More Delay for HS2, and how should we proceed?

[zwk500]

But it's not true to say that there's no limit to capital spending, and the markets would allow us to borrow as much as we like. The borrowing limit might be higher than what the treasury is currently, but it's not infinite.

Plus there are resource constraints as well. If too much of the construction sector was given over to rail improvements, then that would impact on the available resources to build houses, hospitals, power stations etc.

Both of these are fair points

 

[Nicholas Lewis]

Would it?

The money would likely have disappeared into the subsidy pit on short-term service improvements (the kind that appeal to short-termist politicians), none of which would have been sustainable in the long run.

The reality is that infrastructure is expensive, and our hard-earned experience of railway upgrades is that they have repeatedly turned into debacles.
When was the last time a rail upgrade programme actually delivered what it was supposed to on something resembling its planned budget and schedule?

Maybe Evergreen on the Chiltern? That is the only one since privatisation that comes to mind, and it was also a very unambitious programme compared to the others.

But I agree, getting off topic.

BR delivered the biggest electrification and route modernisation project on ECML on time and on budget.

 

[LNW-GW Joint]

Part of the rationale for HS2 was the experience of the WCRM programme, which cost £10 billion and ten years of severe disruption to WCML services.
Adonis/Darling decided a new line would deliver many more benefits for far less disruption.

Added to which, if you gave NR £10 billion they wouldn't know where to begin spending it, because there has been no analysis of where the benefits would be.
The Castlefield upgrades are a case in point.

 

[GRALISTAIR]

Part of the rationale for HS2 was the experience of the WCRM programme, which cost £10 billion and ten years of severe disruption to WCML services.
Adonis/Darling decided a new line would deliver many more benefits for far less disruption.

That was my recollection too.

 

[Energy]

I was saying that the 5B/yr HS2 is costing could have bought a lot more local infrastructure improvement around the Northern cities to benefit a much wider section of the population. Anyhow getting off topic.

That's not entirely accurate though as the £5Bn comes from lending on that HS2 will be built so isn't applicable to other projects

Let's kill off the idea that there was a good business case for HS2. It only ever qualified as "low" or "low to medium" value for money, and that was dependent on (1) building the full Y-network, which has now been killed off; and (2) inventing so-called "Wider Economic Impacts" of HS2, without ever comparing those WEIs with the economic impacts that alternative rail investments would have brought.

Did I ever say that HS2 had a good business case? The BCR I'd around 0.8 last time I checked which isn't great but isn't terrible. The stonehenge tunnel has an initial 0.5 and 0.7 for adjusted.

Theoretically rail investment up north can still happen at the same time as hs2 if the BCR is good enough with the treasury capital limit putting a delay depending on how important it is.

But it's not true to say that there's no limit to capital spending, and the markets would allow us to borrow as much as we like. The borrowing limit might be higher than what the treasury is currently, but it's not infinite.

Of course, the markets aren't infinite. HS2 is taking a lot of the supply chain as well.

BR delivered the biggest electrification and route modernisation project on ECML on time and on budget.

Maybe not the best example, the ECML wiring falls down fairly regularly.

Part of the rationale for HS2 was the experience of the WCRM programme, which cost £10 billion and ten years of severe disruption to WCML services.
Adonis/Darling decided a new line would deliver many more benefits for far less disruption.

HS2 and moving the express services is a better spend of money than adding 2 110mph tracks to the existing WCML.

 

[Nottingham59]

It certainly looks like ongoing work on the Delta-Handsacre section has been frozen for the next three years.

Call for clarity on what HS2 construction delays will mean for communities around Lichfield - Lichfield Live®

Clarity is being sought over what delays to the construction of HS2 will mean for communities around Lichfield.

lichfieldlive.co.uk

Signs have gone up on compounds in and around Lichfield stating that they have been closed in the wake of the Government’s announcement that the controversial high speed rail line will be re-phased.

