We have noticed a plethora of different analyses and realisations of the impacts of the recently-announced HS2 Phase 2 cancellation. Initially, there was a new article about it almost every day. Lately, it has slowed to every week or two. So, on top of our own analysis, we add a summary of these other predicted impacts.

In brief, the government’s new plan announced on 6 October 2023 is for HS2 Phase 1 is to reach all the way south to Euston – provided private finance picks up the tab for Euston station’s expansion. Old Oak Common will not be the ultimate terminus – although the engineering timescales mean that it will be the temporary terminus for a significant period.

The Prime Minister stated that the government will complete the line from Birmingham to Euston, with HS2 trains continuing to and from Manchester on existing rails. The net journey times between Manchester, Birmingham and London will still be cut by 30 minutes.

Our earlier four part series on HS2 entitled High Speed Buffers identified potential problems to completing the line – those buffers just got closer.

Euston HS2 station

London looks like it will indeed get a smaller than planned 6-platform HS2 station at Euston. Quite how that will be done safely, within budget or on time, whatever ‘on time’ means now, is questionable.

The current nominal Euston HS2 area for development could be greater, as the Government and HS2 Ltd had acquired more land on the western side than is necessary for the now-reduced HS2 station. However, it appears that there may also be legal issues with the announcement. The Compulsory Purchase Order powers used to acquire land under the HS2 Phase 1 Act are only valid for land used for railway purposes: it does not include re-purposing land for oversite development (OSD). OSD over a railway is allowed, but not where there isn’t a railway.

A 6-platform Euston makes reinstating the originally intended 10+ tph HS2 service levels later much harder and much more expensive to achieve. However, for a Government looking to save money right now, this means more development land at Euston to sell – if this is indeed legal.

It appears that Sunak’s team might have calculated the Euston station cost estimate incorrectly, as the level of over-site development and funding contribution from it is widely considered to be undeliverable. We are hearing that developers can’t understand the numbers…

There are several basic issues facing any developer at Euston:

Lack of agreed or funded railway approach to Euston. How could a developer afford to pay up-front for a multi-billion pound railway approach before receiving money back from development? The Government’s visible dislike of London will not help such matters.

The Birdcage scheme previously approved by Parliament is ruled out.

Dispersal of passengers from Euston is further compromised by the lack of Crossrail 2 and the cancellation of the interchange tunnel to Euston Square.

Doubtful legality of selling on Compulsory Purchase Order (CPO) properties purchased for a different purpose.

Furthermore, oversite development at Euston may also interfere with the “protected” view of St Paul’s from Primrose Hill. The sight-line basically goes across the centre of Euston station on a northwest – southeast diagonal. There are other sight lines nearby. This apparently trivial consideration actually carries a lot of planning weight.

In analysing alternative railway and development options at Euston a few years’ ago, one of the contributing authors created a sight-line map, with the light blue line below indicating the St Paul’s – Primrose Hill view corridor:

Euston HS2 protected view sight lines. JRC

Euston’s HS2 station, and dwell times

The number of HS2 platforms is crucial – how many to start with, and whether to include any provision for expansion. There’s an interface issue here in terms of how quickly it is possible to move people off the platform. This ultimately determines how quickly the train can be prepared for its next journey and how soon outbound passengers can start boarding. It may be possible to design well integrated train-platform-entry-exit system to turn a train around in under 30 minutes – 12 tph with 6 platforms. The Shinkansen part of Tokyo Station delivers 10 tph with only four platforms, although the usual Intercity metric is 45 minutes for a long-distance train.

Euston approaches

There is still plenty of scope for Euston approaches via HS2 – still under the control of HS2 Ltd – to be out of control on cost and timing, with knock-on effects on Network Rail (NR), who had been worried about this all along. There is an engineering case for NR to be given control over all works, and to work in close concert with the Development Corporation about oversite development because badly-sited piers can prevent a workable railway layout.

