Boris Johnson Backs $129 Billion HS2 U.K. Rail Plan Despite Rising Costs

Tim Ross and Christopher Jasper
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Boris Johnson Backs $129 Billion HS2 U.K. Rail Plan Despite Rising Costs

(Bloomberg) -- U.K. Prime Minister Boris Johnson committed tens of billions of pounds for a controversial new high speed rail line linking London with cities to the north, despite soaring costs and mounting anger from his own Conservative Party colleagues.

The High Speed 2 (HS2) development will become Europe’s largest infrastructure project but it has suffered delays and criticism of its management, with spiraling costs estimated to rise potentially to more than 100 billion pounds ($129 billion). Trains may not start running until 2031.

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Johnson believes the new line stretching from the capital to Birmingham and then on to Manchester and Leeds is vital to revive the economy in “left behind” communities that backed Brexit and voted Conservative in last December’s election.

“Our generation faces a historic choice,” Johnson said as he announced his decision in Parliament on Tuesday. “We can consign the next generation to overcrowding, standing up in the carriageways, or we can have the guts to take a decision, no matter how difficult and controversial, that will deliver prosperity to every part of the country.”

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The project is highly sensitive politically for Johnson’s government. Backers of the plan say it will cut journey times, increase capacity, create jobs and help link northern and central parts of England to the wealthier south. Boosting the country’s former industrial heartlands is Johnson’s key political mission now that the U.K. has left the EU.

First-Time Tories

He won a majority in Parliament largely thanks to persuading voters in these areas to back him, with some traditionally Labour-supporting districts electing Conservatives for the first time.

But many Tory members of Parliament oppose HS2 because the line will cut through their districts, causing severe disruption for thousands of constituents, and wrecking sensitive environments including ancient woodland and nature reserves. The project managers at HS2 Ltd have been attacked for delays and for failing to keep costs down.

“HS2 is unloved, unwanted and has been grossly mismanaged,” Conservative MP Andrew Bridgen told Johnson. “This could well be an albatross around this government and the country’s neck moving forward.” Other senior Tories including Graham Brady and former cabinet minister Jeremy Wright also spoke against the project.

“We’re totally in favor of a transport revolution that cuts pollution and carbon emissions, but bulldozing through irreplaceable wildlife and nature sites is not the way to go about it,” Greenpeace U.K. executive director John Sauven said. “Over 100 ancient woodlands will be damaged or destroyed along with 33 sites of special scientific interests and hundreds of local wildlife sites.”

Ministerial Oversight

Johnson said the government commissioned a review of HS2, which concluded the case for going ahead was clear, despite the problems so far. He promised to reassess the costs and will appoint a government minister with the full time job of overseeing the project.

“This country is being held back by our inadequate infrastructure,” Johnson said. “Efficient transport can clean the air and cut pollution and get cars off the road,” he told the Commons. “We can shorten your commute and give you more time with your family and increase productivity -- and bring business and investment to left-behind communities.”

HS2 trains will reach speeds of 225 miles (362 kilometers) per hour, faster than most other high-speed lines in the world. On the High Speed 1 Channel Tunnel line, Eurostar trains to and from continental Europe reach 186 mph, while domestic services attain 140 mph. HS2 will also triple north-south rail capacity, with as many as 14 trains an hour using the line.

The decision to proceed with HS2 was taken after the Oakervee Report into the project concluded that the full Y-shaped network should be built.

The 130-page report following a study led by civil engineer Douglas Oakervee dismisses proposals such as building only part of the line, starting it from Manchester to boost the northern economy, or halting it on the fringes of London as impractical or poor value for money.

High Cost

HS2 may now cost 87.7 billion pounds at 2019 prices, up from the budgeted 62.4 billion pounds, the report warns, which allowing for further overruns of up to 20% could mean a final bill of 105 billion pounds. The London-Birmingham line would open by 2031, slipping from 2026, with Manchester and Leeds sections completed in 2040 rather than 2033.

The terms of reference for a review to make the northern sections of HS2 properly integrated with the rest of the rail network and other forms of transport will be published this week, Slack said. The government’s funding envelope for HS2 is between 72 billion and 98 billion pounds, a number Slack said also covered contingency for “anything unexpected.”

The biggest HS2 contracts are for the construction of the line and its stations, with at least 11.5 billion pounds of work handed out across 27 tenders as of August.

Balfour Beatty Plc, Britain’s biggest civil engineer, leads the way, holding contracts with Vinci SA of France to design and build bridges, tunnels, embankments and viaducts for the northern half of the first phase of the line, valued at about 2.5 billion pounds.

The same two companies, together with Paris-based SYSTRA SA, have been engaged to build a 1 billion-pound hub interchange between HS2, the London subway and the main line to southwest England at Old Oak Common, London.

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--With assistance from Stuart Biggs, Thomas Penny, Olivia Konotey-Ahulu and Tiago Ramos Alfaro.

To contact the reporters on this story: Tim Ross in London at tross54@bloomberg.net;Christopher Jasper in London at cjasper@bloomberg.net

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Stuart Biggs

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