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Government urged to allay HS2 delivery concerns

rail track 2by3

Government must act now to clarify the schedule for High Speed 2 (HS2) amid concerns over delivery of the project, according to a new report from the Public Accounts Committee (PAC).

The Progress with Preparations for High Speed 2 report comes just days after chief executive Simon Kirby announced his departure from HS2 Ltd – the company responsible for planning and delivery of the HS2 rail network.

The PAC report also urged government to confirm important details about the second phase of HS2 and plans for the wider rail network.

The Committee has recommended that a Department for Transport (DfT) announcement on the route of phase 2b, due to be made this autumn, should also confirm whether phase 1 – between London Euston and the West Midlands – will open in 2026 or 2027.

According to the report, costs estimates for phase 2 – extending the network between the West Midlands and Crewe (2a), and to Manchester and Leeds (2b) – are still volatile and should be firmed up urgently.

It highlights HS2 Ltd’s recommendation to DfT that the planned HS2 station in South Yorkshire be moved from Meadowhall to Sheffield Midland station as “one example of the significant uncertainty” that remains about phase 2.

The impact of these proposed route changes on passengers, local communities, growth and regeneration is not clear, said the Committee, urging the DfT to explain the basis for its final decision as part of the phase 2b announcement.

The Committee acknowledged “considerable progress” has been made with preparations for HS2 since it reported on the project in 2013 and welcomes the DfT’s commitment to setting out how UK railways will operate as an integrated network.

However, uncertainty remains over how HS2 will work with the rest of the transport system, for example how it will interact with proposed transport investment in the North of England.

The report stated “a great deal of work is still required” to integrate plans for HS2 with other rail investment proposals and the existing network.

“Furthermore, greater assurance about sources of funding and finance for regeneration and growth is required to ensure that the promised regional benefits from High Speed 2 materialise,” it added.

“The government has promised significant benefits to taxpayers in return for their investment in HS2, expected to run to more than £55bn,” said PAC chair Meg Hillier.

“Despite this, Parliament and the public are still in the dark about crucial details – not least when the railway will open, how much it is expected to cost and precisely where it will go.

“The announcement at the weekend that HS2 Ltd chief executive Simon Kirby is leaving the company adds to the uncertainty enveloping a project on which strong and stable leadership is vital.

“Lack of clarity over plans for HS2 in South Yorkshire highlights what is at stake for communities and local economies, and why government must explain its intentions and the basis for its decisions in a transparent manner.”

Hillier added: “The public must be confident the grand vision for HS2 does not blind the government to the finer points which have implications for many people’s lives now and in the decades to come.

“Local authorities must know central government’s intentions to ensure they can plan effectively for regeneration and maximise the potential for growth near HS2 stations.

“The government is due to announce its decision on the 2b route this autumn and we urge it to seize this opportunity to address the concerns set out in our report.”

PAC report conclusions and recommendations:

  • The Public Accounts Committee (PAC) said it remains unconvinced that the timetable for delivering High Speed 2 (HS2) is realistic. The Department for Transport (DfT) considers the programme to be on schedule, citing the fact that it recently issued the invitations to tender for major civil engineering contracts for phase 1 on time.

    However, HS2 Ltd is only 60% confident that phase 1 will open in December 2026. The DfT and HS2 Ltd consider this to be too low. HS2 Ltd has been asked to increase confidence to 80%. As a result, HS2 Ltd is assessing the impact of extending the phase 1 opening date by up to 12 months from December 2026 to December 2027.

    The DfT has maintained that delays to phase 1 will not have an impact on the phase 2 timetable. Nevertheless, PAC said there remains considerable uncertainty about the phase 2 route, with an announcement due in the autumn.

    Recommendation: The announcement of the route of phase 2b this autumn should include a realistic timetable against which the PAC will hold the DfT and HS2 Ltd to account. At the same time the DfT should confirm whether it intends to open phase 1 in 2026 or 2027.
  • According to the PAC report, the DfT does not have a clear enough picture of the estimated costs for phase 2. The Committee described the cost estimates for phase 2 as “volatile”.

