More Delay for HS2, and how should we proceed?

[jfowkes]

There's another side to the sunk cost fallacy. When you're well into a project, a lot of the money has been spent and there's nothing you can do about it. The choice you then face is between

1) spending the rest of the money and getting all the benefits of the scheme

or

2) cancelling the scheme, having to pay the costs of cancelling it, and getting none of the benefits.

As the scheme progresses, the ratio of the benefits to the remaining costs gradually improves.

This also applies to the environmental costs and gains.

 

[Xavi]

If stopping HS2 and spending the money elsewhere brings more benefit, the rational choice is obvious.

Only there is no guaranteed benefit for scrapping the lifetime / annual pension allowances. There’s definitely a cost though - over £1bn/year.

Similarly, childcare measures will cost £5bn a year from 2026 (the same as annual HS2 build cost) and capital expensing will cost £8-11bn/yr.

All the new measures Hunt announced yesterday amount to a £19bn per year gamble. Puts a perspective on HS2 cost.

BTW, on Euston, a decent cost-effective station design had been established and the next step was to be the detailed design the phase. There were no "issues" to overcome. It's simply been scrapped so Hunt can have his "national debt to GDP ratio in year five lower than year four" moment.

Totally agree. There are though choices available to achieve the ratios as the £19bn demonstrates.

 

[Bletchleyite]

With regard to Euston *Station*, if you're willing to accept stuff on top (which the current station has, and few seem bothered by), surely it would be possible in such a prime real-estate area for the station to cost nothing - basically, you can have the lease of land for free to stick your flats or whatever on top of, including the existing station's unused parcel deck, if you build a station for us as well. Just slightly extreme planning gain.

 

[zwk500]

With regard to Euston *Station*, if you're willing to accept stuff on top (which the current station has, and few seem bothered by), surely it would be possible in such a prime real-estate area for the station to cost nothing - basically, you can have the lease of land for free to stick your flats or whatever on top of, including the existing station's unused parcel deck, if you build a station for us as well. Just slightly extreme planning gain.

Massive engineering challenge because you've got to meet the vibration and noise requirements for residential or office space. You've also got a difficult structural puzzle as the pillars need to take account of the track. However you're certainly right, a massive over-track development from Euston all the way up to the end of the trench is/was planned as part of funding HS2 - but it certainly wasn't marginal cost.

 

[Tezza1978]

I think at this point it is very unlikely that the work will have restarted by the end of the next parliament (~2030)- .

Having read the rest of this thread and heard on here from people with inside knowledge, patently that is not going to be the case! Ive just received an invite - today - to a HS2 engagement event at Euston...for an event at the end of March where they are giving members of the public a rooftop tour of the Euston works and talking about what they have achieved so far and the additional "construction activities that are taking place in the coming months" at Euston!

Sunk cost fallacy. If stopping HS2 and spending the money elsewhere brings more benefit, the rational choice is obvious. It's not as if HS2 is all that popular. Plenty of people would welcome the decision.

See my response above re continuing works at Euston. Its just not going to be a half finished derelict overgrown line (as in the novel /computer game Metro 2033 !)

 

[Meerkat]

There's another side to the sunk cost fallacy. When you're well into a project, a lot of the money has been spent and there's nothing you can do about it. The choice you then face is between

1) spending the rest of the money and getting all the benefits of the scheme

or

2) cancelling the scheme, having to pay the costs of cancelling it, and getting none of the benefits.

As the scheme progresses, the ratio of the benefits to the remaining costs gradually improves.

If you cancel HS2 then you have to pay the financing costs of all the debt incurred so far, but without the fare income to pay a big chunk of it.