One notice left on Netherstowe Lane by contractors said:

“Due to the recent Government announcement to postpone HS2, we regretfully serve notice that work on this section of the project will be postponed until August 2025.
“Site security will remain monitoring the site closely for the duration while works are dormant.
“All road diversions and closures will remain in place but will still be managed by the traffic management systems.”
HS2 signage at Netherstowe Lane

The BCR is around 0.8 last time I checked which isn't great but isn't terrible

A BCR of 0.8 is terrible. It means the benefits of the scheme are less than the net cost. So destroying value.

 

[LNW-GW Joint]

Netherstowe Lane is north/east of Lichfield but south of the junction where the Phase 1 and 2a routes diverge.
So it does look as though this part of Phase 1 is delayed.
I see local MP Michael Fabricant is on the job with questions in the house, so we'll soon know.

 

[Nottingham59]

And we'll soon get every parish council in South Staffordshire insisting that HS2 reopen closed off roads and making good after breaking the terms of their consents.

 

[Xavi]

BCR has flaws and ignores the GDP created through the multiplier effect (in its simplest form £1 investment in the form of wages is spent again) and associated tax revenues - about 70p over 4 years for every £1 invested the last time I checked OBR.

Governments don’t need to issue bonds (borrow money) in the way they portray. If you want to learn more, read The Defecit Myth by Stephanie Kenton.

 

[Meerkat]

BCR has flaws and ignores the GDP created through the multiplier effect (in its simplest form £1 investment in the form of wages is spent again) and associated tax revenues - about 70p over 4 years for every £1 invested the last time I checked OBR.

Governments don’t need to issue bonds (borrow money) in the way they portray. If you want to learn more, read The Defecit Myth by Stephanie Kenton.

If that’s truse how come we aren’t booming with all the ever increasing tax being spent on the wage heavy NHS etc?

 

[Jonny]

BCR has flaws and ignores the GDP created through the multiplier effect (in its simplest form £1 investment in the form of wages is spent again) and associated tax revenues - about 70p over 4 years for every £1 invested the last time I checked OBR.

Governments don’t need to issue bonds (borrow money) in the way they portray. If you want to learn more, read The Defecit Myth by Stephanie Kenton.

The decision to remove the multiplier effect is basically an anti-abuse measure. Otherwise you could justify any waste of money using the multiplier effect, which is the argument that Ms Kelton and her contemporaries use.

If that’s truse how come we aren’t booming with all the ever increasing tax being spent on the wage heavy NHS etc?

Well spotted - it isn't. That sort of economics had its heyday in the mid-late 1930s. What happened next is a matter of history.

---

Also, I hope they don't go for a cutback to Old Oak Common at the London end. Otherwise there are going to be capacity issues - bear in mind that if it is too difficult to change to the Elizabeth Line then people are going to go to North Acton LU and/or Willesden Junction - both of which are not exactly places that could easily handle surge loads.

 

[stuu]

Well spotted - it isn't. That sort of economics had its heyday in the mid-late 1930s. What happened next is a matter of history.

Yes. It worked. That's because spending was on capital investment, not just wages. So society benefited from the investment and productivity increased.

A lesson worth remembering

 

[LNW-GW Joint]

Netherstowe Lane is north/east of Lichfield but south of the junction where the Phase 1 and 2a routes diverge.
So it does look as though this part of Phase 1 is delayed.
I see local MP Michael Fabricant is on the job with questions in the house, so we'll soon know.

The Netherstowe Lane work site, at its junction with Wood End Lane, is actually in the V of the Crewe/Handsacre HS2 lines as they diverge.
Phase 1 includes the Handsacre branch and the first about 1 km of the Crewe line, with Phase 2a starting just after the HS2 main line crosses the Trent & Mersey Canal.
The Phase 1 works in the area are for an extensive grade separation between the two routes.
If that site is being mothballed, that puts paid to through running on the WCML.

 

[Nottingham59]

Phase 2a starting just after the HS2 main line crosses the Coventry Canal.

If I'm reading the map right, isn't that the Trent and Mersey canal?