    At the time of the 2015 Spending Review, the DfT submitted to the Treasury a cost estimate that was £7bn over the agreed funding of £28.5bn. Six months later, following a Cabinet Office-led review of the estimated costs of the programme, the DfT and HS2 Ltd had identified up to £9bn of potential savings.

    A large proportion of these potential savings result from HS2 Ltd having applied the more mature and detailed estimates for the unit cost of the viaducts, tunnels and cuttings from phase 1 to the phase 2 plans but it is not clear why these assumptions could not have been applied at an earlier stage, said the Committee. It added that it remains to be seen whether these planned savings on phase 2 can be delivered without adversely affecting the expected benefits of the programme.

    Recommendation: The DfT should produce a firm cost estimate for phase 2, setting out the basis on which it was compiled by the time of the route announcement in autumn 2016.
  • The impact of proposed route changes in South Yorkshire on passengers, on local communities and on growth and regeneration is not clear, according to the report. HS2 Ltd has recommended changing the location of the planned HS2 station in South Yorkshire from Meadowhall to Sheffield Midland station.

    The DfT and HS2 Ltd have identified around £768M of savings in the new proposed route. However, the published report proposing this change contained no quantification of the benefits for each of the alternatives, although it is clear that fewer trains will stop at Sheffield than under previous plans. Five high speed trains per hour were initially planned to stop at Meadowhall but only one or two high speed trains per hour are planned to stop at Sheffield Midland.

    The nature and scale of potential disruption to communities that were not expecting to be affected by HS2 is not yet clear. The DfT is expected to announce its decision as part of the phase 2b route announcement.

    Recommendation: The DfT’s decision on the location of the South Yorkshire station should set out the basis on which the selected option was chosen, including quantification of the impact on passengers, local communities, and on forecast growth and regeneration.
  • The PAC said it is concerned that the DfT may find it difficult to secure the skills required for all of its major transport infrastructure plans. The extensive programme of infrastructure investment over the next few years is increasing the demand for engineering, project management and commercial skills across the industry. The DfT and HS2 Ltd are competing with consulting and engineering firms, and other government projects for scarce skills, which represents a key challenge that will also impact on project costs.

    To address the skills shortage for the HS2 project, HS2 Ltd and the DfT are engaging with the industry and developing a long-term plan, which includes the establishment of a national college for high speed rail. Although the DfT failed to mention it during the PAC’s evidence session, it published a Transport Infrastructure Skills Strategy in January 2016.

    Recommendation: The DfT should report back to the Committee in 12 months’ time on progress in securing all the skills needed to deliver all its infrastructure programmes.
  • Sufficient funding will be required to secure the promised regeneration and growth benefits of HS2. The PAC said it is encouraging that the DfT and Department for Communities and Local Government have learned lessons from High Speed 1 and have started planning for regeneration and growth benefits.

    However, it said, the £55.7bn funding package for the project does not include provision for the regeneration around HS2 stations. Instead, local authorities are required to identify sources of finance and funding. The main exception is Euston where the DfT has long-term funding to pay for works to enable future development about the HS2 station estimated to cost £417M.

    Recommendation: The DfT should seek assurances from the relevant local authorities that they have plans in place to identify sources of funding and financing, to secure the local regeneration and growth benefits of HS2.
  • The PAC report said it is not clear how HS2 will work with the rest of the transport system. The DfT is developing a plan for how the UK’s railways will operate as a single, integrated network when HS2 opens.

    However, the Committee said significant uncertainties remain which need to be resolved. For example, it said, it is unclear how HS2 will interact with proposed transport investment in the North of England, and how much it will cost to integrate HS2 with the wider network. Particularly pressing is a decision about the design of the HS2 trains and how they will be compatible with the rest of the network.

    Recommendation: The DfT should publish its plan for how the entire rail network will operate once HS2 has been built at the time of the phase 2 route announcement, in autumn 2016.

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