Britains HS2 Is Frankensteins Railway

(Bloomberg Opinion) -- It's increasingly clear that Britain created a Frankenstein’s monster when it embarked on plans for a high-speed rail network linking London and the north. Once brought into being, it couldn't be controlled. HS2 goes far beyond being a troubled infrastructure mega-project: It is a symbol of hubris and national decline.

Birthed with good intentions, HS2 is more likely to inspire horror and revulsion among those who look upon its face — chiefly for its habit of vaporizing billions of pounds of public money while taking ever longer to deliver a railway. The latest of multiple reviews and resets, and the first to be presented by the Labour government that took office last year, shows that this basic syndrome hasn’t yet changed. The target for services to start will be pushed back beyond its (already delayed) window of 2029 to 2033. No replacement date was given, though the second half of the 2030s now looks probable. No fresh cost estimate was given either, but the final bill is likely to be north of £100 billion ($135 billion) in today’s money — compared with £35 billion in 2010, when the plan called for a much bigger network.

HS2 was progressively cut back in the face of relentless cost escalation. The original blueprint was for a Y-shaped network spanning 530 kilometers (330 miles) that extended to Manchester in the northwest with an eastern leg ending in Leeds. The pruned-back project consists of a single 225-kilometer line from London to Birmingham in the English midlands that, per mile, is likely to be the most expensive railway in the world. For this outlay, the country will get a piece of transport infrastructure that fulfills almost none of its initial aspirations, which were to narrow regional disparities by improving north-south links and freeing up track capacity to expand local train services. The economic case for HS2 rested almost entirely on the network value.

How the project went so badly wrong is a fiscal Gothic horror story of many themes and subplots. They include political instability, with ministerial churn and repeated tinkering; the planning system, which required the project to obtain more than 8,000 consents; the use of cost-plus contracts, which created an inbuilt incentive for contractors to overspend; tensions between HS2 Ltd., the body responsible for developing the railway, and the Department for Transport; and poor governance and a lack of commercially astute management. There was no single root cause of HS2’s “systemic failure,” Mark Wild, who took over as HS2’s chief executive officer in December, said in a March letter to Transport Secretary Heidi Alexander that was published last week. Rather, it was the “accumulation of compounding vulnerabilities over time.”

Beyond this, the allegations of fraud and malpractice that have swirled around HS2 suggest that not all is right with the moral atmosphere. At least three whistle-blowers have come forward to charge that HS2 Ltd. deliberately understated its costs to avoid jeopardizing parliamentary approval. One, Stephen Cresswell, was awarded almost £320,000 by an employment tribunal last month.

While HS2 was enacted with cross-party support, opponents have never given up hope of halting a project they regard as fundamentally flawed. Some of the dissenters’ early warnings, including of cost blowouts way beyond the official estimates, have proved prophetic. In a 2013 report titled The High-Speed Gravy Train, the free-market Institute of Economic Affairs said HS2 offered poor value for money, linked the decision to proceed to lobbying by powerful special-interest groups that stood to gain from the project and said their influence would further inflate costs. 

“We're supposedly heading into this era of greater infrastructure spending — how can you spend this money with any confidence when you don't know how things went so badly wrong?” Michael Lord, a Conservative member of the House of Lords who tabled an unsuccessful amendment to stop HS2 in 2017, told me in an interview before last week’s announcement. “Are we a banana republic?”

If there was an original sin behind HS2, it was hubris. This passage stands out in the 131-page review by James Stewart, former chair of global infrastructure at KPMG LLP, that was published alongside the government’s announcement:

Many people argue that there is a culture of “gold plating” on UK infrastructure projects, i.e. going for iconic designs and state of the art civil engineering solutions. In my view this has been evident on HS2. Steps had to be taken to counteract this culture and behaviour. The top-down vision of building a railway that would be the best and fastest has been a major factor in undermining attempts to introduce a culture of cost control.

New transport routes tend to hug existing arteries because it’s cheaper and less environmentally destructive. HS2 couldn’t do this because of the decision to use top-of-the-range trains capable of traveling at 360 km per hour, which required straight lines. HS1, the high-speed Channel Tunnel link championed by former Conservative Deputy Prime Minister Michael Heseltine, largely traces the path of the M2 and M20 motorways and existing railway lines. In a 2010 paper with a foreword written by Heseltine, Tony Lodge, a research fellow at the Centre for Policy Studies think tank, proposed an alternative route for HS2 that adhered to the same philosophy. Last week’s announcement was “all too predictable,” Lodge told me.

The key point the Stewart review makes is that the decision to go for the best, whatever the cost, sets a tone that cascades down through the organization. This is how you end up with £100 million bat tunnels. If you’re going to go for the gold-plated option, make sure you can afford it.

The priority now must be to complete what remains of HS2 as effectively and cost-efficiently as possible. In Wild, who took over Crossrail (now known as the Elizabeth Line) at a difficult juncture and saw it through to successful completion, the government has the right person in charge. He must be given the time to pursue the reset he believes is required. Another core error of HS2 was to have rushed into construction before designs and cost estimates were ready. “Think slow, act fast” is the golden rule of major project delivery coined by Danish academic Bent Flyvbjerg.

In time, though, there must be a fuller accounting of how HS2 turned into such an “appalling mess,” in the transport secretary’s words. The case for a public inquiry is strong. HS2 carries echoes of other landmark fiascos, including the awarding of PPE contracts during the pandemic, the wrongful prosecutions of Post Office sub-postmasters and the infected-blood scandal. All point to an erosion in standards of probity and capability within UK state institutions and the body politic.

Britain is neither as rich, nor as competent, nor as morally upright as it likes to think it is. If the country wants to avoid more horror shows, it needs some honest self-examination. A little humility wouldn’t go amiss.

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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew Brooker is a Bloomberg Opinion columnist covering business and infrastructure. Formerly, he was an editor for Bloomberg News and the South China Morning Post.

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