The latest HS2 delays expose deeper problems with UK infrastructure planning

HS2’s troubled journey shows no sign of easing. Mark Harper’s announcement that the government would delay construction of the Birmingham to Crewe route and the proposed link to central London followed the scrapping of the HS2 eastbound route to Leeds in 2021, just 18 months after Boris Johnson gave the project the green light.

The story of HS2 – and the Transport Secretary’s announcement – is a depressing portrayal of what is going wrong in decision-making on major infrastructure projects in the UK, with this latest decision almost certainly increasing the cost of HS2.

Delays in construction projects do not reduce their costs

It appears that the Chancellor’s budgetary rules – in particular the requirement to reduce debt as a proportion of national income five years from now – have driven this decision.
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Simon Jack, Twitter, March 9, 2023, https://twitter.com/BBCSimonJack/status/1633781080552615936?s=20

But this rule is meant to be a proxy that the government is on a path to long-term fiscal sustainability. Delaying investments expected to deliver economic benefits and introducing further uncertainty into the government’s perceived willingness to commit to large infrastructure projects – when major projects are already plagued by shifting political headwinds – undermines the government’s goals for financial sustainability rather than supporting it. John Armitt, chairman of the National Infrastructure Commission, is right in saying that delays in construction projects often result in costs being stretched out over time rather than being reduced, and a leaked analysis from DfT
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Elgot J, Internal Government Briefing, admits HS2 delays will increase costs The guard14 March 2023, www.theguardian.com/uk-news/2023/mar/14/internal-government-briefing-hs2-delays-increase-costs

confirms that the delays will increase costs.

Delaying HS2 undermines the government’s commitment to raise levels

The decision will also likely delay or reduce many of the benefits of the HS2 project. Phase 1 of HS2 (London to Birmingham) was rated as ‘low’ value for money; only the inclusion of the northern sections increased the overall price-performance ratio. The delays – which included a halt to planned improvements to the Birmingham-Crewe route – also raise questions about the Government’s commitment to more general ‘levelling’. If investing in major infrastructure projects is an important sign that Britain is committed to growth and tackling regional disparities, this decision seems to signal the opposite.

Other large infrastructure projects have experienced the problems of HS2

The problems the project has encountered over the years tell us a lot about how infrastructure decision-making in this country could be changed for the better. The estimated cost of HS2 has risen by a staggering amount – from £48bn in 2011 to more than £125bn by 2020. This is no doubt partly due to inefficiencies – these can be addressed through better planning, adequate incentives for projects to Adhering to planned schedules and ensuring relevance Departments and public bodies that have the skills to oversee project implementation would all help.

But it’s also because the government is notoriously bad at estimating the cost of major projects upfront. Crossrail and Thames Tideway, for example, similarly exceeded initial estimates by a significant amount. The government needs to ensure that the Treasury has experts who can review departments’ cost estimates and address the optimism that creeps into the costing of construction projects. Political decision-makers should also be more flexible when planning. Rather than trying to plan every detail over a long period of time, ministers and officials should consider starting with a minimum viable option and then expanding on that over time to avoid settling on an option that may not be the most likely unexpected and unnecessarily expensive.

The government has failed to convince opponents of the benefits of HS2

The benefits of HS2 were debated throughout the project. This is partly because the way the government assesses the benefits of projects – cost-benefit analysis – is ill-suited to capturing the value of projects – like HS2 – with long time horizons and benefits that are intrinsically are difficult to measure. The project also met with a great deal of public and political opposition, with the local and environmental disadvantages of large-scale projects always having to be weighed against other advantages. HS2 is not the only major infrastructure project to fail to involve the public from the start, and the Institute for Government has previously advocated the creation of a public engagement commission modeled on France’s Commission Nationale du Débat Public (CNDP) pronounced ) to support better public participation.

The latest decision in HS2’s long and troubled history will only increase costs and delay the benefits that the project will eventually bring, and it calls into question – once again – the government’s commitment to long-term growth-enhancing investments. In order to avoid the overspending and drag that has marked the journey of HS2, infrastructure decision-making needs to be rethought more comprehensively.