I seem to recall they tried to get private investors interested in HS2 before construction began. But the only people interested were the Chinese and we've decided we don't really want them investing on national security grounds.Well, I'd say there's one fairly massive difference - the proposed funding source.
Agreed.
The article about the proposal in the i explicitly compares the planned funding model to the LGV Sud Europe Atlantique:
Revealed: English Mayors' French-style solution to HS2 North
Andy Street and Andy Burnham examine Bordeaux-to-Tours funding model as a way to replace axed high-speed lineinews.co.uk
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"HS2 Back on Track" - front page of Sunday Express - private sector plan to build Birmingham to Manchester
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Nottingham59
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It's much less of a risk for private investors now. Phase 1 is going to be built. Investors can see that there will be trains running and they will be able to extract private-sector levels of return from track usage charges.
And they will make sure that the contracts will allow them to charge whatever it costs per mile to recover their investment, even if that means that the publicly-funded phase 1 has to charge correspondingly less per mile.
HSTEd
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And then the project will fall apart because the Treasury will not agree to pay the TOCs enormous piles of additional subsidies to allow them to make the return they want.
HS2 Admitted to a cost of ~£5-7bn for HS2 Phase 2A, with the inevitable cost growth, additional delay and the need to recreate a new delivery body from scratch turnout is probably going to reach more like £10bn.
Which means they will want an operational track access profit of something approaching a billion pounds a year, or roughly 8% of the entire operational non-HS2 subsidy to the rail industry.
Where will that come from?
Tezza1978
Member
Oh I agree in terms of those types of sections of track. Can't see it making any sense to restrict to 125mph in open countryside, not when the trains being built are capable of much more
Well out of the €8 billion the LGV Sud Europe Atlantique cost €5.2 billion was paid by the EU, the French government, local authorities, and SNCF, with only €3.8 billion paid by private investors. A lot depends on how much money government is willing to put up.
Arkeeos
Member
Ehhh, it relies on connecting to the hs2 Manchester tunnel for “NPR”, and I don’t think anyone seriously believes NPR will happen.
Snow1964
Established Member
There is likely to be two forms of finance, big funds (eg pensions that want long term income), and some speculative money (they will look for pockets of previously agricultural land, that can be developed, that railway doesn't need once built).
Some might even come from Government although without fanfare (the funds that Network Rail would have needed to sort out the Hansacre junctions and 2 track bottleneck), if they can quickly piggyback off HS2A Parliamentary Bill for first 20-30 miles then might not need elaborate new Hansacre area improvements as bypassing the problem area. Some sort of accounting fudge of money that would need to be spent anyway.
chris2
Member
So if there’s less tunnels, which ones in the plan are being removed? Under Crewe station?
My two cents… given that the absolute priority is to bypass Colwich, I’d have thought the priority should be to extend HS2 along the phase 2a route to Baldwin’s Gate and get onto the WCML fasts there. This is where the two routes converge and basically run in the same corridor towards Crewe. Then at least a decent HS2 service can run to the north without screwing everything up.
As things stand, new powers are required for a fast lines connection at Handsacre while powers to build phase 2a aren’t yet expired, so it doesn’t seem beyond the realms of possibility to find a funding mix that gets the first stretch of 2a going, leave Handsacre as it is, and apply for powers to build a short deviation from the phase 2a route onto the WCML fasts.
My two cents… given that the absolute priority is to bypass Colwich, I’d have thought the priority should be to extend HS2 along the phase 2a route to Baldwin’s Gate and get onto the WCML fasts there. This is where the two routes converge and basically run in the same corridor towards Crewe. Then at least a decent HS2 service can run to the north without screwing everything up.
As things stand, new powers are required for a fast lines connection at Handsacre while powers to build phase 2a aren’t yet expired, so it doesn’t seem beyond the realms of possibility to find a funding mix that gets the first stretch of 2a going, leave Handsacre as it is, and apply for powers to build a short deviation from the phase 2a route onto the WCML fasts.
The Manchester one? On the basis that it will be an NPR tunnel, not a HS2 tunnel.
daodao
Established Member
This is the section of HS2 which really shouldn't have been cancelled, and which is necessary to provide adequate relief for the WCML and to ensure that the benefits of HS2 phase 1 can be realised. It was right to abandon the expensive HS2 phase 2b project from Crewe to Manchester, which would not have provided any relief to the WCML and would have accounted for most of the costs of HS2 phase 2, for the least benefit.
