Cook report: HS2 considering private finance options and descoping

 

HS2 Ltd has been actively engaged in 'exploring' private finance options and is expected to provide findings by the end of the year.

The news came in a bombshell report by the chairman of HS2 Ltd, Allan Cook, which admitted publicly for the time what the government has known since at least the spring - that HS2 is billions of pounds over budget and years behind schedule.

Originally priced at £33bn then £56m, the government has now conceded it could be close to £90bn.

”Local
An aerial view of the planned station at Old Oak Common

The report admits that 'the scale and the complexity of the task, as well as the transformational benefits it will deliver for the country and its regions were under-estimated in the original business case'.

Mr Cook called for HS2 to be 'reset and restructured' into 'smaller, more manageable sections', albeit with intergration between phase one and phase 2a to create a London to Crewe not just Birmingham phase.

HS2 is already considering ways to reduce scope for the project, the report revealed.

The report has been heavily redacted, but only where 'commercially necessary' the Government claimed.

'HS2 will continue to explore Private Finance opportunities both pre and post construction for [redacted].This workstream has already had input and advice from IPA [Infrastructure Project Authority] and HMT [Treasury] and will conclude its findings by December 2019,' the report said.

It added that private and third party funding would be 'especially relevant on Phase 2b where the scheme is less mature and more choices exist for the sponsor and stakeholders'.

HS2 would also continue to develop opportunities for 'further cost efficiencies on Phase One, including challenges to standards and specifications'.

Another key milestone coming up is the overall procurement strategy for phase 2a and 2b due next month, following advanced discussions with DfT and the IPA.

Among the revelations was Mr Cook's claim that Northern Powerhouse Rail (NRP) - a planned east to west high speed route - 'cannot be built without HS2 lines coming into Leeds and Manchester'.

He went on to reveal that much of the design work for NPR has been led by HS2 as there is currently no dedicated delivery vehicle in place to deliver the NPR ambitions.

However the report concludes that there is 'no realistic alternative' to HS2 to relieve overcrowding and congestion on the roads and rail links between London, Birmingham, Manchester and Leeds and more generally within and between the Midlands and the North.

A concern for the infrastructure sector as a whole follows a ‘Periodic Update’ review by the cabinet secretary later in 2016, which highlighted further potential efficiencies through benchmarking HS2 against international high-speed railway projects and suggesting potential cost-saving opportunities.

However, these efficiencies depended on innovation by the supply chain in methods of construction, off-site manufacturing, investment in technical skills and new types of plant and equipment, and European approaches to site management.

These savings 'have largely not been realised in practice, particularly on the non-tunnelled sections of the Phase One route' the report found.

There are also legislative delays facing the project as the Third Reading of the Phase 2a (West Midlands to Crewe) hybrid Bill was expected in the House of Commons before July.

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