The economic case for HS2 collapsed before ground was even broken, as this newspaper has been arguing for years. Successive governments were warned that this costly project represented poor value for money compared with alternative investment in transport infrastructure. Concerns were raised over its scale, political salience and dated technology; too many of its supporters saw HS2, wrongly, as an alternative to airport expansion, housebuilding in the South or building extra much-needed motorways. Few could have foreseen spending exceed the basic budget at such pace. We report today that the cost of building the first phase has, yet again, jumped, this time by at least a fifth in the last year, ensuring that any sensible measure of the project’s benefits will always remain far lower than its gargantuan costs.
When Boris Johnson reapproved the project in 2020, estimated costs had already reached £100 billion. The eastern leg to Leeds has since been scrapped, saving money but further eroding the project’s supposed purpose. In August, the Infrastructure and Projects Authority’s assessment of HS2 suggested it was “unachievable”.
There are very serious questions to be asked on what this episode tells us about the way in which infrastructure is financed and planned in Britain, and the massive and costly barriers to building. Why is it that transport policymakers tend to favour low-return, high-risk projects over high-return, low-risk alternatives – such as more roads and strategic rail projects that link cities other than London – and why do the views of special interests take precedence over those of the taxpaying majority?
HS2 should have been completed by now, and at a fraction of the cost. Instead, the 134 miles of track between London and Birmingham may cost as much as £396 million per mile – making it one of the world’s most expensive railways. Even if the 2013 estimate had been correct, at £165 million per mile it would be more than double the price Italy is paying to build a high-speed connection between Naples and Bari.
With this in mind, the Government would be right to cancel the Birmingham to Manchester spur, as has been suggested. Phase two has reportedly cost the taxpayer £2.3 billion, but to spend more would be to succumb to the “sunk cost fallacy”. Scrapping this phase could save £35 billion. Rishi Sunak is opposed to “economic fairytales”. The idea that the HS2 juggernaut can confer real, net economic benefits is clearly in the realm of make-believe. Mr Sunak finds himself in the unenviable position of having to find the funds for the next phase or discard the project. The taxpayer would thank him for choosing the latter option, even if vested interests may not.