Old Oak Common as HS2 terminus

Whilst it is still planned for Euston to be the eventual terminus of HS2, Old Oak Common will be the temporary terminus for a number of years.

The latest analysis for Old Oak Common as a terminus is expected to turn 6-7 tph in realistic conditions, maybe 8-9 tph if the trains are only doing the short run to Birmingham. Having seen the outline design in a recent presentation, we anticipate that vertical transport – lifts and escalators – will be a major constraint. Transporting people from level -3 (-8 in normal building terms) to and from ground level, then most of them up to the overbridge will present a massive challenge.

We estimate that Old Oak Common could handle 10+ tph, but that would require train management to be spread back along the length of WCML. This would ensure that Old Oak Common does not have to be the catch-all station used to take recovery time in case of late arrivals, as Euston is (and inefficiently so). It currently takes 35-42 minutes to turn a train round at Euston, so it is basically a vast and inefficient parking lot for the entire WCML. Re-gearing HS2 for more efficient operations would push these inefficiencies back onto the classic network.

TfL estimated that HS2 terminating at Old Oak Common will require five additional Elizabeth Line train sets. However, the option for a run-on order of the present train build expires fairly shortly. Political transport instability will make the requisite negotiations between the DfT, Treasury, TfL, and GLA even more difficult than they might otherwise have been.

Old Oak Common as it stands now

Old Oak Common station construction is currently 18-24 months behind schedule. The station box still needs plenty of digging out, and the spoil tunnel to Willesden is further from completion than it should be. Thus the plan to launch the first Euston tunnel boring machine (TBM) in August was inevitably delayed.

The March 2023 Euston redesign (again) announcement had plenty of time to get on with things without causing real delay, although the contractors have now over-demobilised. In addition, maximising oversite development requires more in situ cast concrete. This means a much lower proportion of prefab concrete and steel that was the main focus of the “current” design in progress and again slows construction.

Impact on the West Coast Main Line

Keeping just HS2 Phase 1 fails to provide a complete railway between London and Crewe where lines diverge. The West Coast Main Line (WCML) would have benefited from congestion-free tracks 5 and 6 all the way. HS2 Phase I only gets to Handsacre (near Lichfield), so creates new capacity constraints on the WCML between Lichfield and Crewe. This will be a particular problem for freight operations which were aiming for a clear run to Crewe. There may have to be alternative line upgrades for freight trains taken forwards via Shrewsbury and Uttoxeter. However, keeping just Phase 1 will mean some Manchester expresses continue to run via Stoke-on-Trent, thus lowering the capacity risk between Crewe and Manchester.

Furthermore, there will need to be changes made to the WCML to accommodate 400m long trains. Manchester Piccadilly, Glasgow Central, and probably others will likely need at least 140m long platform extensions, along with consequent layout and signalling changes. All of which will be difficult and expensive, unless the 400m trains are split at Crewe and Carlisle.

Whilst HS2 infrastructure will allow high speed running, on WCML, the trains will be limited to 110mph, unless work is done to increase speed limits for non-tilting trains to 125mph; something that has been done on some parts of the line.

Impact elsewhere

Cancelling ‘the rest of HS2’ kills the HS East Midlands spur, which offered a fast route between Birmingham and Nottingham. Will anything be offered in its place? We doubt it.

Phase 2 of HS2 was expected to create railway capacity to take half a million lorries a year off the road annually, a feat which haulage firms say will now be impossible. The obvious result will be more motorists sitting in traffic jams and major backlogs on already congested roads and motorways. This will negate any benefit of the Prime Minister’s plan for drivers to reallocate billions from HS2 to road upgrades – a single freight train removes an average of 129 lorries from Britain’s roads.

Unaddressed engineering issues

There remain many unaddressed issues, such as the nature of signalling on HS2, train selection and number of consists options, fares and pricing. Everything we have read to date assumes ETCS Level 2 signaling and automatic train operation (ATO) for the line. Trains have been ordered, although we all believe this order will need to be revisited, as with no Phase 2, 8-car trains are likely the wrong formation.

