Transport secretary Justine Greening announced yesterday that the UK is going ahead with plans to build a new £33 billion (€40 billion; $51 billion) high-speed rail network, a controversial project which has been described by some pundits as a ‘white elephant’.
“I have decided Britain should embark upon the most significant transport infrastructure project since the building of the motorways,” Greening stated in her announcement speech. “By following in the footsteps of the 19th century rail pioneers, the government is signalling its commitment to providing 21st century infrastructure connections – laying the groundwork for long-term, sustainable economic growth,” the transport secretary added.
At present, only the first phase of the High-Speed 2 (HS2) network – a £17 billion, 140-mile line between London and Birmingham, to open in 2026 – has been formally approved. The second phase of the Y-shaped network – connecting Birmingham to Leeds and Manchester by 2033 – still has to go through a final consultation phase, to take place in early 2014 with a view to finalising the second phase’s route by the end of that year.
A Department for Transport spokesman told Infrastructure Investor that it was still too early to comment on private sector participation in the HS2 project. But last June, rumours emerged that the government was considering leasing the HS2 rail line to the private sector one year after it is completed. Construction costs would come from the government balance sheet.
The inspiration for the lease is said to be the government’s successful concession of the UK’s first high-speed rail line, known as HS1, for £2.1 billion last November to a team of Canadian pensions Borealis and the Ontario Teachers Pension Plan.
Despite the government’s assessment that HS2 will generate up to £59 billion in benefits over a 60-year period, critics have questioned the new network’s value for money. Writing in yesterday’s Guardian newspaper, columnist Simon Jenkins called HS2 “gesture spending dressed up as growth” and said transport secretary Greening “gasped over her plan today like [Iranian president] Ahmadinejad over his latest nuclear enrichment plant”.
In a statement on the project’s value for money, the government admitted that “phase 1 lies toward the lower end of the medium value for money categories,” generating about £1.4 for every £1 invested. The authorities did not address the value for money of phase two, saying its route has yet to be finalised.