Faisal Islam: Why a full HS2 line could still be built despite the latest fiasco

An important development from the financial markets: Faisal Islam: Why a full HS2 line could still be built despite the latest fiasco6 minutes ago Share Save Add as preferred on GoogleFaisal IslamEconomics editorGetty ImagesHS2 was, appropriately enough, at the ultimate Y-junction. In one direction lay the entire cancellation of HS2, despite the viaducts, tunnels, verges, bat protection facilities, and floating platforms that have already been built. In the other direction lay spending the money on completing a slowed down, stump of a line, that would only connect west London with Birmingham by the late 2030s.

The HS2 boss Mark Wild has calculated that the costs of cancellation and realistic remediation would be in the same range as completion from this point — about £60bn. So that's £100bn all in on the world's most expensive railroad. A Y junction was the original shape of the line as envisaged in the first plans for a line from London to Birmingham that branched to Manchester and Leeds.

Economic Details

The purpose of the original plan was practical — capacity and speed, but also strategic. The UK is a long, thin country that excels in the service sector, and connecting these sources of growth would lever in investment and create agglomeration effects that would help rebalance Britain's lopsided economy,The whole point of the project was the benefits to the rest of the country. After the scrapping of the Leeds leg, and then the Manchester leg, the top DfT civil servant wrote: "The previously stated strategic case for HS2 — to generate transformational benefits and rebalance the economy by joining and Midlands with London — no longer applies".

What are we left with? A line strategically justified as helping northern England, which now stops at Birmingham, its budget blown south of Birmingham partly to hide it from shire eyes, with a a connection to the West Coast Main Line (WCML) which is not expected to run until between 2040 and 2043. And in order to keep the project going, it will be slower, later, and risks meaning worse services beyond Birmingham.

HS2 trains were specced for the straight HS2 lines, so when they transit on to the WCML, they will not be able to tilt around its bends and will run slower (110 mph) than the existing Avanti pendolinos (125 mph). This is a real crisis in the making. The WCML is full up, with up to 15 trains per hour, and is the busiest mixed use line in Europe.

Analyst Views

This is not going to work, and everyone knows it. The WCML was built in the 1840s and we are still using it as a piece of critical infrastructure. And so this is why, paradoxically, the epic failure of HS2 might in fact mean the Western leg gets built in full.

The government is already committed to Northern Powerhouse Rail, using HS2 legal powers and the route in central Manchester. After the costs of London-Birmingham and Cheshire to Manchester are spent and sunk, completing the line from Birmingham to Manchester Airport would represent maximum benefit for the least cost.

Financial markets are tracking the development closely as investors assess the likely impact.