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Armitt: there is 'a risk that HS2 will not happen'

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John Armitt has added his voice to concerns over the future of HS2 by admitting that there is a ‘risk that it won’t happen’ as the business case for the scheme comes under intense scrutiny.

The former chief executive of Union Railways, the company responsible for development of the high-speed Channel Tunnel Rail Link, told an EC Harris spending review panel last week that there would be political appeal to cutting HS2.

He said: ‘The decision to go ahead [with HS2] was fundamentally a political one. Eighty-eight per cent of journeys in this country are not made by rail. Politically, there are a lot of people you can appeal to by cutting HS2.’

According to the AJ’s sister publication Construction News, the Olympic Delivery Authority chairman added that the UK’s deficit and financial problems meant that “clearly there is a risk that HS2 won’t happen”.

He said the UK needed to look at ‘adding to its 19th century’ infrastructure and insisted that “any new railway will be high speed”.

“But in the current political environment it is a pretty risky time and it will get even riskier as the election gets nearer,” he added.

His comments came hours after Lord Mandelson entered the debate by writing in the FT that ‘all the parties, especially Labour, should think twice before binding themselves irrevocably into HS2’ and that “there are no simple options when it comes to transport – but I now fear HS2 could be an expensive mistake’.

He added: ‘It is not all it seems and has the potential to end up a mistake, damaging in particular to those people that it was intended to help.’

Former Labour chancellor Alistair Darling admitted he was a “HS2 sceptic” in an interview with The Sunday Telegraph at the weekend.

Transport secretary Patrick McLoughlin last week admitted the projected cost of HS2 now stands at £42.6bn, up from £33bn, which includes a ‘contingency’ fund.

Armitt is currently undertaking a review, commissioned by the Labour Party to look at the ways to achieve consensus on major infrastructure decisions and long-term planning.

CBI chief policy director Katja Hall said industry now needs confidence that the business case for HS2 is ‘watertight’ after its budget swelled.

In its Infrastructure Cost Review: annual report 2012-13 released earlier this month, the Treasury claimed its work was uncovering large efficiency savings across major projects, including £1bn in the first phase of High Speed 2.

But the reported cost of the first phase (London to Birmingham) now has a budget of £21.4bn, with an allocation of £21.2bn for phase two, but these figures include a contingency fund of £14.4bn across the scheme.

HS2 last month appointed former LOCOG chief executive and commercial secretary to the Treasury Lord Deighton to lead a taskforce to maximise the economic benefits – including job creation – generated by HS2.

Speaking at EC Harris this morning, founder of transport consultancy Steer Davis Gleave, Jim Steer, admitted there was a ‘real sense of risk around HS2’ now, but added that it was going to be ‘a great deal more valuable than HS1, which is currently only half full’.

He added that he didn’t know another transport scheme that creates the same level of return for the Treasury than HS2 through its track access charges.

EC Harris senior adviser Richard Bowker added: ‘If it does get canned, I wonder if it will be our own fault, through our inability to explain that it’s about capacity, jobs, regional economics. I still believe there are fantastic benefits to HS2 but we have to get smarter about communicating it.’

HS2 Ltd has been contacted for comment.

It issued this response to Lord Heseltine’s comments today: “Lord Mandelson does not call for HS2 to be cancelled. What he does is call for greater consensus for and stronger evidence of its benefits so that politicians and the public can make informed decisions as to its long term value to the UK.

“We must build on that consensus by providing up to date and detailed evidence of the benefits that HS2 will bring, including the creation of 100,000 jobs and the economic return of £2 for every £1 invested through linking eight out of our 10 biggest cities. However, we recognise the challenge that has been laid down and our need to respond.”



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