As HS2 Phase 1 is in effect a diversionary route for WCML trains, it can command a higher fare and be successful – unless you are taken out of the way to Old Oak Common not to Euston.

This BBC article provides excellent images, graphics, and maps of what has been built so far for HS2.

PM’s HS2 Euston plan almost identical to the one he rejected as Chancellor

The Prime Minister removed HS2 Ltd from running the Euston project, citing mismanagement and spiralling costs. He said Euston needed a private finance partnership to keep down costs.

But Allan Cook, former chair of HS2, said that then-Chancellor Sunak was offered a near-identical private partnership plan for the Euston upgrade in 2020, but he had rejected it. Lendlease, a large Australian property developer, had offered to partner with the government to construct Euston HS2 station. Had the Chancellor approved the plan, the station would be much further along. Furthermore, the government’s Oakervee Review inquiry at the time found that such a private finance partnering on the HS2 project could save taxpayers “several billions of pounds”.

Instead, costs of the new station and the link to Old Oak Common have ballooned from £2.6 billion in 2020 to the £4.8 billion current figure.

Recently, Sunak said: ‘There must be some accountability for the mistakes made, for the mismanagement of this project”, whilst not mentioning his own direct role in the oversight of the project.

Furtheremore, Network Rail had no foreknowledge of the Prime Minister’s announcement or of the alternative schemes proposed despite there being plenty of existing rail projects that have not been funded.

Just playing with money…?

Why the sudden change of heart? Quite possibly, money.

It’s not just playing with costs, but with phasing as well – eg releasing money that would have come from future loans for long term transport capacity investment into day to day spending on potholes. And short-term bus subsidies.

Essentially, the £36bn that Sunak is committing comes from the pre-budgeted Northern Powerhouse Rail (NPR) and HS2 sums – and ignores what the real sum would have amounted to with HS2 cost over-runs. In his sweeping list of other projects, it isn’t spelt out whether some of those would have been already budgeted as other transport spend.

It would be useful to do an estimate of the net expenditure that was already budgeted across all these projects, and hence what are the net savings to the Treasury. Plus expenditure savings from the delayed spending which arises.

The Prime Minister can re-allocate the net savings, to be used to fund tax cuts in the run-in to the General Election, whilst making a promise to use £36 billion on numerous schemes in the Midlands, North and Wales. The £1.1bn spending on towns recently announced is also a pork barrel mainly for marginal constituencies, so there is a large amount of pre-election preparations under way.

However, there are no net savings pre-election to fund tax cuts, as they are currently viewed as inflationary by economists, and as such are politically undeliverable.

…and then the politics

What does this mean for Labour? Sunak has handed a poisoned chalice to Starmer & Co. – should Starmer cancel the Sunak promises for lots of other schemes, or continue with them, knowing that the Treasury is running on ‘empty’ in the cash tank?

Regarding the immediate HS2 spending, Phase 1 is still eating up huge amounts of money beyond the committed budget, so that reduces spending headroom for any government going forward.

Any solution is likely to involve the time-old method of delaying spend – which almost always increases costs. Labour would need to prioritise what their top projects are.

Labour could choose to back the NPR elements, and possibly give another bonus to Manchester Mayor Burnham. They might think about restarting Phase 2a as the WCML is otherwise lacking effective tracks 5 & 6 all the way to Crewe as mentioned earlier. The railway industry would need to argue that element strongly. Phase 2a powers are good until late 2026, and can be extended year by year by the Secretary of State, for up to 5 years.

This would depend on the present government not being utterly vindictive and deliberately seeking to end those powers (and/or start a fire sale of property purchased for HS2). However that is less likely, as it would raise potential legal issues, penalties, and costs for the DfT.

HS2’s cashflow

HS2 doesn’t directly consume much cash yet – it is using borrowed money, so cancelling Phase 2 will only reduce the public sector borrowing requirement. Although obviously the carrying charges will eventually work their way through to a higher cash requirement. Because of the way that the government budget is constructed, it is transport, then railways (of all stripes), then NR which take the hit on that.