 

[Snow1964]

DfT has today (16th March) published HS2 preparation accounts for year to 31 March 2022. Although these are not covering the most recent 11 months, will probably come as a surprise

HS2 works £112.8m vs budget £133.9m (16% underspend)
Property acquisition £122.5M vs £135.5M budget (10% underspend)
overall 13% below budget for year

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1143125/high-speed-rail-preparation-act-2013-expenditure-report-1-april-2021-to-31-march-2022-web-version.pdf

Total expenditure under the Preparation Act for the period from 1 April 2021 to 31 March 2022 was £235.3m against a budget of £269.4m, representing an underspend of £34.1m or around 13%. This incorporates expenditure by both the Secretary of State directly and HS2 Ltd on the Secretary of State’s behalf.
Of this total expenditure, HS2 Ltd spent £112.8m against a budget of £133.9m, an underspend of £21m or 16%. This was primarily due to reprofiling programme development costs to align with Phase 2B’s revised strategy, lower corporate support costs due to slower than predicted programme activity, and a reduction in anticipated spend on track matting and location laboratory testing.
The Secretary of State spent £122.5m on the acquisition of land and property and associated property schemes against a budget of £135.5m, an underspend of £13.1m or 10%. The variance was due to slower than anticipated progress on a number of key property acquisitions. The breakdown of this expenditure is shown at Annex A.
With the Phase One and Phase 2A Acts receiving Royal Assent on 23 February 2017 and 11 February 2021 respectively, expenditure in relation to the compulsory purchase of land (including by way of statutory blight notices) for Phase One and Phase 2A now falls outside of the scope of the Preparation Act.

 

[Dan G]

With regard to Euston *Station*, if you're willing to accept stuff on top (which the current station has, and few seem bothered by), surely it would be possible in such a prime real-estate area for the station to cost nothing - basically, you can have the lease of land for free to stick your flats or whatever on top of, including the existing station's unused parcel deck, if you build a station for us as well. Just slightly extreme planning gain.

Euston has two blocks over it, either side of the lengthwise spine roof which provides light and ventilation. I would be surprised if their value isn't included in costings.

 

[stuu]

Euston has two blocks over it, either side of the lengthwise spine roof which provides light and ventilation. I would be surprised if their value isn't included in costings.

Probably not, unless the Treasury have changed their minds about how theoretical values are accounted for. The over-site development values for Crossrail weren't allowed to be included in the budget calculations, as they have to assume the worst case - i.e. nothing IIRC

 

[Danfilm007]

DfT has today (16th March) published HS2 preparation accounts for year to 31 March 2022. Although these are not covering the most recent 11 months, will probably come as a surprise

HS2 works £112.8m vs budget £133.9m (16% underspend)
Property acquisition £122.5M vs £135.5M budget (10% underspend)
overall 13% below budget for year

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1143125/high-speed-rail-preparation-act-2013-expenditure-report-1-april-2021-to-31-march-2022-web-version.pdf

Nice surprise to see it under budget by a not insubstantial amount! Therein lies hope yet...

 

[Mikey C]

DfT has today (16th March) published HS2 preparation accounts for year to 31 March 2022. Although these are not covering the most recent 11 months, will probably come as a surprise

HS2 works £112.8m vs budget £133.9m (16% underspend)
Property acquisition £122.5M vs £135.5M budget (10% underspend)
overall 13% below budget for year

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1143125/high-speed-rail-preparation-act-2013-expenditure-report-1-april-2021-to-31-march-2022-web-version.pdf

Property acquisition in the year is basically under budget because they're behind on acquiring property!

Similarly the HS2 works is partially down because of "slower than predicted programme activity", so not a reduction in the project spend, just a delay.

It's akin to the office window cleaning budget in the 6 months to June being down because the June visit got delayed to the 1st July, as opposed to because you actually renegotiated the contract to reduce spend by 10%.

 

[IndianPacific]

Nice surprise to see it under budget by a not insubstantial amount! Therein lies hope yet...

If I'm reading it right, it's in 2019 prices. A massive part of the issue is the inflation since then, which has been particularly massive in construction.

 

[LNW-GW Joint]

There are reports that HS2 Phase 1 is 40% complete.
I think that means they have spent 40% of the budget, which is not at all the same thing.
I think Crossrail suffered from the same paradox - 95% complete might still mean a long way from opening.
Half a tunnel is worth nothing until you have built the other half.

