Hunt urged to radically pare back HS2 to save £44bn

Huge swathes of HS2 should be abandoned to save the Treasury close to £44bn, a former government transport adviser has urged.

Andrew Gilligan, who was part of Boris Johnson’s team when he was prime minister and is a long-time opponent of the project, called for cancellation of all parts of the high speed rail scheme not already under construction.

He said chancellor Jeremy Hunt could “mitigate cuts to other areas” at this week’s Autumn Budget by dramatically reducing spending on HS2.

In a report published by think-tank Policy Exchange, Gilligan said the project should be slashed back to a link between Old Oak Common in north-west London and Handsacre, north of Birmingham.

This would involve scrapping sections to Euston at the heart of the capital and north to Crewe, Manchester and the East Midlands.

“Many of the benefits of HS2, such as they are, would still be delivered by such a scheme, and the benefit-cost ratio is better than for the full project,” the report said.

Starting northbound High Speed 2 services from Old Oak Common – and selling on land at Euston earmarked for the terminus – could save up to £5bn, Gilligan said. Scrapping the redevelopment of the existing Euston station would save at least a further £1.7bn, he added.

Abandoning phase 2a of the project, from Handsacre to Crewe, would put up to £7bn back in the Treasury’s coffers, according to the report, while cancelling plans for phase 2b from Crewe to Manchester could be beneficial to the tune of £21bn.

Another £9bn could be saved by halting the proposals to take HS2 to East Midlands Parkway.

“Cancellation is not merely expedient,” argued Gilligan. “It is right. HS2 is Britain’s greatest infrastructure mistake in half a century.

“Even at the official price, even before the spending crisis and even before COVID, it was and is a misdirection of resources of unprecedented size.”

It was reported last month that a leaked internal report had rated the chances of the project staying within its £44.6bn phase 1 budget as just 50 per cent.

MPs have called for spending cuts on HS2, while levelling-up minister Michael Gove suggested the project might be reviewed.

HS2 chief executive Mark Thurston recently told MPs that speculation about cuts to the rail scheme could further drive up costs.

A Department for Transport spokesperson said this week: “Assessment in the summer found HS2 would deliver positive value for the taxpayer.

“HS2 will bring transformational benefits and is currently supporting 29,000 jobs. We’re committed to delivering it as set out in the Integrated Rail Plan, and construction is under way and within budget.”

Last month, trade bodies called for reassurance that HS2 would be delivered in full. A Railway Industry Association spokesperson said at the time: “Unless we get reassurance from the government on HS2, there will be heightened uncertainty for both rail businesses working on the project and for the communities the line will serve. What’s more, this lack of certainty impacts the ability of rail suppliers to invest and plan for the future, limiting the jobs, investment and economic growth they could otherwise provide.”

Civil Engineering Contractors Association chief executive Alasdair Reisner added that any move to cut HS2 would be “completely counter-intuitive” and would also “signal a profound loss of faith in the future of UK plc as a high-growth, world-leading economy”.

If later stages of the project do go ahead as planned, contractors may be engaged in a different manner.

Thurston told delegates at the Rail Industry Association’s annual conference last week that he wanted to streamline the procurement process for upcoming contracts on HS2, taking a different approach to civils deals to attract more local suppliers.

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