The most recent estimate of bringing HS2 to Euston is around £4.5 billion.

It will be interesting to see if and how any HS2 funds released find their way to local government spending, which comes out of a wholly different silo to transport. This applies even more to any Economic Development Corporation (EDC) – will it be a transport body or a local government one? It matters.

A sober assessment of the East Midlands leg showed that because it missed all the major settlements other than Sheffield (only a near miss), the classic railway was likely to compete with it very effectively on door-to-door timings.

Real capacity relief on WCML only happens if HS2 goes to Crewe (Phase 2A). The WCML into Manchester may now be the most congested rail line in the country, which HS2 from Manchester airport to Piccadilly would help resolve.

Barnett formula

Under the Barnett formula arrangements for Wales and Scotland, there will need to be an offsetting amount of money allocated to Wales and Scotland to reflect the post-HS2 spend in England. Sunak’s suggestion of electrifying the North Wales main line and some other spend in South Wales, and proposed dualling the A75 in Dumfries & Galloway in Scotland, are existing well defined projects. So rather than being a funding allocation to the Welsh and Scottish governments (which aren’t Tory), they are targeted on areas which see some Conservative voting support.

Borough of Camden loses

Under Sunak’s plan, HS2 Ltd would lose control over the Euston station build, with a separate team set up as an Economic Development Corporation (EDC) to do it – HS2 Ltd being tarred with ‘mismanagement’ in Sunak’s speech. Camden would lose because the responsibility for delivering ‘relevant’ local infrastructure shifts to the EDC not them, and the Treasury and Secretary of State get to decide what ‘relevant’ means. This would stop the Borough of Camden receiving the large Section 106 payments they were demanding.

Sunak also claimed that his Euston plan would release much more cash to fund projects outside London. This would then require a large over-site development.

Politically, Euston is in Sir Keir Starmer’s constituency, so this gives him no local wins. Unless he gives more locally ‘relevant’ scope for infrastructure to LB Camden if Labour won, which could come back to bite him in two ways: as the local MP, and as monies not moving away from London as promised.

The advantage for the Government is that Euston station expansion budgeting would be far easier with a Development Corporation and saving the approximately £1bn on s.106 grants that wouldn’t have to give to Camden (at moderate oversite development), whilst incentivising maximum oversite development.

Deferral of Euston HS2 station will lead to lost tunnelling efficiencies

The government’s decision to delay completion of the HS2 Euston terminus by two years will abandon tunnelling efficiencies, according to a New Civil Engineer report quoting the project’s chief engineer.

SCS is the Skanska Costain Strabag JV joint venture which is boring the pair of 14.3km Northolt Tunnels, as well as the 7.2km Euston tunnels between West Ruislip and Euston. The magazine asked SCS’ head of tunnelling Michael Greiner about the difficulty of working amidst the continual chopping and changing chaos of HS2. He said it brings many changes to the workflow and work force schedule adjustments. Planned efficiencies can no longer be used, and that the changes were causing insecurity in the supply chain. For instance, tendering contractors save time and money by moving the workforce from one contract to another, re-use existing materials or temporary works from one contract to the next”.

Continuity of work, such as sequential contracts, is almost always the cheapest way to work; conversely stop/start is nearly always more expensive.

Another of the co-authors held a long discussion with Maddelyn Sutton, HS2’s Head of Engagement, and Sir Mark Worthington, the HS2 Construction Commissioner who was formerly Margaret Thatcher’s Private Secretary, and SCS. All say that they are completely in the dark about the implications of the Euston changes on their tunnelling contract between OOC and Euston.

The purpose of reducing the number of platforms to 6 together with train frequency is to avoid grade separation… enabling two tunnels to be bored to the portal.