 

[cuemaster]

Yes also curious as to what 40% figure means... could it also mean 40% way through the construction schedule, ie from preparing earthworks etc...
With crossrail much of the tunnel/construction etc was complete i understand but there was the need to integrate 3 seperate signalling systems together, and appeared to be an afterthought in terms of understanding the complexity to do this. Also covid didnt help either!

 

[weeklycommuter]

It will reach Euston. Though delayed, even this government isn't stupid enough to cancel a major station this far into construction. And the next government is very likely to be Labour, who have committed to building HS2 in full and so at the very least will finish Euston.

Euston Station is in Sir Kier Starmer's Constituency of Holborn and St Pancras.

 

[Bald Rick]

With regard to Euston *Station*, if you're willing to accept stuff on top (which the current station has, and few seem bothered by), surely it would be possible in such a prime real-estate area for the station to cost nothing - basically, you can have the lease of land for free to stick your flats or whatever on top of, including the existing station's unused parcel deck, if you build a station for us as well. Just slightly extreme planning gain.

Massive engineering challenge because you've got to meet the vibration and noise requirements for residential or office space. You've also got a difficult structural puzzle as the pillars need to take account of the track. However you're certainly right, a massive over-track development from Euston all the way up to the end of the trench is/was planned as part of funding HS2 - but it certainly wasn't marginal cost.

A major issue at Euston is the protected sight lines, which means that over site development is limited in height and location.

There are reports that HS2 Phase 1 is 40% complete.
I think that means they have spent 40% of the budget, which is not at all the same thing.

It will be 40% of earned value, which means 40% of the activity is complete (usually measured by milestones).

One of the best measures of project financial progress is earned value as a % of cost of work done, - if it’s less than 100% you’re over budget!

 

[paul1609]

It’s what they did with HS1, with “classic” services stoping at every lamp-post between Ashford and Orpington.

That's not really true the standard Ashford Classic service calls at the five intermediate stations to Tonbridge, Sevenoaks and then Fast to London Bridge. There are odd stopping patterns late in the evening and at other times but the majority of the Tonbridge to Orpington intermediate stops are made by Tunbridge Wells line trains.

 

[MattRat]

Came here because I'm at a lot. What on earth is going on with HS2 right now? The only concrete thing I can find is delays to Crewe and Manchester, but there's all this talk and rumours about what might happen or what is happening in terms of cancellations and what's still committed, and I just want to know what the actual truth is.

 

[Dan G]

Came here because I'm at a lot. What on earth is going on with HS2 right now? The only concrete thing I can find is delays to Crewe and Manchester, but there's all this talk and rumours about what might happen or what is happening in terms of cancellations and what's still committed, and I just want to know what the actual truth is.

Birmingham Curzon Street to London Old Oak Common is being built and will open around 2030.

Euston station was part-way through the design process but has been shelved. It is now planned to be delivered with phase 2 in the late 2030s/early 2040s; so far into the future who knows what will happen with them. Maybe the next government will bring them forwards, maybe it won't, maybe it will scrap them. Anyone who believes "commitments" by politicians is foolish.

No-one knows what's now planned with the Handsacre link. That would allow trains to leave Curzon Street and carry on northwards on the WCML. It was was to have been part of CS-OOC but that may have changed.

 

[BrianW]

Yes also curious as to what 40% figure means... could it also mean 40% way through the construction schedule, ie from preparing earthworks etc...
With crossrail much of the tunnel/construction etc was complete i understand but there was the need to integrate 3 seperate signalling systems together, and appeared to be an afterthought in terms of understanding the complexity to do this. Also covid didnt help either!

