preparations to begin building the first phase of HS2 commenced this week, as the DfT authorised HS2 Ltd to issue ‘notice to proceed’ to the project’s four main works contractors.
Accompanying the announcement, the DfT published a revised business case for the project. But the scheme’s critics quickly branded the analysis worthless, saying it was prepared before the Covid-19 pandemic that will fundamentally alter UK travel demand.
HS2 Ltd awarded two-stage design and construction contracts for Phase 1 to four consortia in July 2017 (LTT 21 Jul 17). This week’s announcement allows the consortia to start full detailed design and construction. The consortia are:
Government company HS2 Ltd said construction would begin “in line with Public Health England advice during the coronavirus outbreak”.
Phase 1 will have a staged opening, with services due to commence between Old Oak Common and Birmingham between 2029 and 2033. Up to six trains an hour could be operate each way during this period.
The latest cost estimate range for Phase 1 is £35bn-£45bn (Q3 2019), including contingency. The DfT is proposing a target cost of £40bn.
The central case benefit:cost ratio for Phase 1 is 1.2:1, including wider economic impacts. This represents low value for money.
The full Y network, comprising all three phases of the scheme (Phase 1, 2a and 2b), has a BCR of 1.5:1 including wider economic impacts, signifying ‘low to medium’ value for money.
On Covid-19, the DfT says: “Until new information is available on the potential longer-term impact of Covid-19 on long-term demand and economic growth it is not possible to say whether this will materially impact the value for money of HS2.”
HS2 critic Lord Berkeley said: “The Government giving HS2 the go-ahead at a likely cost of over £50bn for Phase 1 just a day after the OBR suggested that the UK faced the worst recession for 100 years and a forecast drop in GDP of 35 per cent is certainly well timed to get minimal scrutiny.”
Stop HS2 campaign manager Joe Rukin said: “One of the certain long-term impacts of the [Covid-19] crisis will be a drop in the demand for long-distance travel, as everyone is realising how well video conferencing actually works. We are certain there will be a legal challenge to this decision.”
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