Sir Mark and Maddelyn agreed that primary legislation will be required for the change. They all also thought that the tunnel contract will need to be renegotiated to continue under SCS, but this renegotiation will flow from the new legislation. SCS pointed out that the omission Phase 2a to Crewe will also need primary legislation because the Phase 2a Act has already been passed by Parliament.

As a result, there is enormous uncertainty about the details and what exactly will be required, when, and how much it will cost. It is important that HS2’s current notification process in Camden to CPO subsoil of residents’ homes for the tunnelling is halted until the uncertainty is resolved…

SCS are only currently proposing only a one-year suspension of tunnelling work starting next summer, with their tunnelling contract work proceeding normally at present.

Euston Square link a linchpin to creating more transport capacity

The Euston Square link is part of the TfL Development Agreement with HS2 – for the expanded Underground station, so it will be problematic for the government to walk away from it. Unless they do not build HS2 to Euston at all.

One of the authors had worked at TfL on the HS2 – Euston negotiations. Essentially, if there be no direct interchange between Euston HS2 and Euston Square stations, a fair bit of the argument against Old Oak as a terminus falls away.

Furthermore, completion of the upgrade of the sub-surface lines serving Euston Square would create quite a lot of spare capacity on the Metropolitan, Circle, and Hammersmith & City lines. TfL were trying to make these lines more attractive to HS2 passengers to destinations that would otherwise be served via Crossrail. However Crossrail’s surprisingly popularity and supercharged ridership mean alternate transport capacity will be needed.

But this would only work by building the direct Euston – Euston Square interchange, currently an out of station (OSI) interchange across busy streets. The modelling suggested that TfL would have achieved that objective.

The Government removing the Euston – Euston Square pedestrian link leaves the ball in London’s end to foot the bill should it feel necessary for transport purposes.

The DfT policy paper outlined a plan to “strip back the Euston project and deliver a station that works”. That is, building a smaller six-platform HS2 station, with more space given over to development. The plan estimates that as many as 10,000 luxury homes could be built, which would be five times as many as at the successful King’s Cross railway lands.

So this new railway line, which would add crucial network capacity and economic stimulus, is now being transposed into a development deal. Sixty acres of land, much of which had been compulsory purchased by DfT via the 2017 High Speed Rail Act, will be sold-off to a Development Corporation, similar to the established for the privately-run King’s Cross lands development.

The DfT plan stated that the sell off of HS2 railway lands to developers would raise up to £6.5 billion, which it claimed the government would invest into the needed projects for people and communities around the country. But there is little expectation that much, if any, social housing would be included at the London terminus.

The Euston works could last to 2040. Which is a cruel irony for Camden residents and businesses that have endured disruption for years already – with homes demolished, businesses closed, and open space destroyed. In addition, converting land compulsorily purchased for railway purposes to allow commercial development will further enflame the situation.

We understand that the tunnels’ alignment and design between Old Oak Common and Euston are complete and that they are not dependent on the Euston HS2 station design. The tunnel design maximises operational efficiency and flexibility to service any number of Euston platforms. The major works required to construct the Euston Approaches tunnels, railway cutting, and concrete box are now paused until 2026.

There may well be issues related to any changes in agreements signed for HS2, which could be just the tip of the legal iceberg. Re-allocation of the nominal £36bn in cancellation savings is also questioned by the Institute for Government’s HS2 is a fiasco of change and churn article.

Meanwhile the Value for Money (VfM) of the remaining HS2 Phase 1 is not glorious either, as the DfT Permanent Secretary has acknowledged to the House of Commons Public Accounts Committee.

HS2 Phase 2

£1.25bn has been spent to date on the scrapped Phase 2 of HS2. The Government is already planning on removing Phase 2 safeguarding and selling the now ‘surplus’ land from next summer. However, there is no hint yet that the Government would go for a vote to extinguish the Phase 2a Act.

Selling HS2 lands effectively makes it much harder for Labour to reinstate the scheme and leaves a minefield of costly choices behind.