 

[Xavi]

If that’s truse how come we aren’t booming with all the ever increasing tax being spent on the wage heavy NHS etc?

I should have stated that multipliers are in relation to capital investment. Wages spent on NHS operations (revenue expenditure) do not have the same multiplier effect.

However, rail revenue expenditure (aka subsidy for the government part) is a special case. When the railways don’t operate, economic activity (GDP) drops sharply. For every £1 spent £2.20 of economic activity is lost. Rail is an economic enabler.

The decision to remove the multiplier effect is basically an anti-abuse measure. Otherwise you could justify any waste of money using the multiplier effect, which is the argument that Ms Kelton and her contemporaries use.

BCR has never included multiplier effect, so can’t be ‘removed’. However, for the past 40 years or more, UK governments have largely ignored the benefits of the multiplier effect and this has contributed to the relatively poor economic indicators.

 

[Meerkat]

When the railways don’t operate, economic activity (GDP) drops sharply. For every £1 spent £2.20 of economic activity is lost. Rail is an economic enabler.

Got a source for that?

BCR has never included multiplier effect, so can’t be ‘removed’. However, for the past 40 years or more, UK governments have largely ignored the benefits of the multiplier effect and this has contributed to the relatively poor economic indicators.

Probably because it would just be a wild guess.

 

[Sniffingmoose]

Looks like the work around Lichfield is stopping according to the local paper. This will anger locals more if they are leaving the A38 exit at streethay closed for 2 more years. Guess we need clarification. If they are delaying the connection to the west coast main line. That is not good.

Call for clarity on what HS2 construction delays will mean for communities around Lichfield - Lichfield Live®

Clarity is being sought over what delays to the construction of HS2 will mean for communities around Lichfield.

lichfieldlive.co.uk

Clarity is being sought over what delays to the construction of HS2 will mean for communities around Lichfield.

Signs have gone up on compounds in and around Lichfield stating that they have been closed in the wake of the Government’s announcement that the controversial high speed rail line will be re-phased.

Lichfield MP Michael Fabricant has called for confusion on the delays to be cleared up.

 

[LNW-GW Joint]

If I'm reading the map right, isn't that the Trent and Mersey canal?

Yes you're right, the Coventry canal joins the T&M at Fradley Jn, just a mile to the northeast of the HS2 bridge.
Google Maps doesn't put waterway names in very often!

 

[snowball]

From the Guardian:

Internal government briefing admits HS2 delays will increase costs

DfT document appears to undermine ministers’ claims, saying jobs are likely to go and construction firms could be at risk

www.theguardian.com

DfT document appears to undermine ministers’ claims, saying jobs are likely to go and construction firms could be at risk

An internal Department for Transport briefing on the HS2 project has admitted delays to the high-speed railway will increase costs, appearing to undermine ministers’ claims.

The document seen by the Guardian says the decision to delay the project is also likely to cost jobs, put construction firms at risk of going into administration and that the department could face compensation claims.

It also raises the prospect of trains terminating at an outer London station, Old Oak Common, for almost a decade before trains arrive at Euston.

The transport secretary, Mark Harper, announced the delays last Thursday evening and said they were justified in order to “balance the nation’s books”. Huw Merriman, the rail minister, said he apologised for the timing of the statement last week which “I accept was discourteous” to MPs.

Parts of the HS2 line between Birmingham, Crewe and Manchester will be “rephased” by two years, meaning the line to Crewe may not be open until 2036, and Manchester not until 2043. Under the last announced schedule, London-Manchester trains were due to start to run some time between 2035 and 2041.

The internal advice was revealed by Louise Haigh, the shadow transport secretary, during an urgent question on Tuesday, saying it was “time ministers came clean” about the consequences of the decision.

Responding, Merriman said: “Obviously we do not comment on leaked documents or certainly not documents I have not been given at all. It is an entirely responsible government approach to balance the commitments we make and transport commitments total £40bn that have been set out to the house.

