Expert Comment: Evaluating the Future of HS2: Economic, Strategic, and Infrastructure Considerations
University of Salford Business School’s Dr Zeeshan Syed, Lecturer in Finance, shares his thoughts on PM’s decision to scrap the northern leg of Britain's High Speed 2 (HS2) high-speed rail project.
In decision-making, timely action is preferable to delay. Politicians, like Rishi Sunak with his decision on HS2, would benefit from proactive decisions rather than facing repercussions later.
The ongoing debate around HS2 highlights differing perspectives on the prioritisation of megaprojects. Some question the project's utility, given changing work and transport trends:
- With emerging remote work trends, will the majority choose to work from home or at an office in the future?
- When considering leisure travel, will there be a preference for public transport or private vehicles?
Why might one endorse a project that may not align with primary preferences? It's suggested that political considerations might influence such decisions. As observers, it's essential to rationally assess the merits and drawbacks.
Regarding megaprojects like HS2, let's evaluate the underlying arguments.
Their Economics is not right: Initially estimated at £37.5 bn (2009 prices), the project's cost rose to £78.4 bn by 2015 (as reviewed by Allan Cook) and is estimated at £110bn in 2019 (as reviewed by Lord Berkeley). These figures have not been adjusted for inflation, implying the increases result from cost overruns and operational inefficiencies. Notably, there were projections for HS2 to realise efficiency gains between 2015 and 2017. Given the current inflation rates and expectations of prolonged high interest rates, the financial implications warrant thorough examination.
A reassessment of the prevailing concept of connectivity is warranted. Contemporary infrastructure could be envisioned as 'corridors' that incorporate enhanced train systems, augmented frequency and the integration of digital infrastructure, aligning with the reduced necessity for work-related travel.
Furthermore, as highlighted by Lord Berkeley, regional transport predominantly relies on public conveyance. The established cross-country network, exemplified by the roughly 2-hour train journey between Manchester and London, underscores the system's efficiency. In light of this, the decision to forego the northern extension of HS2 appears justified, and a reconsideration of HS2 phase 1 might also be apt. However, transparent communication is essential, outlining alternative strategies such as the 'levelling up corridor' which emphasises digital infrastructure, enhanced railway lines, and punctual, modern trains.
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