Why I still believe in HS2
We really need to finish the damn railway (and take it to Manchester)
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I had a very exciting day yesterday – HS2 invited me to visit Old Oak Common, the massive new railway station in West London that is currently under construction.
Here is a photo of me playing it totally cool, because I’m a serious policy-focused journalist, and not a nerdy man who likes trains:
Anyway, the reason for the media invitation was that HS2 wanted to mark a happy milestone in the construction of the new station: the installation of the actual platforms that HS2 trains will call at.
And fair play to them – that’s as good an excuse as any, and I guess it’s nice to have some good news to share for once, given the project has a famously long and troubled history.
So to celebrate the occasion, HS2 mocked up a couple of station signs inside the 1.8km underground “box” that has been built,1 and the assembled media watched as one of the almost 2,000 platform slabs was slowly lifted into place.
It was genuinely quite exciting, because if you squint, you can begin to see the station actually taking shape. For example, look carefully at the photo below, and you can see the six platforms (made up of three ‘islands’) – and you can just about imagine HS2 trains whisking passengers to Birmingham in just 48 minutes.
However, this all said, there was an elephant in the (extremely large) room. That was the awkward reality that despite this tangible progress, as things stand, nobody knows for sure when those trains to Birmingham will actually arrive.
This is because the project is currently undergoing a “reset”. Since construction began in 2019, costs have spiralled, and the sequencing of all of the different parts of the project have fallen out of whack due to overly-optimistic timelines. So at the end of last year, former Crossrail CEO Mark Wild was parachuted in to figure out how to get the project under control.
So Wild’s first job is to figure out a new plan to build what I’ve heard described as a ‘minimum viable product’ that will get the railway up and running – and later this year, he’s expected to present it to the government for its sign off.
And though there are no official details yet of what the new plan will look like, there are signs that it could be pretty grim news for the railway nerds.
For example, a couple of weeks ago Rail Magazine reported based on leaks that one option on the table is postponing the construction of the interchange station at Birmingham Airport. And I’m not sure anyone knows what is going to happen with the final short section of the route that will connect Old Oak Common to Euston – even though the Tunnel Boring Machines are buried in the ground and ready to go, there’s reportedly no money yet to actually dig the tunnels.
So even though HS2 has already had its wings clipped in recent years, with Rishi Sunak dropping plans for the line to go to Manchester, there could still be more pain to come. And on the financial front, Rail also now reckons that the project could end up costing upwards of £100bn and that services will only start in 2036, or more like 2039. That’s several years later than the previously promised 2033.2
Anyway, I mention all of this not to kick HS2 when it is down – but because that’s what made my visit yesterday so interesting. Seeing Old Oak Common at close quarters really did reaffirm my certainty that we need to build this railway – and we need to do so properly.
For all of the eye-watering numbers, I simply do not think there is any other credible option, and that at this point we should be willing to pay basically whatever it ends up costing – and that includes the cost of taking it to Manchester, as originally envisioned.
So this week, I thought I’d explain why.
The ‘Sunk Cost Fallacy’ fallacy
If you’re a smart-arse like me, then chances are that you like to roll out the phrase “sunk cost fallacy” when talking about spending decisions. This is the idea that it doesn’t logically follow that you should continue to throw good money after bad.
So for example, paying £15 for a cinema ticket shouldn’t stop you from walking out of a bad film halfway through. Or just because you’ve continued to pour resources into an unwinnable war, it doesn’t mean that you should keep fighting. Instead cutting your losses and retreating might work out better.
I think generally, this is a useful rule to live by – not least because I made the mistake of sitting through the entirety of Suicide Squad. But I also think that turning the phrase into an iron law would be misguided too.3
This is primarily because there are sometimes occasions when soldiering on is actually the better course of action. And in this case it is because even though politicians sometimes still talk about HS2 like it is a hypothetical, the reality is we’ve already built half a railway.
In fact, as of the end of last year, we’ve already spent £32.8bn (at 2019 prices) to get it to this point, and there are already thousands of people working across the country to deliver this project. As the YouTuber Chris Spargo observes, we’ve already started building something so enormous that, unlike the Great Wall of China, is actually visible from space.4
And it seems crazy to me that despite all of these efforts, the plan could be further reined in or delayed. And worse still, despite the half-built London-Birmingham leg being the most expensive section, the idea of ever building the extra bit to Manchester5 is now talked about with the same incredulity as if you were to propose that Britain should build a Moon base, rejoin the European Union or liberate the Postcode Address File.
So I suppose I am making a straightforward “sunk costs” argument – but I think it’s also important to recognise that cutting our losses also isn’t costless – and that’s because of the missed opportunity cost of not doing HS2 properly, despite the extremely high price.
And that opportunity cost is that, well, we won’t get the benefits of HS2.
A friend of mine put it to me the other week that given the spiralling costs, wouldn’t it be better to spend the money on other transport projects? Why are we building a train that will make it quicker to travel between London and Birmingham, and not spending the cash on improving local services? This was essentially Rishi’s argument when he culled the Manchester leg of the project, and promised to redirect the cash to building bypasses and dual carriageways in marginal constituencies.
