In a tough decade for the UK, maybe of most dispiriting story is that of HS2.
HS2 is the name for a high-speed rail line that was to run from central London to Birmingham, Manchester, and Leeds. With a top speed of 360 kph, the line was to run faster than France’s TGV. Journey times from London to Manchester were to be cut from two hours and six minutes to one hour and ten minutes.
Speed is one thing and capacity is another. HS2 was to be built on an entirely new line. This would have the added benefit of taking London-Manchester traffic off London’s congested commuter rail lines. A secondary benefit is that HS2 would have enabled much more throughput on the existing network. The first phase was due to start service in 2027.
HS2 was important politically because it showed the government’s intent to boost the economy of the north of England. It was first conceived in 2010 under the then-Prime Minister Gordon Brown. It evaded George Osborne and David Cameron’s austerity cuts. And it had the backing of Theresa May and Boris Johnson.
Despite the backing of prime ministers, year by year, the project was pared back. The first bit to go was the spur line to the Channel Tunnel. Then went the spur line to Sheffield and Leeds. Finally, in October, Rishi Sunak announced that the line from Birmingham to Manchester wouldn’t be going ahead.
The version they have landed on is a sad vestige of the original. It won’t link to the cities of the north. Its Euston station will be smaller and will not include an extension to the Northern Line tube. And because part of HS2 will now run on congested old lines, its capacity will be reduced from 18 trains per hour to about eight. Another casualty is the old commuter lines, which will now be dedicated partially to HS2 rather than increased local capacity.
Some 14 years of work had gone into HS2 when the Manchester leg was finally cancelled. What happened?
The simple answer is that the Manchester leg was cancelled because it was too expensive.
HS2 is forecast to cost £200 million per kilometre. This is compared to an average of £25 million per kilometre for European high-speed rail, according to a report from the European Court of Auditors.
The estimated total cost of the project is £100 billion. The original estimate, from 2010, was about £20 billion.
Money was one problem and time was another. From an initial forecast completion date of 2023, it’s now forecast to be completed by 2040.
High-speed rail linking major cities like Manchester, Birmingham, Leeds and London is a great idea in principle. It makes the nation smaller. It makes it easier for people to collaborate. It boosts economic growth. And it’s good for the environment. That’s why high-speed rail has proliferated across Europe in Spain, Italy, France, Germany, Belgium and the Netherlands.
Why does high-speed rail make sense in France but not England? It comes back to cost. At £200 million per kilometre, it gets very hard to justify high-speed rail. The benefits don’t exceed the costs.
Why does high-speed rail cost more in England than in European or Asian countries? It comes back to the point I was making last week.
The UK — by contrast to high-speed rail enjoyers France, Italy, Belgium, Spain, Germany, China, South Korea, and Japan — didn’t design and build HS2 itself. The UK’s method of delivering infrastructure is to pay others to do it on their behalf.
When it comes to basic infrastructure like schools, that’s not such a problem. There’s not a huge cost or quality difference between outsourcing the project and having the state run it in-house.
Where outsourcing does become a problem is with complex projects. With complex projects, the difference between having the state do the work, and paying others to do it on the state’s behalf, can be enormous.
A big part of the problem is coordination costs. Coordination is about making sure everything is done in the right sequence. The bigger the project, the more complex the sequence. Outsourcing projects makes coordination much harder.
Here’s how Brian Potter described the challenge of complex projects in his newsletter Construction Physics:
“… as building complexity increases, the costs of verifying construction has been done correctly rise SLOWER than the potential savings from coordinating – the costs of verifying rise linearly with the number of building elements, whereas the savings from coordinating rise with the square of number of building elements (since each new element needs to be coordinated with every existing element).”
High-speed rail projects are about as complex as construction projects get. HS2, for example, will require new stations in central London and Birmingham, tunnelling through Oxfordshire hills, interfaces with other modes of transport such as the tube. Everything must be right.
How did it come to be that the UK can’t build a rail line?
It seems to me that this comes from the intersection of two trends.
The first is the trend toward privatisation and the outsourcing of non-core government work. This has been ongoing since the 1980s.
In the 1980s, the privatisers had a point. At that time, the state-owned and managed everything from steel factories to shipbuilders and carmakers. In Ireland, the state-owned hotels, ferries and sugar factories. None of this made any sense.
But the privatisers went too far. Not all functions of a state can be provided more efficiently by the private sector. As I wrote last week, outsourcing construction comes at a cost. And the more complex the project, the greater they cost.
The second big trend that doomed HS2 is the accretion of regulations around construction. Construction is more highly regulated than it was in the 1990s, when the Channel Tunnel was built. There are stricter rules around the environment, archaeology, health and safety. The planning system is Byzantine. All of these rules and procedures have made projects more complex than they used to be.
In summary, the accretion of rules has made projects more complex, right at the time that the UK (and Irish, and US) governments have lost their ability to deliver complex projects.
Next week, I want to write about four things the state will need to change if it is to regain the ability to do hard things.