Welcome to the Forum, and thank you for this reminder. I don't think (as some seem to) that designers, engineers and politicians are all useless self-servers. Dither, delay, changing objectives, over-complication all add to cost. It may be that Crossrail was 'too far down the road' to learn from Thameslink and its signalling integration 'issues'. HS2 was 'committed' pre-Covid too. 40%? It means what you want it to mean- significantly/ substantially/ ...
Meanwhile architects, groundworkers out of jobs (transfer to home insulation programmes?) and residents uncertain. How will things look at election-time I wonder?

 

[LickeyIncliner]

DfT has today (16th March) published HS2 preparation accounts for year to 31 March 2022. Although these are not covering the most recent 11 months, will probably come as a surprise

HS2 works £112.8m vs budget £133.9m (16% underspend)
Property acquisition £122.5M vs £135.5M budget (10% underspend)
overall 13% below budget for year

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1143125/high-speed-rail-preparation-act-2013-expenditure-report-1-april-2021-to-31-march-2022-web-version.pdf

If I've understood correctly, the "works" here are just preparatory works in advance of the various Acts of Parliament that actually authorise building the line - so absolutely necessary if anything is to be built, but [a] relatively trivial compared with the costs of construction, equipment etc, and no guide at all to overall overspend/underspend on getting the railway built and operational?

 

[snowball]

@tomuk has posted on another thread this link to an update from Lichfield Live, suggesting work is continuing between the delta junction and Handsacre:

More clarity expected in coming weeks on impact of HS2 changes on Lichfield - Lichfield Live®

More clarity on what changes to the HS2 project will mean for Lichfield are expected int he coming weeks, Lichfield Live has been told.

lichfieldlive.co.uk

More clarity on what changes to the HS2 project will mean for Lichfield are expected int he coming weeks, Lichfield Live has been told.

The Government has confirmed proposals for “rephasing” of stretches of the controversial high speed rail scheme.

Lichfield MP Michael Fabricant has raised concerns with the HS2 Minister, Huw Merriman, after signs went up on compounds around Lichfield suggesting local phrases of the project would be paused until August 2025.

The notifications also suggested that roadworks would remain in place for that period.

But Lichfield Live now understands such signage is being removed having been put up buy contractors locally rather than as part of a national directive.

The confusion over the delays to the project had come after initial national suggestions that the stretch north of Birmingham would be pushed back. But with the link to the West Coast Main Line at Handsacre forming part of Phase One – which will go ahead as planned – the work is expected to continue.

Mr Merriman said in a House of Commons debate this week:

“As far as the Government is concerned, those parts of the HS2 network where construction is going on will actually be completed and we will do that to the timescale that I have talked to.

“I do need to give him a little more clarity on what that will mean in terms of the scaling, but as far as I’m concerned Phase One will be completed and ready for us to deliver trains by 2033.”

 

[Nottingham59]

The full debate makes interesting reading in Hansard (14 Mar 2023 at 12:42pm)

https://hansard.parliament.uk/Commons/2023-03-14/debates/12BE7356-3FDA-4474-8D0A-C0F3EC649E36/HS2RevisedTimetableAndBudget#

(Urgent Question): To ask the Secretary of State for Transport if he will make a statement on the revised timetable and budget for completion of HS2.

 

[JamesT]

If I've understood correctly, the "works" here are just preparatory works in advance of the various Acts of Parliament that actually authorise building the line - so absolutely necessary if anything is to be built, but [a] relatively trivial compared with the costs of construction, equipment etc, and no guide at all to overall overspend/underspend on getting the railway built and operational?

This report does appear to be solely concerned with preparatory expenditure. However, given that Phase 1 was authorised in 2017 and 2A in 2021, there surely must be some reports on how that expenditure has been going. TBMs under the Chilterns are not 'preparatory'. But looking in https://www.gov.uk/government/collections/dft-annual-reports-and-accounts the only reports appear to be like the previously linked one.