However, though this might sound rhetorically appealing, I think this misses the point – as HS2 is the strategic lever that helps make all of that other stuff possible. We need HS2 to unlock meaningful improvements everywhere else.
And this is because, most directly, the new railway will move high-speed services from the West Coast Mainline, freeing up space for more local trains (and freight) on the old tracks.
For example, though Milton Keynes and Northampton will not be on HS2, once the line is built it’ll be possible to operate more commuter services to London from these stations. And the extra capacity will also make it possible to move more freight by rail from the port of Felixstowe to the West Midlands, which is home to much of Britain’s warehouse capacity.
And it’s also in the cancelled northern section where many of these benefits would also have been realised. Much of the planned infrastructure in and around Manchester was critical to making the regional “Northern Powerhouse Rail” plans work: HS2 would have built a tunnel under Manchester Piccadilly that regional trains would have used too. And it would have linked Crewe and Manchester Airport, giving regional trains a faster approach to the city.
So this is all to say that what makes HS2 unique compared with other projects is that it really is top-level, strategic infrastructure.
I think it’s a bit like if you have an old church: You can spend money on maintaining and marginally improving it in certain, limited ways. Perhaps the hinges on the crypt need oiling, or the pews need reupholstering. But if the roof has caved in, nothing else matters until the big, expensive thing has been fixed. So the choice is either spend the money to fix it – or give up and abandon the building.
And you might have noticed that Britain is crumbling at the moment. If we’re going to have a future – we need to fix the church roof. And to a much greater extent than Westminster would care to admit, that means that the only real solution given the situation we’re in is to write a blank cheque and hope for the best – because there is no alternative.6
And this, ultimately, is why despite everything I really think we need to finish HS2 properly.
Is there a point where I’d say the costs have got too damn high? I guess… maybe? I’m genuinely not sure where I’d draw the line, but I think the reality is that we need to accept the idea that HS2 is not an optional extra – it’s a strategic necessity.
So despite everything, we should pay for Euston to Old Oak Common, via the Birmingham Interchange. And we really should take it to Manchester, and construct the line so that one day it may also go to Leeds.
And yes, we should put serious efforts into working out what has gone wrong so far, and do everything we can to stop HS3, HS4 and HS57 from suffering from the same problems.
But for better or worse, if we want a functioning country with a growing economy – we need to finish this railway.
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Plus! You can hear me speaking to HS2’s Station Delivery Director on Monday’s episode of The Abundance Agenda.
Don’t worry ultra-nerds, I’m told the fonts used on the sign aren’t finalised yet, so this isn’t an indication of how the station will be branded.
I strongly do not recommend working out how old you’ll be when it opens, like I just did,
If I wanted to be even more of a smart-arse, I’d call it a “thought terminating cliche”.
Basically because instead of being just a narrow railway track, the entire route is a fairly wide construction site – which means brown mud instead of trees and grass, creating a stark contrast with the area around it.
Let alone Leeds and Glasgow, as per the project’s original plans.
It’s a bit like complaining about the cost of hospital beds at the start of the pandemic. Tough luck – we’ve got to pay it.
I mean we’ll probably all be long dead by the time Britain has an HS5, but this is important work for future generations!
If I recall correctly the original HS2 included branches to Liverpool, Wigan, Leeds, Sheffield, York and Newcastle. All these have been “traded out” of plans over the years. Personally extending to Glasgow and Edinburgh would also make sense.
I would argue these really make sense to gain the full network effect benefits and help shift the economic balance away from London and the SE. Especially if supported by branch lines to enable local towns to these cities.
Finally, a SW High Speed link (Cardiff (and Swansea?), Bristol, Exeter and Plymouth, both to London and a Birmingham “hub” would also aid economic growth and levelling up.
In a not too distant future (fingers crossed) of quality communications on trains (countering HMTs argument of not being productive whilst travelling!); combined with cheaper renewable/nuclear energy based grid, the benefits of being able to move people and freight efficiently around the country would I argue bring enormous benefit socially and economically, whilst being better for the climate!
However, this only becomes practical and affordable if planning rules and perhaps some of the improvements to contracts, enable an override of local objections and the associated costs. Similar to the proposed AI Growth Zones which are currently being identified.
But ultimately it requires some bold and integrated thinking and cross-political agreement so we stop muddling through national infrastructure.
Easy to say, but we can do this!
"And yes, we should put serious efforts into working out what has gone wrong so far, and do everything we can to stop HS3, HS4 and HS57 from suffering from the same problems." - spot on. HS2 is not unique at the moment with its high costs, we see it on many construction projects and the cost of proposals for new lines such as EWR and Crossrail 2 have increased rapidly. The government needs to get a grip on the supply of materials and on energy prices that have fuelled much of this, as well as other factors.
We should learn from HS2: work out how we can get construction inflation under control, make sure we retain the experience of engineers for future projects, not just give up.