“It’s also well within a responsible government’s remit that where there are spending pressures right now due to the help this government has given to those facing increased energy costs … I’m very proud of what we are doing when it comes to delivering HS2.”

Harper said the government remained committed to HS2 trains eventually reaching Euston in central London, but was “prioritising HS2’s initial services between Old Oak Common in London and Birmingham Curzon Street to provide delivery of passenger benefits as soon as possible”.

Transport experts have said trains terminating at Old Oak Common for a prolonged period would put huge pressure on the Elizabeth line and mean there is little time saved in practice for journeys into central London.

Haigh had said it was obvious why the government had announced the changes in a written statement just before the weekend, rather than going to the Commons.

“Ministers ducked and dived from scrutiny – and now we know why. This damaging leak blows apart their key claims to be saving taxpayers’ money,” she said.

“Their plans will hit jobs, harm the north, and cost taxpayers even more – little wonder they refuse to be straight with the British public. Thirteen years of Conservative failure is holding Britain back.”

The document admits there will be “some impacts on jobs and HS2 Ltd will need to consider how best to progress the various phases of the programme”. It says “additional costs will be created by deferring expenditure on the programme”.

In the document’s Q&A format, it asks: “What will the government do about construction companies that go bust because of this announcement?”The document says companies will have to “work through the contractual consequences of this announcement”.

The document says the Manchester leg may not be completed until 2041, with “Euston delivered alongside high-speed infrastructure to Manchester”. Construction at Euston will not be continued “for the next two years … with the site made safe and maintained until construction works continue”. It says design teams on the site will be demobilised.

The Q&A asks: “Is the government breaking its promise of trains going to Stafford, Stoke-on-Trent or Macclesfield?” The department does not offer a guarantee, saying only “that it is continuing to work through the implications of this funding settlement”.

 

[LNW-GW Joint]

At Euston, I believe another conventional platform (15?) is planned to go out of service temporarily this year so that HS2 can rebuild the interface between the two stations.
With the delay to the HS2 programme, is this still the plan?
There would seem little point in removing a conventional platform if no work is going to take place on the HS2 side for a couple of years or more.

 

[SCDR_WMR]

At Euston, I believe another conventional platform (15?) is planned to go out of service temporarily this year so that HS2 can rebuild the interface between the two stations.
With the delay to the HS2 programme, is this still the plan?
There would seem little point in removing a conventional platform if no work is going to take place on the HS2 side for a couple of years or more.

Well if the Guardian report is correct, tools will be downed for 2 years so platform 16, I believe, will remain operational

 

[Xavi]

Probably because it would just be a wild guess.

Not according to Office of Budget Responsibility (aka Treasury).

Got a source for that?

Oxford Economics.

Well if the Guardian report is correct, tools will be downed for 2 years so platform 16, I believe, will remain operational

Enabling works continuing. Euston station construction delayed until spring 2025 (was due to start now). TBM launch from OOC also likely to be pushed back, but can’t be any later than start of OOC station build. All about Treasury cash flow rather than the build.

 

[CdBrux]

Enabling works continuing. Euston station construction delayed until spring 2025 (was due to start now). TBM launch from OOC also likely to be pushed back, but can’t be any later than start of OOC station build. All about Treasury cash flow rather than the build.

Would this delay allow, if beneficial, the resources being used for other tunneling on HS2 to be redeployed to start Euston tunnels once they have finished the ones they are on at the moment? Also same for the line north of the delta junction if that is also delayed, so less immediate need to find people, equipment and materials some of which may be in shortish supply / high costs right now? I appreciate any savings possible here will almost certainly not outweigh the lost opportunity of the delay and other temporary mothballing costs, just trying to see the whole picture.

 

[Mikey C]

However, rail revenue expenditure (aka subsidy for the government part) is a special case. When the railways don’t operate, economic activity (GDP) drops sharply. For every £1 spent £2.20 of economic activity is lost. Rail is an economic enabler.

