It’s hard to imagine that in 1825, Britain led the way with the first passenger train service between Liverpool and Manchester. Almost 100 years later we again made history when the Flying Scotsman, the fastest stream train in the world made a record breaking journey between Edinburgh and London.

Fourteen years ago, not quite 100 years since that Flying Scotsman’s journey, another Scotsman, then-Prime Minister Gordon Brown, envisioned a high-speed rail line that would transform the UK’s transport infrastructure, marking what he called a “momentous day in the long and glorious history of British railways.” Fast forward to today, the dream has turned into a nightmare. The project, known as HS2, has been deemed “unachievable” by the Infrastructure and Projects Authority, with costs spiralling to an astronomical £100 billion.

But what led us here? This blog post aims to dissect the core issues behind the cancellation of HS2, focusing on the exorbitant costs and the ambiguous benefits.

The initial £20 billion investment promised by Gordon Brown now seems like a distant memory. According to Britain Remade, the HS2 stretch from London to Birmingham alone would cost £396 million per mile, making it one of the most expensive railway projects globally. In contrast, similar projects in France cost just £46 million per mile.

But it’s not just HS2 which has proven costly. Crossrail took a lot longer than originally planned and was billons over budget. The upgrade of the Trans Pennine route was expected to be done by 2019 at a cost of a measly £289 million. It is still not finished, costing £10bn so far.

Jeremy Hunt, Chancellor of the Exchequer, speaking at the 2023 Tory conference in Manchester questioned why building high-speed rail in the UK costs nearly 10 times more than in France.

One of the most formidable hurdles for HS2 was the UK’s labyrinthine planning bureaucracy. Unlike the more streamlined processes seen in countries like France, the UK’s system requires a multitude of consultations, environmental assessments, and public hearings. These processes can take years to complete, and every delay only adds to the overall cost of the project.

Underlying this complexity is the difference in legal frameworks between the UK and many European nations. In the UK, common law protects individual property rights, making it a lengthy and expensive process for the state to acquire the land and permissions needed for such large-scale projects. This contrasts sharply with countries operating under Napoleonic law, where the state’s right to initiate infrastructure projects is often assumed, cutting down significantly on the time and money spent in the initial stages of development.

This maze of planning requirements not only slows down the progress but also adds layers of bureaucracy that contribute to ballooning costs. Even before a shovel hits the ground, the project’s budget could have escalated due to these procedural requirements, making UK infrastructure projects, like HS2, considerably more expensive right from the get-go.

Another contributing factor to the high costs is the UK’s construction sector’s low productivity which has remained consistently below the UK average, and dramatically below other sectors such as automotive. The sector is marked by a lack of collaboration, poorly managed supply chains and a focus on extensive contracts and legal redress rather than the collaboration and deep integration which is so successful in other sectors.

The reliance on legal redress as a fallback not only inflates costs but also consumes valuable time, leading to project delays. This adversarial approach saps resources that could otherwise be invested in innovation and process improvements, which are essential for completing projects like HS2 efficiently and cost-effectively.

The sector’s inability to shift its focus from contracts to collaboration has not only impacted HS2 but is also indicative of a larger issue that plagues the UK’s construction industry. Until this is addressed, the productivity paradox will continue to be a stumbling block for infrastructure projects across the country.

Not only has HS2 suffered from a reliance on complex contracts, those contracts have also been inadequately drafted with little to no incentives for speed and efficiency. The primary focus of these contracts often leaned towards compliance rather than encouraging innovation or cost and time-saving measures.

The initial allure of HS2 was not just about reducing the travel time between Manchester and London but also about increasing the network’s capacity. By adding dedicated high speed rail line, this would free up capacity on other lines. However, as costs escalated, the tangible benefits became increasingly murky. This lack of clarity made it challenging to justify the enormous financial outlay, especially when other infrastructure projects like Crossrail and the Edinburgh tram system have also faced delays and budget overruns.

As if the challenges of planning bureaucracy and poor productivity weren’t enough, the UK’s burgeoning public debt dealt the final blow to the already beleaguered HS2 project. The economic turmoil wrought by the pandemic and the subsequent energy crisis left the UK Treasury’s resources severely depleted. Since March 2020, the UK’s government debt has surged by 40%, reaching a staggering £2.6 trillion. This has pushed the nation’s debt to over 100% of its national income for the first time since the early 1960s.

Compounding the problem is the nature of this debt. Nearly a quarter of it is indexed to inflation, which means as inflation rates rise, so do repayments. Britain is now spending more on servicing its debt as a percentage of government revenue than any other developed economy with the yield on 30-year government bonds hitting its highest level in two decades recently.

In this precarious financial landscape, the UK finds itself trapped in what its fiscal watchdog has termed “a very risky era for the public finances.” Given these circumstances, the already spiralling costs of HS2 became increasingly untenable. The project, with its budget overruns and delays, simply could not be justified against a backdrop of soaring public debt and financial uncertainty.

The cancellation presents a Catch-22 situation. While it may cut down on the immediate costs, it could lead to more significant issues down the line. A stable pipeline of work is crucial for the construction sector to plan effectively. According to Stephen Glaister, a professor at Imperial College London, the cancellation of HS2 could disrupt this pipeline, leading to further inefficiencies.

The HS2 saga serves as a cautionary tale, highlighting the pressing need to overhaul the UK’s approach to construction and infrastructure planning. As Jeremy Hunt aptly pointed out, the country needs to figure out why its projects are so much more expensive than those in other nations. Until then, the vision of a streamlined, efficient, and modern transport network will remain an elusive dream.

In the end, the HS2 project’s cancellation may be a symptom of a much larger, systemic issue that needs addressing. It offers us a moment to pause and reflect on what can be done better, not just for the future of the UK’s railways, but for the future of our construction sector and our national infrastructure as a whole.