Rail 893: the unanswered questions on HS2

HS2 is the biggest infrastructure project ever to be built in this country. It is, too, controversial given the huge amount of money it will cost and its environmental impact on parts of the country. So it was inevitable that it would be dragged into the general election campaign. Unfortunately, it has not been raised in a way which could lead to an informed debate about the merits or otherwise of the scheme but rather it has been caught up in the short term politics which has typified this election campaign and, indeed, political discourse today.

Instead, a carefully orchestrated leak of the Oakervee report was an attempt to ensure the issue would be sidelined until after the election. This was clever politics. As I have mentioned on several occasions before, the only policy of Boris Johnson in this initial short term of office is to ensure he gets the big prize, a Tory majority able to ensure that his party remains in government for the next five years. Nothing else matters.

Soon after becoming Prime Minister, Boris Johnson launched the Oakervee inquiry into HS2 because many of his backbenchers – and indeed some ministers, too – loathe the project and would love to see it ditched. However, making a firm decision either way would have been damaging to his ambitions as there are strong supporters of the project even in his party. Moreover, many businesses would be adversely affected and Johnson is keen to repair the damage done by his ridiculous off the cuff ‘F*** business’ remark.  On the other hand, endorsing the project wholeheartedly might have caused a row when he least wanted it. Therefore a fudge, a Johnson speciality, was the best option through the announcement of a review.

When an enquiry or review like this is launched, you can always tell what the desired outcome is by looking at the track record of the chairman. I remember talking to senior Labour politicians in 2009 when the enquiry was set up to look at the war in Iraq and they were all delighted when Sir John Chilcot was appointed as they knew he ‘was one of us’. So when Doug Oakervee, was made chair, there was no question that the scheme was going to be ditched. Oakervee was a past chairman of HS2 ltd, a known supporter and not someone who was likely to come up with a radical recommendation.

There was supposed to be some balance with the appointment of Lord Berkeley as the deputy who is known to be sceptical of many aspects of the project, notably its excessive cost. The appointment of Oakervee was a sign that Johnson had decided that scrapping the scheme would be more politically risky than retaining it. However, Johnson tends to change his views as often as the tides turn and just a couple of days before the leak of the report – which clearly came from a Government source – he said in an interview in Nottingham that ‘the scheme is extremely expensive’.

The leaked report was something of a damp squid, with pretty much a ‘carry on as you were, Pike’, as Captain Mainwaring would say in Dad’s Army.  Even though the report confirmed that the cost had gone up to £88bn, it recommended not only continuing with the construction but did not even suggest any significant ways of reducing the eventual bill apart from the scrapping of a junction in Staffordshire and reducing the capacity from 18 trains per hour to 14.

The intention behind the leak was to ensure that the future of the line did not become an election issue. But, and this is a big but, supporters of the project should not be taken in. A leak such as this during an election campaign does not signify that the policy has been set in stone but, rather, that the government wants to give that impression without having to commit to it. The crucial notice to proceed cannot be signed during the Purdah period that precedes elections and during the government cannot make any important decisions.

Therefore, Johnson has kicked the ball into touch but the result of the game remains very much in the balance. Indeed, the worst outcome for supporters could be a Tory government with a strong majority, which therefore would mean Johnson does not have to worry about any dissenters in the ranks.

Opponents will certainly be fed with lots of ammunition from Lord Berkeley who is seething about the whole process. He told me how he was effectively shut out from the process: ‘There were half a dozen civil servants working with me and Doug [Oakervee] and it was clear from the beginning that I would not be allowed to go to the key meetings. There was really no attempt to look at major potential sources of saving such as moving the terminus to Old Oak Common – possibly with a name change to London Central West – which would then, of course, make Crossrail 2 which is due to serve Euston less viable or slowing the trains down in line with continental high speed lines, which might well allow ballasted track for some sections.’

Berkeley is especially angered by the business case, or rather the refusal to recalibrate it: ‘Everything is determined by the business case, so slowing down the trains, for example, would make it look worse. But in fact, it is already terrible. Given that it is accepted that 14 trains per hour is probably the likely maximum, that reduces the benefits.’ He reckons that if the cost goes up to £100bn as widely expected and train capacity reduced to 14 per hour, the benefit cost ratio will fall to 1:1 or possibly even worse, which in effect means the scheme is not viable under normal Treasury rules. Yet, no such reappraisal was undertaken by the review team through fear, Berkeley reckons, that the result would be embarrassingly bad.

Berkeley raises a bigger question and a very pertinent one: ‘There is a lot of talk about improving railways in the North and HS2 does not help people who, say, commute into Birmingham or Manchester. If there was a real choice between helping them, by investing in all those overcrowded commuter railways, rather than spending this huge amount on HS2, which is the better outcome? These commuters are vital for business in the regions, while HS2 will encourage a Londoncentric economy.’ There is no sense, he argues, in saying both because HS2 will absorb both huge amounts of capital and operational expenditure. Even if he is wrong, he says,  someone ought to be looking at the scheme in that way. It is a point backed by Andy Street, the Conservative mayor of the West Midlands who argued in an article in The Times how HS2 must be part of a wider project to improve the railways more generally, notably for commuters in the regions.

Berkeley will produce a minority report after the election, which will not only give ammunition to opponents but will raise some very pertinent questions about the project. HS2, like Brexit, never goes away.

 

 

Williams review will remain a thing of mystery

 

While the Oakervee report has been deliberately leaked by government sources, I understand the Williams review, commissioned as a result of the debacle on the network following the May 2018 timetable changes, will never see the light of day. Instead, we will get a fully fledged White Paper (which shows the government’s intentions and is the basis of legislation) early in the New Year, though of course that might change if the Tories do not get back into power. Further discussions within Whitehall may reduce the status of the paper to Green Paper, which is the basis of consultation, but a White Paper was the preferred option at the time Parliament was dissolved.

The rationale behind not publishing the review is that it would lead to rows over the difference between Williams and the subsequent White Paper and therefore would cause embarrassment to ministers.

As widely expected, this will suggest the establishment of a national body that will be responsible for all aspects of rail policy development and strategy. However, the name has not yet been decided (Rail UK is not possible since it does not cover the whole of the UK) and its precise functions, notably its relationship with Network Rail remain open for discussion.

There will be a new form of contract that will replace franchises, but again, it is difficult to see how this will resolve the perennial problem over risk transfer – if the private sector does not take the revenue risk, what is the point of contracting out, apart from avoiding the risk of industrial action? Of course, if the Tories do not get their expected majority, then all bets are off. A Corbyn-led government would use the process to issue a very different kind of White Paper with renationalisation at the heart of it. And, according to Mystic Wolmar, even if the Tories win, Grant Shapps will go off to better things than Transport, so we will have our third minister within a year. Do note that Mystic, in this year’s predictions, had already said that Grayling would not be in office by the end of the year, so he got that one right.

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