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HS2 Delayed: Construction Halted for Two Years

With the delay of HS2 announced by the Government, we examine the impact on the project and the implications for Levelling Up.

The UK government has announced that parts of the High Speed Two (HS2) rail project will be delayed for two years due to rising inflation and increased costs. The route from Birmingham to Crewe and on to Manchester will be affected by the delay, with an additional route to Leeds already cancelled in November 2021.

The first part of the project was due to be extended between 2030 and 2034 but will now be pushed back to between 2032 and 2036. Services to Manchester will not extend until the 2040s. Transport Secretary Mark Harper said the government is “prioritising HS2’s initial services” between Old Oak Common in west London and Birmingham Curzon Street.

The delay has been criticised by some, with Birmingham City Council leader Ian Ward saying it is “another betrayal of the Midlands and the North, making a mockery of the government’s empty promises to level up the UK economy”. Labour’s shadow transport secretary Louise Haigh said tens of thousands of jobs and billions in economic growth are dependent on the project, and the North is once again having to “pay the price” for government failures.

Conservative MP and former chief secretary to the Treasury Simon Clarke, on the other hand, called the delay a “sensible decision”, citing doubts about value for money and cost control.

A Levelling Up Pledge

Delivery of the high-speed railway has been a core pledge of the Conservative government, but it has been plagued by delays and ever-increasing costs. The estimated cost in 2010 was about £33bn, which increased to £55.7bn for the whole project in 2015. By 2019, the estimated cost had soared to at least £71bn, excluding the final eastern leg from the West Midlands to the East Midlands. The delay to the northern section is believed to be an attempt to spread the cost over a longer period, making it more affordable annually.

The Confederation of British Industry (CBI) said the delay would hit confidence in the rail industry and could ultimately lead to higher overall costs for HS2. John Foster, the CBI’s policy unit programme director, said the news “will ultimately reduce investor and contractor confidence in the rail sector”. However, Chancellor Jeremy Hunt is set to announce his spring budget next week and will have Rishi Sunak’s target in mind – to get government debt to fall as a percentage of GDP within five years.

HS2 Ltd chief executive Mark Thurston said the project had suffered a “significant” impact from increased costs in building materials, fuel and energy due to high inflation. Mr Harper also hinted at further delays to services to central London, saying the government will “address affordability pressures to ensure the overall spending profile is manageable”, and that they will take the time to ensure they have an affordable and deliverable station design, delivering Euston alongside high-speed infrastructure to Manchester. This means it could be more than a decade before high-speed services stop at Euston, with passengers expected instead to travel for half an hour on the Elizabeth Line.

Final Thought

The delay to HS2 is part of a series of setbacks affecting key road projects under cost-saving measures that threaten to deliver a blow to Levelling Up plans. Similar to previous socioeconomic plans of the past, the momentum for Levelling Up seems to be slowing.

The delay is expected to hit confidence in the rail industry, and it remains to be seen how it will affect the government’s plans for levelling up the UK economy. With the upcoming general election, it will be interested to see how the Government concludes there policy plans in this area.

Levelling Up Commission

Curia is holding the Levelling Up Commission this year, seeking to implement the Government’s Levelling Up White Paper and find pragmatic solutions to regional disparities across the UK.

Through roundtable meetings with MPs and senior leaders of local and regional government from across the UK, quantitative data analysis and regional sprints, the Commission intends to set out a series of recommendations to consider how regional inequalities can be reduced from the perspective of public services in four key areas:

  • Health and Social Care
  • Housing and Homelessness
  • Education, Skills and Training
  • Crime, Justice and Rehabilitation

To hear thought leaders discuss levelling up in health and social care, signup to the Commission first inquiry session here.

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