In October 2023, the UK Government announced that it was cancelling further stages of the controversial HS2 rail line; only the first stage, between London and Birmingham, will be completed and funding for the remaining stages will be diverted to other projects. We look at what this means for UK transport strategy and the wider UK infrastructure sector – particularly in the light of the Government's stated ambition to make it easier to implement major infrastructure developments.
What's been decided on HS2?
The following further phases of HS2 (due for completion in 2032-33) have been cancelled:
- Phase 2A: from end of Phase 1 at Fradley in West Midlands to
Crewe
- Phase 2B: from Crewe to Manchester and West Midlands to Leeds
Although construction on Phase 2 had not started, significant preparatory steps had been undertaken, including purchase of relevant land. Phase 1 (from London to Birmingham) will be completed and trains will run from a new station at Euston, but this will be smaller than originally planned (6 platforms instead of 11). To reduce burdens on the taxpayer, the Government plans to seek more funding for the Euston development from the private sector and to adopt a more ambitious approach to redevelopment of the local area, potentially involving up to 10,000 homes.
What other projects will be funded instead of HS2?
The £36 billion earmarked for HS2 will, on the basis of the Government's current plans, be spent on a variety of different transport improvements (including rail, roads, mass transit systems within cities and bus networks), with a regional split as follows:
- Projects in the North: £19.8 billion
- Projects in the Midlands: £9.6 billion
- National projects: £6.5 billion
The Government has also confirmed that it will provide £12 billion to improve connectivity between Liverpool and Manchester, to fund the Northern Powerhouse Rail scheme (but this is not funding that has been diverted from HS2).
Is this the right decision?
Critics of the decision point out that HS2 was designed not just to allow faster connectivity but also to address capacity constraints on the West Coast mainline – and that the projects to be funded in its place address different problems, primarily sub-optimal connectivity within and between major towns and cities in the North and the Midlands. The Government's main response to this is that in the wake of the pandemic, passenger numbers are down by 20% and therefore capacity is less of an issue (although this does not do much to address concerns about insufficient capacity for rail freight, as opposed to passengers). It also argues that the very substantial rise in the projected costs of HS2 (the cost of the first phase has risen from an initial estimate of £20.5 billion to £44.6 billion) means that it is now a very expensive way to address any remaining capacity issues – and that the money will be better spent on a broader range of projects aimed at improving connectivity in the North and the Midlands.
Where now for UK transport strategy?
The National Infrastructure Commission has pointed out that the decision on HS2 "leaves a major gap in the UK's rail strategy around which a number of cities have based their economic growth plans......A new comprehensive and long term strategy that sets out how rail improvements will address the capacity and connectivity challenges facing city regions in the North and Midlands is needed." Although some details of the Government's plans in the wake of the decision have been published (notably here and here), these are more in the nature of a list of existing or potential projects for which funding will now be made available. The Government will now need to work with local and regional authorities to develop a coherent strategy (or set of strategies) to fill the gap left by the cancellation of the remaining phases of HS2; in particular, broader economic and infrastructure plans are likely to need some significant recalibration.
What does this say about the UK's ability to implement major infrastructure projects?
Major infrastructure projects are, by their nature, complex and challenging to deliver – and the UK is not the only country to have experienced difficulties in implementation. That said, the decision not to proceed with the remaining phases of HS2 is hardly an advertisement for the UK's ability to deliver major projects of this type. The National Infrastructure Commission has made a number of recommendations for reform, including:
- Removal of delivery barriers that cause delays and
cost-overruns, particularly improvements to planning processes to
speed up consent times (which have increased from 2.6 to 4.2 years
on average); in its Autumn Statement, the Government indicated that
it would pursue a number of measures designed to address these
concerns (see
section 3)
- Setting fixed budgets for major infrastructure projects but
with greater flexibility to move money forward and backwards across
years, to "remove the illusion that delay saves costs"
(for example, inflation has had been a major factor in pushing HS2
over budget – but with a faster process, at least some of
this could have been avoided); and
- Increasing the UK's attractiveness to overseas investors by (i) improving certainty, not only in the planning process but also across other areas including utilities regulation and Government policy statements and (ii) investing in the UK's skills base and supply chains.
Jamie McKie, Head of Planning at Travers Smith
To view the full Newsletter, click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