Surely that depends on the route though. If you removed the WCML or the commuter lines in London, there would be an enormous impact on the economy, but that wouldn't be the case for many marginal branch lines which serve a social purpose.

And you presumably only need a certain frequency to get this GDP benefit also, as above this the extra cost of running the service would outweigh the benefits as you end up shipping air around, causing negative GDP.

 

[Meerkat]

Not according to Office of Budget Responsibility (aka Treasury).

Link?

Oxford Economics.

Link?

 

[Sir Felix Pole]

Grimshaw's standing down their design team for Euston.

Grimshaw

Grimshaw has confirmed it will make redundancies after key parts of the multi-billion High Speed 2 (HS2) were put on hold due to budget concerns
Last week transport secretary Mark Harper announced delays to phase 2a of the route, between Birmingham and Crewe, and to further design work on Grimshaw’s HS2 Euston terminus in a bid to tackle the project’s spiralling costs.
In a ministerial statement, Harper said ‘significant inflationary pressure and increased project costs’ meant phase 2a construction work would be pushed back by two years and other elements paused.
As a result, the AJ understands Grimshaw has been told to temporarily stand down its entire design team – rumoured to number around 90 – on the Euston job.
A practice spokesperson said: ‘We are currently focusing on mitigating the impact that delay has on our people and our practice, and we have had to take the difficult decision to start a redundancy consultation process. Our immediate priority is supporting our employees through this period.

 

[The Planner]

At Euston, I believe another conventional platform (15?) is planned to go out of service temporarily this year so that HS2 can rebuild the interface between the two stations.
With the delay to the HS2 programme, is this still the plan?
There would seem little point in removing a conventional platform if no work is going to take place on the HS2 side for a couple of years or more.

Well if the Guardian report is correct, tools will be downed for 2 years so platform 16, I believe, will remain operational

Will save a few quid on the Platform 2 works for the sleeper if that is the case.

 

[Xavi]

Grimshaw's standing down their design team for Euston.

Grimshaw

Makes sense as the station construction is the part that’s paused. Enabling works are continuing but will have little architectural input.

Link?

Link?

Oxford Economics - The economic contribution of UK rail

The economic contribution of UK rail

The UK railway sector supported £42.9 billion of economic production (GVA) in 2019, associated with 710,000 jobs. Productivity and wage levels, both on the railways and in the rail supply sector, were above-average in every region.

www.oxfordeconomics.com

OBR - The impact of fiscal policy on GDP growth and unemployment

The impact of fiscal policy on GDP growth and unemployment - Office for Budget Responsibility

We normally evaluate the output consequences of fiscal measures by applying ‘fiscal multipliers’ based on the historical impact of additional public spending or tax cuts on the economy. These multipliers capture the indirect effects of the fiscal measures on activity over and above their...

obr.uk

Moderators - apologies for posting links.

 

[Fazaar1889]

Moderators - apologies for posting links.

I used to get flagged for posting links every time but the way the mods want it displayed is actually not that complicated. So for the OBR link, the mods suggest you post it as:

The impact of fiscal policy on GDP growth and unemployment - Office for Budget Responsibility

We normally evaluate the output consequences of fiscal measures by applying ‘fiscal multipliers’ based on the historical impact of additional public spending or tax cuts on the economy. These multipliers capture the indirect effects of the fiscal measures on activity over and above their...

obr.uk

The impact of fiscal policy on GDP growth and unemployment​

I think it's meant to make it clear that it's not your words and is for blind people? But I'm not 100% certain how its helps.

 

[zwk500]

Moderators - apologies for posting links.

I used to get flagged for posting links every time but the way the mods want it displayed is actually not that complicated. So for the OBR link, the mods suggest you post it as:

I think it's meant to make it clear that it's not your words and is for blind people? But I'm not 100% certain how its helps.

I believe you're meant to provide a summary of the relevant points of the article (or to quote the important statements) so that paywalls don't block people out, that people who use assistive technology aren't excluded and so that people don't have to wade through long documents searching for the right info.