Birmingham region mayor Andy Street has apparently been given the nod by the Government to look at privately financing elements of Phase 2. For instance, Phase 2a is far easier (cheaper and more shovel-ready) to complete than Phase 2b or 2 East Midlands Parkway, and no Euston slots are required for them either.

Map of HS2 Originally planned Phases

What happens to Network North now?

The proposed Network North plan is the basic Northern Powerhouse (NPR) schemes, including Hull electrification and a new or improved line to serve Bradford – plus an electrification sop to North Wales. The nature of the NPR alignment may mean that there are missing billions of pounds, which might still be needed to do a proper underground scheme across Manchester to Piccadilly station – a problem for Mayor Andy Burnham, and perhaps for Keir Starmer should he become Prime Minister in 2024, as widely expected.

Northern powerhouse planned connexions with h2s

It is unclear whether this is really NPR money that would have been spent or committed in any case – it could possibly be a nett Treasury saving).

Here is a useful summary of the Network North “indicative examples” proposed by the Government. Note that most are not costed, oven-ready, or with powers to be built, many need business cases to be prepared or signed off, so they are really a public wish list by the present government and not committed projects.

The Midlands and North of England are set to benefit from £150 million of new funding to improve bus services over the next financial year, the Transport Secretary announced on 23 October. This is apparently just the first spend – further funding allocations are expected to be announced in due course.

Whilst local authorities and operators will be able to decide how to allocate the funding, the Government claims it is sufficient to support up to 25 million miles of new bus services across the North and Midlands for a year. Further funding allocations of £1 billion worth of new bus service funding across the North and the Midlands as part of the Network North Plan are set to be announced.

The funding comes from the government’s reallocation of HS2 funding as part of Network North, which they claim will benefit more people, in more places, more quickly. Whilst this funding will result in quicker transport improvements, it will not move them more quickly, nor so anything to address the railway’s chronic overcrowding.

We further note that there is no mention in the Government’s press release on this of its Net Zero commitments, nor the environmental or societal benefits of increased public transport

HS2 cancellation to £1.3bn local road upgrade pledge unravels

As part of its Network North announcement, the Government would redirect money from the scrapped HS2 Phase 2 totalling £1,320m for road schemes in all parts of the country. The DfT has backtracked on this claim as the Prime Minister soon insisted that schemes in its Network North announcement were just ‘examples’ of what might happen with cash saved from the curtailment of HS2. Whether it represents full or top-up funding, how many projects the cash covers, and the basis upon which it calculated these sums all remain unclear.

Interim Conclusion

This is unfolding into a debacle. We make the comparison to Beeching, although there is a difference between closing existing railways and not building new ones, even one that until recently had support from across the political spectrum.

HS2 is a brand new trunk railway, bringing much needed north-south capacity through the centre of the UK. And relieving the already overcrowded West Coast Main Line.

Whilst the cancellation of HS2 beyond Birmingham will be a disappointment to many, the botched nature of the announcement gives a strong impression that the decision had not been thoroughly thought through before being made.

That the Network North document had to be changed within 24 hours of initial release is indicative of the lack of clear thinking and in-depth analysis of the full ramifications of the changes, so we have no clear idea of what is going to happen or of the degree of further changes.

Given the time and effort need to prepare (but alas, not proof-read) the HS2 and Network North supporting documents, it is clear that this wasn’t a last minute decision as Sunak was trying to claim, but had been prepared earlier. However, he did not brief his own Cabinet on this HS2 decision, which is further evidence of rushed imprudence. HS2 planning has been under way for a decade – it will take years to unravel it and its myriad agreements.

This appears to be a decision based on short-term political gain, and questionable even on those grounds. Only time will tell what may or may not be salvaged.

Many thanks to the combined contributions of the Silver Seven LR Dream Team of experienced commentators for the insights provided in this piece.

He’s Back! – The feature header image shows Dr Beeching pointing at Manchester, which will not now have HS2 arriving at its Piccadilly station.

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