HS2 uncertainty is ‘alarming and destabilising’, warns industry

Construction leaders have warned the government that scrapping phase 2 of High Speed 2 would have “serious implications” for the UK economy.

Prime minister Rishi Sunak is widely expect to scrap or postpone the extension of HS2 from Birmingham to Manchester amid concerns over the project’s cost. This morning (25 September) Sunak once again refused to voice support for phase 2 during an interview on BBC News.

The potential axing of phase 2, which also includes a route from west London (Old Oak Common) to central London (Euston), has been met by horror from construction executives, who warned on Friday (22 September) that they “cannot overstate how harmful” changes to HS2’s scope are.

Senior executives from Mace, Skanska and VolkerRail were all signatories to an open letter (see in full, below) from the construction industry to the government, calling for it to support HS2 phase 2. Other signatories included executives from consultants such as Aecom, Arcadis and Atkinsréalis, as well as High Speed 1, British Steel and the Railway Industry Association.

“The renewed speculation over the last week has been deeply alarming and destabilising to the industry as a whole,” the letter reads.

“It is a particular blow to the 30,000 people working to deliver this vital infrastructure each and every day, and the many thousands of businesses in the North West that are currently investing in the area based on HS2 reaching Manchester.

“Discarding [the government’s commitment to HS2 phase 2] now will have serious implications for the UK economy.”

The letter adds: “Perhaps most important of all, from a business perspective, these constant changes to a flagship infrastructure project add to the perceived risk of the UK as a place to do business, as well as adding to the cost of each and every infrastructure project in the future.

“At a time when we need to compete globally harder than ever, and we need to deliver infrastructure more efficiently than in the past, we cannot overstate how harmful this is.”

Speculation that the route between Birmingham and Manchester might be scrapped or delayed arose earlier this month, after photos emerged that suggested the prime minister and chancellor were discussing the costs of continuing the scheme.

Sunak has not confirmed his commitment to the full HS2 route. He is expected to make an announcement this week, before the Conservative Party Conference in Manchester this weekend.

Former transport secretary Grant Schapps told the BBC on Sunday (24 September) that continuing the scheme would be “irresponsible” in the face of rising costs.

The alleged change of plans has faced backlash from a spectrum of business leaders and politicians.

John Armitt, chair of the National Infrastructure Commission, told the BBC on Saturday (23 September) that limiting HS2 would be a “tragedy”, telling government: “You control the costs, you don’t run at the first whiff of gunfire.

“You buckle down and you address those cost issues and you address them on a daily basis across the whole project.”

Gordon Brown, whose Labour government initially proposed HS2, said: “Every country in Europe is doing high-speed rail.

“It’s becoming the norm rather than the exception, and Britain is in danger of having 19th-century solutions to 21st-century problems.”

Sunak has also faced backlash from his own party. Former cabinet members George Osborne and Michael Heseltine wrote in The Times that scrapping the line to Manchester would be a “gross act of vandalism”.

In full: industry letter to government

Dear prime minister and chancellor,

We write as the representatives of 21 businesses, who collectively employ thousands of people in the UK, to urge you to end the speculation and recommit to HS2 from Manchester to Euston. All the companies signing below are either based here or have substantial and long-term commitments to investing in and supporting the UK economy.

As you know, nothing is more important in business than certainty and confidence. That is the basis on which we invest and we grow, and the basis on which we employ people and develop their skills. Our growth supports the government’s promise on taking office last year to grow the economy and create better paid jobs.

As such it was welcome when you each, as prime minister and chancellor of the exchequer respectively, took office and provided clarity and certainty to the HS2 project, the biggest public infrastructure investment project in the country. The project already employs some 30,000 people, the majority of which are employed in our companies and in our UK-based SME supply chains.

Delivering big infrastructure properly means committing in the long term, giving certainty to the businesses building it and planning to rely on it in future. At the Autumn Statement, only 10 months ago, the chancellor committed unequivocally to HS2 phase 2, stating that “smart countries build on their long-term commitments rather than discard them… so today I confirm that … we will deliver… HS2 to Manchester.”

We agree that you were right to make this long-term commitment. Discarding it now will have serious implications for the UK economy. When further uncertainty arose around HS2 earlier this year, the chancellor once again intervened to offer business certainty and confidence. When asked whether HS2 would reach Euston, chancellor, you insisted you did not see “any conceivable circumstance” it would not.

Over the years, prime minister, you have also been clear in your support for HS2. In March this year you told the Liaison Committee, “I think it’s important that we get the big infrastructure projects right, that we do them properly.”

In light of the above, the renewed speculation over the last week has been deeply alarming and destabilising to the industry as a whole. It is a particular blow to the 30,000 people working to deliver this vital infrastructure each and every day, and the many thousands of businesses in the North West who are currently investing in the area based on HS2 reaching Manchester.

The reputation of the UK as a place to invest and do business has already suffered in recent years. Statements by some politicians have had the effect of undermining the UK’s reputation for certainty, confidence, and predictability of decision-making in our country. Together, you have both worked hard to address these reputational challenges since taking office one year ago.

This hard work would be undone if the rug is pulled from under HS2. The scope of the project has already changed three times in the last three years, with the removal of the eastern leg, the removal of the Golborne link and then the two-year deferral of certain works. Every change of scope both adds to the costs – the two-year deferral alone will cost at least £380m, with 100s of jobs already being cut because of that decision. At the same time, it reduces the benefits of the scheme, weakening the business case.

Perhaps most important of all, from a business perspective, these constant changes to a flagship infrastructure project add to the perceived risk of the UK as a place to do business, as well as adding to the cost of each and every infrastructure project in the future. At a time when we need to compete globally harder than ever, and we need to deliver infrastructure more efficiently than in the past, we cannot overstate how harmful this is.

We ask that you move urgently to quell the speculation and reaffirm your commitment to the delivery of HS2 phase 2, from Manchester to Euston in full, to sustain the growth in widespread economic benefits this project is already delivering.

Yours

Colin Wood, chief executive, Aecom

Alan Brookes, global chief executive, Arcadis

Richard Robinson, UK and Europe chief executive, Atkinsréalis

Xijun Cao, president and chief executive, British Steel

Chris Rumfitt, chief executive, Field Consulting

Nigel Milton, chief of staff and carbon, Heathrow

Dyan Crowther, chief executive, High Speed 1

Michael Hird, chair and owner, Hird Group

Darren James, chief executive, Keltbray

Paul Goodhand, managing director, Knorr-Bremse Rail Systems (UK) Ltd

William Wilson, chief executive, Linbrooke Services Ltd

Mark Reynolds, group chairman and chief executive, Mace Group

Charlie Cornish, group chief executive, Manchester Airports Group

Darren Caplan, chief executive, Railway Industry Association

Lucy Prior MBE, chair, Railway Industry Association SME Group

James Bain, chief operating officer Europe, Worldline and chair, Rail Supply Group

Rob Morris and Sambit Banerjee, joint chief executives, Siemens Mobility

Thomas Faulkner, executive vice president, Skanska UK

Nick Salt, chief executive, Systra

Andy Bell, vice president, Thales GTS UK

Alan Robertson, chair, VolkerRail

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