks like David Higgins thinks that he can reduce the cost of HS2 by ditching important parts of the project. He is expected to ditch the link to HS1, which will also ditch the chance of through trains from Manchester and the North to Europe. But that’s what he did with the Olympic Games, leaving athletes without kitchens in their apartments.”
“Higgins keeps saying that you can build HS2 cheaper if you spend less time planning it. That’s a ridiculous idea for a railway which the proponents expect to last for 120 years. It means decisions are made without the information needed to make them properly. For example, necessary maps and profile information about Phase 1 was not available until after the end of the environmental statement consultation, even though people were asking for it. The train operating companies aren’t getting the information they need to make plans for the ten years of disruption at Euston which will happen before HS2 can open. And if George Osbourne suddenly finds the cash to scale up the plans at Euston for his grandiose vision, they will need to spend even longer on planning and building works.”