Snow1964
Established Member
That's my thinking too, might be planning 70 miles, but I too agree likely to be around 30 miles from Hansacre to south of Crewe, possibly built fairly quickly (even to be ready same date as phase 1)
Then a phase 2 towards Manchester later.
If there are no complicated viaducts, bored tunnels, and minimal green tunnels (more like wide bridges), and no stations, then later start should still allow same completion date in 6 or 7 years
HSTEd
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But does any money have to be spent at all?
This whole scheme seems to be based on the idea that the Government (either now or after the election) will meekly fall into line and turn the money back on. A consortium of companies heavily involved in building HS2 have unsurprisingly concluded that the correct thing to do is [for someone to pay them to] continue building HS2.
Getting to crewe might make you more able to exploit the capacity of HS2 but it is not at all clear that it would actually improve the financial position of the railway or of the country. The BCRs are not particularly good as it is, even if they were better for the whole project with Phase 2a than without it.
Unless the government provides hundreds of millions to billions a year in additional subsidies or provides ten billion up front, Phase 2A is not going to get off the ground. No matter what a handful of construction companies and local politicians think or want. And I even more doubt that the Treasury will sign off Phase 2b.
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Snow1964
Established Member
That's not the way Government does cost-benefit, HS2-2a will be seen as a stand alone project, (not combined with benefits of phase 1), it will assume phase 1 is already the start point of calc as if it is already open.
Will even be able to subtract the saved costs from not needing to do Hansacre extra spurs and the bottleneck works. So end up with a project about quarter of length of phase 1, costing about tenth, and disproportionate benefits as will be able to do about 200mph along about 99% of its length (unlike phase 1 which is speed limited Euston to about Ruislip).
Economically, it is very much like when phase 1 of TGV-Est had extra section added (that was originally going to be in phase 2) because the benefits of the extra section, avoided the slow roundabout alternative (was originally phased to stop at the spur to Metz-Nancy line, but section to Baudrecourt got added to phase 1)
The Planner
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Frees up a lot of capacity through Cheadle Hulme and Stockport though, you could back fill with a lot of local connectivity with that.
HSTEd
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Yes, but even then the BCRs are not very good.
The BCR of Phase 2a in 2015 was ~1.3 (page 19/38) after accounting for additional construction inflation, putting it in the "low" value for money category. There has been substantial further cost growth since then.
But the proposed bottleneck works aren't actually necessary.
HS2 and the wider rail industry may want them, but are not strictly necessary.
At the time of its cancellation HS2 admitted to costs of £5-7bn for Phase 2A in 2019 prices.
Given the history of major cost growth and accusations of a culture of cover-ups reported by various media outlets, it is unlikely it can be delivered within that envelope, which in any case is ~£6.1-8.6bn today.
Add to that the cost of the delay/disruption and standing up a new delivery body, and you will be lucky to get it for £10bn.
The cost of Phase 1 isn't really important, we must always be careful to avoid the sunk cost fallacy.
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Peter Sarf
Established Member
Question
Could that mean, by cancelling HS2 Phase2, Rishi & co have handed a decent prospect for profit to the private sector ?.
[/Cynicism].
Nottingham59
Established Member
Not that much. They'll be able to securitise the cash flows into index-linked bonds paying around 3% and sell them off to institutional investors. Like the water companies did. And HS1. And PFI hospitals. They all end up transferring value from the public purse to private-sector investors.
And I would be surprised if it wasn't possible to find significant savings in construction costs too. Like not having cost-plus contracts with prime contractors; and not phasing the build all at the same time so that it requires 15-20% of the UK's entire cement output, and then being surprised that the price goes up; and not splitting the work between multiple consortia at the start, which reduces the economies of scale, and sets each consortium against the others to bid up the cost of materials and staff and all the other resources that the project needs.
Of course. The private sector developers are salivating at the profits to be made at Euston with a reduced station footprint.
HSTEd
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3% on index linked bonds will be something like 7-8% nominal return.
