The price of HS2: is it still worth £100 billion?

The price of HS2 is more than you think – but we’re not talking just about money. Blame the sunk costs fallacy.

According to the UK government, the cost of the high-speed rail link from somewhere in London – more on this issue later – has rocketed to over £100 billion. To be clear, that’s a thousand million pounds, times 100.

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For this sort of money, you could open a lot of closed rail links, and electrify all of the UK’s rail network where it makes sense – in other words, every mile except little-trafficked branch lines. The carbon emission savings just from eliminating diesel traction would be immense. Also, electric trains are lighter, faster and quieter, and more attractive to travel in, resulting in greater passenger take-up and higher revenues. The rail industry calls it the ‘ the sparks effect’. Wear and tear on the track would be less too, resulting in lower maintenance costs. It’s a virtuous circle.

View of the Euston Approaches worksite.

Yet there’s a lot of momentum behind HS2. Euston station (above) has been torn open to create platforms and other infrastructure that will needed for the new trains. The countryside has had tunnels and embankments built, along with track beds. Viaducts are starting to be built. There’s a lot of jobs at stake here.

The benefits are said to be greater capacity on the west coast main line (WCML). It will all be worth it, we’re told.

HS2: a great idea?

As a rail enthusiast, HS2 seemed like a great idea to me when first mooted in 2009. At last the UK was to get its proper high speed rail system, something to equal the many found in the rest of Europe, France especially. It would relieve the WCML of slower traffic, such as local and freight trains, allowing more express and semi-fast trains to run.

However, high-speed rail will never be as useful in the UK because it’s a smaller, more densely populated country than, say, France or Spain: the centres of population are close together, making time savings fairly small. For example, just 20 minutes will in theory be shaved off the trip from London to Birmingham.

And here’s one of the problems: since HS2 first emerged as a concept, the world has changed. Traffic patterns are no longer what they were. Commuting traffic, which happens in peaks and demands greater train density, is not returning to pre-pandemic levels. Instead, leisure traffic is back to previous levels, and in some cases is even higher. People are using the trains in a less concentrated way, more spread out over the week and during the day. So fewer trains need to be run, making the capacity issue less urgent.

The UK government’s finances, creaking at the seams, are being stretched to cover the full costs now.

Work on the Euston end of the system has been paused. There’s talk of terminating the HS2 line at Old Oak Common, just outside Paddington, from where passengers will be expected to change onto the capital’s Crossrail. The top end of the line has been truncated: the Y shape has been lopped so that the HS2 trains will only go to Birmingham, not on to York and possibly Manchester. It won’t even link up with HS1, which goes through the Channel Tunnel.

And worst of all, the London-centric line is an insult to those living in the north. Denied the sorts of investment in trains and infrastructure that London and its environs have enjoyed for decades, they’re struggling on with old trains, cancellations and patchy timetables.

Not worth the candle

In other words, it’s becoming clear that this project now not worth pursuing for the supposed benefits it will confer. Not for £100 billion.

Yet the problem — the core problem – is the sunk costs fallacy. The unspoken argument is that we’ve spent so much already and are spending £120 million weekly with the total cost rising by £100 million every month as a result of inflation, according to rail expert Christian Wolmar, that it would be foolish to stop now. But a big chunk of money has yet to be spent. Trains, signalling and other rail infrastructure has yet to be purchased. These and operational costs seem unlikely to be recovered for decades.

Savings can be had. If we stop now, a lot of money has been spent. But if instead we spent a fraction – a tiny fraction – of what’s projected to be spent on HS2 rebuilding Euston into an attractive place to join the railway, rather than the dismal corridor it now is, and a portion of the rest on electrification and rail reopening projects, especially in the north, we’d all be better off.

The rail industry behind the scenes would be more than happy to see this happen, according to Wolmar. He says: “There are very few true believers in the project across the railway sector. The rail managers I meet either refuse to discuss HS2 or acknowledge privately that radical action is needed.”

Projects like this acquire their own life, floating above mere reality and rational thinking. We need to stop it now. What are the odds of this happening?