Rehan (Year 12)
Editor’s note: Year 13 student Rehan wrote this insightful essay during his time in Year 12. Post-pandemic demand for rail travel in Great Britain has surged, increasing passenger journeys and emissions, highlighting the need for modern rail infrastructure. The HS2 project was initially designed to enhance rail capacity, reduce congestion, and stimulate economic activity by connecting major cities, but it has faced criticism over environmental disruption, community impact, and escalating costs. CPD
Post-pandemic, the desire for rail transport has been increasing rapidly. Total passenger kilometres across all modes of transport are increasing every year, reaching 740 billion kilometres in Great Britain in 2022, a 15% increase from 2021 (Department of Transport, 2023). 990 million passenger journeys were made in 2022, which is an increase of 155.2% from the previous year (Department of Transport, 2023). However, this rise in the use of rail transport across the UK carries the burden of increased carbon dioxide equivalent emissions, with rail travel emitting 1,875 kilotonnes of carbon dioxide equivalent chemicals, which is an increase of 1.6% from the past year (Department of Transport, 2023). Furthermore, the number of closed complaints from consumers increased by 112.4% from the year ending March 2021, reaching 282,537 (Department of Transport, 2023). These statistics all urgently exhibit the need for the development of more innovative, modern rail transport infrastructure. However, these statistics only paint the picture for the recent era, but pre-COVID-19, this problem was still evident and in desperate need of resolution. In 2016/2017, punctuality and reliability made up 26% of the causes for passenger complaints, and was a significant component in determining passenger dissatisfaction (Department of Transport, 2017). Moreover, in 2018/19, 2,465 kilotonnes of carbon dioxide equivalent substances were emitted, showing how serious the problem was before the pandemic (Charlton, 2019). Therefore, not only does this show the case for HS2 when it was first proposed, this also shows the continued importance of HS2 to this day.
HS2 is a cross-country megaproject designed to revolutionise and innovate the infrastructure for passenger travel in the UK. The Labour party proposed HS2 in 2009, and over the course of 3 years, Justine Greening (Secretary of State for Transport in 2012) accepted and announced that construction would begin. It was meant to improve rail transport by providing quicker speeds, and connecting the major cities of the North and London, leading to increased economic activity. By relieving congestion on existing networks, HS2 was set to induce many more knock-on benefits, including reduced delays, more sustainable rail transport, and increased freight transport on trains. Nevertheless, HS2 endured widespread criticism from the general population as well as many campaign groups, for many reasons, particularly for the environmental disruption and disturbance to local communities it emanated. Furthermore, the costs of the nationwide project have always been in question and a popular area of concern on the viability of the project as a whole, and would ultimately lead to the abolition of the majority of Phase 2 of HS2; essentially meaning only Phase 1 of the megaproject remained extant.
To understand the reasoning behind Rishi Sunak’s resolution, we must first evaluate the benefits and costs the project induced. The purpose of HS2 was to increase capacity overall by creating a track built for cross-city travel. This would lead to a decrease in congestion on existing tracks, relieving pressure on local, intercity services. This way, HS2 would not only decrease the time taken to travel back and forth from major cities in the UK, but it would also have positive externalities via decreases in time taken for shorter intercity services. This would allow for more efficient train services, ultimately increasing the quality of life for residents though maximising utility through competent public services, as well as benefitting firms’ efficiency by offering quicker times to move freight, potentially reducing waste and increasing customer satisfaction by providing quicker delivery times.
Another prominent necessity in the present era is the environmental benefits HS2 would bring to the UK. The project includes stations using minimal energy and net zero emissions, and the construction of completely new rails for passengers, relieving congestion for freight trains on current tracks, therefore reducing the volume of freight moved via road, which reduces emissions. Furthermore, the HS2 woodland fund focuses on supporting programmes to grow and restore woodlands that have been affected by the construction of HS2. In fact, the government relaunched this fund in June 2023, and this included £3.25 million available to landowners to restore the woodlands around the new tracks (Merriman, 2023). However, despite the long-term environmental benefits that accompany the megaproject, the current predicament posed by the construction of HS2 is the environmental harm and community disruption it creates. These issues are the origin of various campaign groups’ protests, including Extinction Rebellion and STOP HS2, and form a significant area of critique on the megaproject as a whole.
Finally, with a project of this proportion, demand for skilled labourers is inevitable. Over 3,000 UK businesses have been involved in the supply chain over the UK and the project as a whole currently supports over 30,000 jobs (Merriman, 2023). This type of community engagement in local areas is symbolic of how HS2 is designed to connect the UK by healing the cultural and economic divide between the North and South of the UK. Furthermore, it shows how the megaproject has a plethora of benefits to a multitude of stakeholders, from business chains to construction workers.