 

[LNW-GW Joint]

Civils contracts have been let for the whole of the Phase 1 route, including the Handsacre connection to the WCML.
There are 4 main contractors, and the northern contract is with BBV (Balfour Beatty/Vinci JV), covering HS2 north of Long Itchington to both Curzon St and Handsacre.
Changes to that contract could well lead to compensation claims from BBV if teams have to be laid off.
Only enabling contracts have been let so far for Phase 2a, with the main civils contracts due later this year (until this week).
At the Euston end, the route contract (ie not Euston station itself) from OOC is with SCS JV along with all the London tunnels and seems likely to continue.
The middle Phase 1 contracts building West Ruislip-Wendover and Wendover-Long Itchington (Align and EFKB) also seem to be unaffected.

 

[Fazaar1889]

Euston station was part-way through the design process but has been shelved. It is now planned to be delivered with phase 2 in the late 2030s/early 2040s

Why is this? I genuinely have no clue. We've constantly been told that's it's delayed! It's delayed! But I've yet to see an actual reason tbh.

No-one knows what's now planned with the Handsacre link.

What makes you say that? Isn't the link vital? Why are they even considering delaying it?

 

[LNW-GW Joint]

The reason for delay is to cap the annual cost of the HS2 project to the budget set by the Treasury/DfT (inflation is increasing those costs).
As to where to stop work, the Euston rebuild is easy to detach as it was already on a later timescale than Phase 1.
Handsacre is essential if DfT wants trains to run through to the WCML in Phase 1.
But it is currently unclear what the detailed fallout is from the delays north of Birmingham.
It's possible Delta-Crewe (ie WCML through running) will open at the same time (but later than OOC-Birmingham) with the Handsacre link dropped.
We are awaiting clarification.
Judging by his Commons statement, I'm not sure even the Rail Minister knows himself yet.
There's been no word at all from HS2 Ltd on any of this.

 

[Fazaar1889]

The reason for delay is to cap the annual cost of the HS2 project to the budget set by the Treasury/DfT (inflation is increasing those costs).
As to where to stop work, the Euston rebuild is easy to detach as it was already on a later timescale than Phase 1.
Handsacre is essential if DfT wants trains to run through to the WCML in Phase 1.
But it is currently unclear what the detailed fallout is from the delays north of Birmingham.
It's possible Delta-Crewe (ie WCML through running) will open at the same time (but later than OOC-Birmingham) with the Handsacre link dropped.
We are awaiting clarification.
Judging by his Commons statement, I'm not sure even the Rail Minister knows himself yet.
There's been no word at all from HS2 Ltd on any of this.

thanks

 

[weeklycommuter]

Civils contracts have been let for the whole of the Phase 1 route, including the Handsacre connection to the WCML.
There are 4 main contractors, and the northern contract is with BBV (Balfour Beatty/Vinci JV), covering HS2 north of Long Itchington to both Curzon St and Handsacre.
Changes to that contract could well lead to compensation claims from BBV if teams have to be laid off.
Only enabling contracts have been let so far for Phase 2a, with the main civils contracts due later this year (until this week).
At the Euston end, the route contract (ie not Euston station itself) from OOC is with SCS JV along with all the London tunnels and seems likely to continue.
The middle Phase 1 contracts building West Ruislip-Wendover and Wendover-Long Itchington (Align and EFKB) also seem to be unaffected.

So they may as well build the whole of Phase 1 including the Handsacre connection to the WCML without delay and move all of the fast long distance services from Manchester, Liverpool and Glasgow as well as Birmingham (currently operated by Avanti West Coast) on to HS2 from London to Birmingham and Handsacre Junction. But without HS2 Euston how many trains an hour could realistically be terminated at Old Oak Common?

 

[MattRat]

So they may as well build the whole of Phase 1 including the Handsacre connection to the WCML without delay and move all of the fast long distance services from Manchester, Liverpool and Glasgow as well as Birmingham (currently operated by Avanti West Coast) on to HS2 from London to Birmingham and Handsacre Junction. But without HS2 Euston how many trains an hour could realistically be terminated at Old Oak Common?

From what I've seen someone else say, the problem isn't OOC, but Crossrail, which doesn't have enough capacity to take all those people into the city.