And I doubt they will settle for something like that, Hinkley Point C is more like 9% in real return. (EDIT: or was before the runaway cost growth)
And HS1 the private sector was allowed to buy the concession for a tiny portion of the build price. (EDIT: and had to take absolutely zero construction risk)
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I understand your scepticism for whether the gov will think 10bn is palatable in the current economic climate, but they will also be very aware that at some point in the 2030s we are going to end up with a giant white elephant with limited benefits unless expanded upon.
nor are the "slow" lines south of Milton Keynes, nor the GWR reliefs - if you don't want to run many trains, or care about keeping freight off the roads.
The "proposed bottleneck works" are a relatively cheap way of getting a much better return from what has been already committed.
I don't know what the correct simile is, but it's the reverse of the sunk costs fallacy.
Nottingham59
Established Member
Yes. and the BCR of the Incremental High Cost option, was 2.2 - 2.6. (para 6.35, p31)
This option was to build most of Phase 2a, but merge it onto the WCML fasts 11.4 miles south of Crewe.
(i.e. Near Stableford/Whitmore) That's what I would do. And drop the Handsacre spur, which is not worth it for 1tph.
HSTEd
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The fact remains that you can't take credit for saving money that is not necessarily saved
"If we buy the £10 option we save £1 by not buying the £1 option" doesn't work if you weren't necessarily buying the £1 option to start with.
The white elephant is already committed, it is happening.
That is not a reason to buy another smaller, slightly less white elephant in order to make your previous elephant look less white.
The BCR for Phase 2A was hardly stunning before the costs of HS2 generally underwent the cost growth of the last decade.
It only looks cheap and great value next to Phase 1.
AlastairFraser
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Well, even that could be redesigned to save money.
An underground section in the airport vicinity, a viaduct along the M56/Princess Parkway till a point south of Northenden Interchange on the M60, then tunnel. That would save several miles of tunneling.
HSTEd
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I would not be surprised if the disruption from ripping a major transport artery apart turns out way more expensive than tunnelling.
Rebuilding Hangar Lane Gyratory turned out to be more expensive than tunneling all the way out of London after all!
AlastairFraser
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You'd only need to modify Princess Parkway/Northenden Interchange slightly, so it's less major work than in the case of HS2. The roads extending south from the Interchange aren't quite as significant as the North Circular or the A40, and I'd place a tunnel portal a couple of hundred metres to the south ideally.
daodao
Established Member
Any new heavy rail route from Ringway/Hale Barns to Manchester city centre would be extremely expensive to construct. Unless it was tunnelled, it would be extremely disruptive to build. An elevated viaduct along the M56/A5103 as far as M60 junction 5 would cause increased noise to residents of Wythenshawe and destroy the ambience of Wythenshawe Park and what remains of Princess Parkway (which was quite pleasant to walk along before the M56 and M60 were built). It would be extremely challenging to construct because of the road flyovers at the Altrincham Road and Northenden Road/Sale Road junctions, and the need to tunnel deep under the River Mersey sited immediately north of M60 junction 5 without an excessive gradient from your suggested viaduct to the tunnelled section of the route.
This rail route isn't a sensible route for NPR if HS2 phase 2b isn't built. The likely demand for fast trains between Liverpool and Manchester can be provided by 2 non-stop tph of at least 8 carriages on the direct Chat Moss route, which wouldn't take any longer time than the proposed roundabout route via a station close to (but not at) Manchester Airport. At present, there is only 1 fast tph consisting of 5-6 carriages.
That is an extremely weak reason for building HS2 phase 2b. All stations within Greater Manchester served by local electric train services on the ex-LNW routes southwards from Manchester Piccadilly station already have at least 2 tph, except for Bramhall.
In all my time of building railways, i have never, ever, known a project where a complete redesign saved money.
I think that there's a lack of understanding of just how poor capacity the trains in the North are.
Where I live there's 2tph with 8 coaches all day, with extra peak services. Total population is under 10,000.
The next station is for somewhere were the village is a few hundred, but a nearby village of less than 5,000.
The next station is for a place of about 30,000, but then it sees 3tph.
Whist the previous station is for about 100,000 people, there are other trains to London which are much faster.
daodao
Established Member
Comparing the demand for public transport to travel into London and Manchester city centres is like comparing chalk and cheese. If there is additional capacity need for travelling by rail into central Manchester from local suburban stations, train length should first be increased from the existing 3-4 coaches per train. For Metrolink services such as that from Altrincham, it would be achieved by ensuring that each service is run by a double tram.
It provides virtually no justification for building HS2 phase 2b.
Is there enough platform capacity to do that?