However, with a nationwide infrastructure project like this, there is bound to be many drawbacks. The UK’s rail currently remains operating at near full capacity, and taking into account the escalating demand for a safe and rapid mode of transport to move cross-country, there is strain placed on the businesses that provide rail transport, leading to inefficiencies and predicaments, such as the recent train strikes and delays plastered across the news. Although HS2 would help contest these problems, constant questions arise as to how quickly the project can respond to these problems, as initial HS2 services stay within the range to start between 2029 and 2033 (Merriman, 2023). Therefore, critics often point out the viability of HS2 in the long term to re-establish an acceptable level of efficiency in time across the UK’s rails, and compare it with potential more cost-effective reinvestments and improvements into existing rails to combat the pressure of capacity without substantial costs and disturbance.
Despite the numerous disadvantages associated with the project as a whole, the most destructive drawback to HS2 is the vast, exponential costs that spiralled out of control. Initially, the costs of Phase 1 was expected to be £49 billion, however in the most recent HS2 report by the government, the cost of Phase 1 has been recalculated to approximate £57 billion[1] (Merriman, 2023). These significant increases are a popular topic of concern amongst critics of the project, and ultimately, the spiralled costs were a significant drawback taken into account by the government, leading to the abolishment of the majority of Phase 2.
The second component of Rishi Sunak’s decision that we must take into account to evaluate if it was economically sound is to analyse why the government sought it beneficial to scrap the megaproject. In the government’s ‘Network North command paper’, a new plan devised to reallocate transport spending created after the announcement to cancel Phase 2, it outlines 3 distinct reasons for its conclusion.
The most consequential flaw mentioned in the plan was the significantly misestimated costs. When first estimated in 2012, Phase 1 was valued at £20 billion; however, when the choice was accepted to move forward with the full project, the valuation of costs doubled. High inflation, poor delivery, changes in schedule, and overoptimistic estimations all further influenced the outlay of HS2, and as a result, the cost of Phase 1 now exceeds the original projection for the cost of the entirety of the megaproject. Furthermore, other similar international projects have proven HS2 unsuccessful. For instance, the Paris-Strasbourg link delivered for 13 times less cost per mile (Department of Transport, 2023). The abundance of faults throughout the construction of HS2 has also inexorably led to a significant decrease in the benefit-to-cost ratio. As the government invested into the development of HS2, it expected to receive £2.30 in economic value per £1 invested (Department of Transport, 2023). This is due to the multiplier effect on injections into the economy, which states that any initial change in aggregate demand generates ripple effects, further affecting the aggregate demand and the economy as a whole. However, the most recent forecast shows that HS2 will provide less value than the investment into the project; 80p in economic value for every £1 invested (Merriman, 2023). This shows how HS2 not only is becoming less worthwhile for the investment and costs into it, but it is hindering innovation by dominating the government’s budget on transport, with HS2 receiving more investment that the rest of the rail network combined.
The second reason for the cancellation of Phase 2 is the recent circumstances of COVID-19 and the nationwide pandemic affecting how we travel, as well as its impact on delays of the project. Despite demand increasing post-pandemic, it is still down by more than 20% compared to pre-pandemic levels. For instance, demand for rail for commuting purposes in 2022 was 58% of the demand pre-COVID, and for business purposes in 2022, it was at 52% of its previous levels in 2019 (Department of Transport, 2023). Therefore, HS2 doesn’t provide an adequate solution to the recent, sudden changes in demand that COVID-19 produced, and has become a more futile investment, leading to questions about other, more effective forms of investment into the rail network that more accurately targets the problems the industry faces in the UK today.
The final cause that the government outlines in the document are the repeated construction delays seen throughout the history of the project. Due to various incidents throughout the last decade, most notably the pandemic, initial completion dates estimated in 2012 are constantly re-evaluated and pushed back. HS2 was meant to be operational by 2026, however taking into measure the external influences, the line to Manchester wouldn’t be in operation till 2041; 8 years behind schedule (Department of Transport, 2023).
The final component of the resolution that must be taken into judgement is the benefits and costs of the next best alternative of HS2. The current UK rail industry is experiencing several fatal bottlenecks, including the problems of delivery times and reducing journey times. As it stands, HS2 is set to become part of the problem, not the solution, as it causes a significant dent in the UK’s budget on rail transport, with the results being far from optimal. However, following the cancellation, the government have created a new plan for transport, prioritising individual towns and cities over connection between them. Scrapping HS2 frees up £36 billion[2], which Rishi Sunak himself promised to reinvest into smaller projects benefitting the rail network across the UK (Department of Transport, 2023). Furthermore, their ongoing commitment to spend £12 billion connecting Liverpool and Manchester still stands (Department of Transport, 2023). This way, instead of relying on one megaproject to solve the problem, diversifying the investment can slowly improve the state of the current network, and the investments can more accurately target the problems faced. In the plan set out by the government, the priorities outlined include promoting connectivity within and between towns and cities across the UK, as well as improving everyday local journeys for people.
