High Speed 2, or HS2, is a high-speed railway which has been under construction in England since 2020. The new track is being constructed between London Euston and Handsacre just north of Birmingham, where a junction will connect HS2 to the West Coast Main Line. The length of the new line has been reduced substantially since the scheme was first announced in 2012: it was originally to be split into eastern and western branches north Birmingham, with the eastern branch terminating in Leeds and the western branch in Manchester. The project was scaled back mainly due to spiralling costs and a weakening business case, with the estimated cost of the project rising from around £33 billion in 2010 to over £100 billion currently.
An official assessment by the Department for Transport and HS2 Ltd – the company set up to develop and promote the new line – attributes the soaring costs to several core factors. Around two-thirds of the increased cost can be attributed to management and delivery failures. Construction began in 2020 before detailed, finalized designs were completed, causing out-of-sequence work, poor productivity, and major inefficiencies. HS2 Ltd and its contractors lacked sufficient capability, client relationships, and project controls to manage a build of this magnitude. And commercial contracting strategies failed to properly incentivize performance or fairly allocate risks between the client and builders. The remaining one-third of the cost increase can be attributed to higher inflation across the UK economy.
These increased costs mean that when completed, HS2 will be the most expensive high-speed railway in the world in terms of cost per unit length. A standard European high-speed rail line costs between £25 million and £32 million per kilometre. By contrast, the remaining London-to-Birmingham stretch of HS2 is projected to cost roughly £200 million per kilometre, making it over 6 times more expensive than the European average. Why is the gap so massive?! Data from the Transit Costs Project and UK infrastructure studies pinpoint three structural reasons why Britain must pay so much for high speed rail compared to its neighbours: excessive engineering, a speed and straightness premium, and planning bureaucracy.
Because England is densely populated and property rights are fiercely protected by common law, HS2 was forced to mitigate local complaints by going underground. The project includes 32 miles of tunnels, many of which were dug entirely for aesthetic and noise-blocking purposes rather than geographical necessity. HS2 is designed to run at top operating speeds of up to 250mph – faster than France’s TGVs (~200mph). To maintain safety at that speed the track must be perfectly straight, which requires building expensive viaducts and deep cuttings. And in the UK, environmental disputes and construction happen concurrently, creating a continuous loop of costly delays. This contrasts with countries like Spain and France where construction permits are largely secured before contracts are awarded.
It is always worth remembering that one person’s spending is another person’s income. So when we hear about spiralling costs for HS2, we should ask ourselves who is benefiting. And as usual, the answer is: private firms and their shareholders. According to the website Construction Briefing, over £32 billion of the £44 billion spent so far has gone to 13 giant construction firms, with Balfour Beatty and Vinci receiving over £5 billion each, and Kier and Eiffage each receiving over £2 billion. These amounts will only increase as more money is spent on the project. Clearly, these firms are treating HS2 as a cash-cow they can use to extract billions of pounds from the UK government – money that could have been spent on schools, hospitals, and other public services.
It doesn’t need to be this way. As already noted, high-speed rail is much cheaper to construct in mainland Europe. All that is required to bring the UK into line with other European countries is a few simple changes in legislation. We could weaken property rights and change planning legislation so that construction permits must be secured before contracts are awarded. We could also drop the requirement for the trains to run at 250mph, as it’s not clear why trains are required to run at such high speed in a relatively small country like the UK. The reason these changes aren’t made is because they would disbenefit members of the capitalist class – in particular, landlords who own property in South-East England, and the large construction firms who are making a fortune from HS2.
Given how HS2 has become such a lucrative cash-cow for the capitalist class, you might wonder why the extensions to Leeds and Manchester were cancelled. I think the reason is that the costs of the project had spiralled to such an extent that it became politically infeasible for it to continue according to its original scope. In effect, the capitalists killed their golden goose. But as construction had already started the London to Birmingham section, they could argue that it made sense to complete this part of the project (this is an example of the ‘sunk cost fallacy’). You might also wonder how nobody predicted the increased cost. My suspicion is that the cost was systematically underestimated to ensure that the project went ahead.
That might make me sound like a crazy conspiracy theorist. But there is no need to posit a coordinated conspiracy here. To ensure that a desired result is obtained, all that is required is that the incentives are lined up a certain way. I have worked in the transport industry myself (I actually worked on a forerunner of HS2, over 20 years ago) and have seen first hand how this comes about. There is an obvious bias towards underestimating costs / overestimating benefits of projects that are likely to benefit the capitalist class. Any transport planner who does not share this bias will eventually find themselves out of a job. At present, our entire transport system is set to up for the benefit of capitalists. Only through socialist change can we build a transport system which benefits all.
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