Ex Rail Freight Boss Speaks Out on HS2 in Scathing Attack on Project Costs and Abilities

UK – Be careful what you wish for seems to be a suitable adage for those proponents of the HS2 rail project after Lord Berkeley, the former Chairman of the Rail Freight Group (RFG), and former Deputy Chair of the Oakervee Review commissioned by the Government to evaluate the future of HS2, decided to issue his own 70 page report evaluating the status of the scheme and his suggestions for its future.

Regular readers will be familiar with Tony Berkeley’s forthright opinions on rail transport, and he is considered by many to be one of the leading experts on the way railways should be run, so his comments on what is now the way forward for services in Britain beg full attention. Lord Berkeley, and the rest of the Oakervee panel, appointed only in August, were dismissed effective 1st November 2019 amongst internal arguments and allegations Oakervee himself ‘fiddled with the numbers’.

HS2 has been dogged by controversy since the outset. Chair of the government’s own review, Doug Oakervee, allegedly said after it was commissioned that he had insufficient time to consider alternatives. The minister responsible said the review, begun in August 2019, would be available by ‘the end of Autumn’, a statement then countered by the prime minister who said Oakervee could report ‘when ready to do so.” Shortly after the panel was dismissed before the review was finalised!

Berkeley argues in his review that HS2 is the wrong solution to the challenges of improving rail services in the Midlands and North, and that there are alternatives which are cheaper and quicker to implement and can provide commuters in these areas with better daily services. Improvements to the lines to and from London can be delivered without building a new line and causing untold damage to businesses and residents as well as the environment.

Meanwhile logistics groups have expressed concern that the new high speed lines may actually damage cargo timetables as the two systems, passenger and freight, are incompatible on the same lines given the slower speed of both bulk carrying and intermodal trains compared with commuter traffic. Claims that HS2 will free up capacity for freight traffic are dismissed by Berkeley as possibly just an illusion with no published policy details, and anyone doubting his status to make such comments should read the foreword to his review listing his qualifications.

One of his major criticisms is the impossibility to produce a genuinely independent report, stating that he was prevented from attending important meetings during the Oakervee Review, which restricted his ability to carry out his role as Deputy Chair effectively. Following a leaked draft of the Review’s report, which he was unaware of, Lord Berkeley therefore has collated and evaluated all of the evidence available to him and conducted his own assessment of the business case for the project.

Based on independent estimates of costs and benefits, he states that the Benefit Cost Ratio (BCR) of HS2, has fallen well below the break-even point of 1:1 and, with a detailed assessment of benefits, could fall to less than 0.6:1. This means that the taxpayer would receive only 60p of return for every pound that is spent on the project. This is in stark contrast with the claimed BCR of 2.3:1 (£2.30 gained for every £1 spent).

It is this figure which has long been used by HS2 Ltd to justify continuing with the project and has helped the project ensure progress through the various parliamentary stages (Phase One and 2a). Unfortunately, Berkeley says, it has become clear that the HS2 analysis is flawed, being based on revenues from very high train speeds and 18 trains per hour, which he says are unachievable anywhere on the continent or Japan, continuing:

“It is my belief that there is overwhelming evidence that the costs of the HS2 project are out of control, the benefits are overstated and that it potentially will not be delivered to Leeds and Manchester for another 20 years. There is also substantial evidence of poor project management and governance, and no sign that this problem will be resolved by the public bodies responsible for its delivery to give stakeholders and Government comfort that it is wise to spend over £100 billion on one railway project.

“From the evidence I have seen, I believe that Parliament was misled on the question of HS2 costs and that it is highly unlikely that, if it had been given the real cost figures by the Department for Transport, it would have passed the legislation to allow this project to proceed. The inaccuracy of the figures given to Parliament are such that the project HS2 Ltd. is currently pursuing does not reflect the endeavour approved by Parliament.”

Lord Berkeley’s report says the current situation now leaves ministers with only two options:

• Recognise that the project is more than three times over budget and begin a process of approving a new budget for the HS2 project at an estimated cost of £107 billion, with or without a reduced specification and accept that the benefit cost ratio will be substantially decreased.
• Build only the small parts of HS2 within the Northern Powerhouse area and cancel the other parts of it; commit to upgrading existing Network Rail lines in the NPH and Midlands Connect areas. This would deliver earlier benefits to local and regional services and save the Government around £50 billion.

This latest rail against the controversial project will fuel the argument further for the government to again review the situation. Already critics have said that for the sums involved Britain’s rail network could be completely electrified and returned to a pre-Beeching status with many smaller lines reopened.

Whether this is the case or not the argument that flights between some of the key points are far cheaper that the rail fares on offer with fears that tickets for passenger transport likely to be even higher in a bid to repay the investment in HS2. This of course is often countered by the climate change argument with aircraft pollution many times higher than rail travel.

HS2 also faces the possibility of a court case in September as a contractor, which says it lost out on a £1 billion station construction project because of ‘procurement blunders’, could potentially produce a £100 million bill for damages. Add to that an HS2 estimate that there may be delays of up to seven years and a rise in costs from the originally projected £56 billion to £88 billion and things do not look too rosy. HS2 appears to many to be running away like an out of control express, if Liam Neeson appears on the footplate, get out of the way!