The new plan also aims to achieve the aims that HS2 was specifically designed to meet, such as connecting the major cities of the North, as well as decreasing the time taken for inter-city travel. For instance, one project the government has highlighted in the plan is to invest over £2 billion for a new rail station and line connection from Bradford to Manchester (Department of Transport, 2023). With this, travel between Bradford and Manchester will take 30 minutes, via a path through Huddersfield (Department of Transport, 2023). This is just an example of how the combined total budget given for HS2 can be spread across multiple projects to achieve better results via better placed investments. As seen before, the benefit-to-cost ratio of HS2 was poor, so with more cost-effective spending, the government, and the economy can reap more rewards for the same cost. Furthermore, the government has decided to split the budget for the new investments similarly to how it was split for HS2 in terms of regions. For instance, as the Northern leg of HS2 was due to receive £19.8 billion in government spending; £19.2 billion has been committed to the North (Department of Transport, 2023). This is the same with the Midlands leg, and the spending committed to Euston will now be spread variously across the country. In this way, every region is set to benefit proportionally to what HS2 was offering.
With all the components of the Conservative government’s decision in mind, we must now conclude whether this decision is economically sound. For the decision to be economically sound, the foreseeable economic benefits of the cancellation of HS2 must be greater than the overall economic costs of the cancellation. Alternatively, we can assess the opportunity cost of the decision to cancel HS2 to evaluate whether the decision is economically sound. The opportunity cost can be defined as the cost of the next best alternative foregone, and if the opportunity cost of cancelling HS2 is greater than the benefits of cancelling HS2, we can say that the decision is not economically sound.
With the pros and cons of HS2 compared to the pros and cons of the new plan devised, I believe that the choice to scrap Phase 2 was economically appropriate. With the new plan, the UK and specifically the North is set to receive similar, if not better benefits compared to the benefits that HS2 was set to deliver. HS2’s benefit-to-cost ratio was far below optimal, as the value that HS2 would provide would be less than the total costs of the megaproject. Furthermore, the predicaments faced by the UK rail network needs responding to now, and with projected completion in 2041, it makes sense to find other forms of investment that provide a quicker remedy. HS2 received lots of critique, and for good reason. The environmental and community disruption it brought during its construction was cause for many protests, including STOP HS2. The opportunity cost of continuing HS2 was too large, as the new plan essentially proposes the same benefits via more cost-effective investments. Despite HS2 being under construction, at this point it I would say it is economically sound to cancel it, because the government can still turn this into a profitable situation for the UK rail network. However, the new plan fails to take one significant problem into account that HS2 would have accounted for, which is the problem of congestion and capacity. HS2 was set to increase the capacity of UK rail, releasing congestion on rail as well as roads, as more businesses would move freight via trains. Moreover, the cancellation may perceive a lack of commitment to the North from the government, which generates negative publicity around the Conservative part as a whole. Despite this, I believe these are is the only drawbacks to the decision, and the other benefits from this trade-off outweigh the flaws.
Reference list
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Department of Transport (2011). TSGB 2011: Freight. [online] Transport Statistics Great Britain: 2011 – GOV.UK. GOV.UK: Department of Transport. Available at: https://assets.publishing.service.gov.uk/media/5a79db69e5274a18ba50f52a/freight-summary.pdf [Accessed 16 Feb. 2024].
Department of Transport (2017). Rail factsheet: 2017. [online] Rail factsheet: 2017 – GOV.UK. GOV.UK: Department of Transport. Available at: https://www.gov.uk/government/statistics/rail-factsheet-2017 [Accessed 19 Feb. 2024].
Department of Transport (2023a). Network North: Transforming British Transport. [online] Network North: Transforming British Transport. GOV.UK: Department of Transport. Available at: https://www.gov.uk/government/publications/network-north [Accessed 8 Feb. 2024].
Department of Transport (2023b). Rail factsheet: 2022. [online] Rail factsheet: 2022 – GOV.UK. GOV.UK: Department of Transport. Available at: https://www.gov.uk/government/statistics/rail-factsheet-2022/rail-factsheet-2022 [Accessed 12 Feb. 2024].
Department of Transport (2023c). Transport Statistics Great Britain: 2022 Summary. [online] Transport Statistics Great Britain: 2022 Summary – GOV.UK . GOV.UK: Department of Transport. Available at: https://www.gov.uk/government/statistics/transport-statistics-great-britain-2023/transport-statistics-great-britain-2022-summary [Accessed 18 Jan. 2024].
Merriman, H.W., Department of Transport and High Speed Two (HS2) Limited (2023). HS2 6-monthly report to Parliament: November 2023 . [online] HS2 6-monthly report to Parliament: November 2023 – GOV.UK. GOV.UK: Department of Transport. Available at: https://www.gov.uk/government/speeches/hs2-6-monthly-report-to-parliament-november-2023 [Accessed 6 Feb. 2024].
[1] 2019 prices
[2] 2023 prices
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