From HS2 to Wembley, why can’t Britain build on budget?

29 Oct, 2023
The Times, by Sam Watling and Matilda Davies

With just 134 miles of track between London and Birmingham now planned, the scope of HS2 is modest by international standards. Yet this short line is at least world-leading in one area: its price.
Those 134 miles of track are forecast to cost £53 billion. At £396 million per mile, this will make it the most expensive of any completed above-ground railway project in the world. For context, it is more than eight times the cost per mile of the new French high-speed line from Tours to Bordeaux.
By European standards, HS2 is a laughing stock. Yet by the standards of the English-speaking world, the fact it is being built at all is impressive. Despite many proposals being put forward over many decades, no other English-speaking country has built a high-speed rail line. The only other current high-speed rail project in the anglosphere is in California. Approved in 2008, this plan to connect Los Angeles and San Francisco has only begun construction on one-sixth of its route. Yet in the intervening 15 years, it has already cost $9.8 billion (£8.1 billion), while the estimated costs of completing the project have nearly quadrupled from $33 billion to $128 billion.
Why is that? In both Britain and America, much has been written about the dysfunctional processes that have caused the cost of high-speed rail to balloon. However, the problem is not just limited to fast trains. When it comes to infrastructure cost in general, the entire anglosphere is a major outlier.

Recent research by Britain Remade has shown that in all forms of infrastructure, be it for energy or transport, English-speaking countries pay a multiple of costs relative to Europe.
The result of this huge cost difference is that we do not just pay more for the infrastructure we manage to build, compared with Europe and Asia — we also get less built. For example, until the plan was frozen, the British government was intending to spend at least £30 billion on Crossrail 2. According to Alon Levy, a transit researcher at New York University, if we were operating at Scandinavian construction costs and design it would be possible to build four Crossrail equivalents for less than a quarter of that total cost.
This is why Crossrail 2 is on ice and HS2 was so drastically cut in Britain, while countries such as France, Spain and Japan continue to build new high-speed rail and underground metro systems without interruption. It’s one reason why the London 2012 Olympics cost more than twice as much as Beijing in 2008.

These overruns extend well beyond the railways. The new Wembley stadium, which was opened in 2007, went a staggering £462.5 million over its original budget. Plans for a “third crossing” bridge over the Menai strait in Wales were £265 million over budget, before being scrapped earlier this year.

What’s going wrong? The scale of failure is so large there must be more than one factor at work. All national infrastructure projects have potential adverse impacts, be they social or environmental, which governments need to convince their voters are justified.
Political wrangling
In Britain, our constituency-based electoral system may be a factor. Marco Chitti, a researcher at the Transit Costs Project, argues that European systems have an inherent advantage because proportional representation means that members of parliament can make decisions on infrastructure projects without fear of suffering a backlash from affected residents in a particular constituency.
Planning hold-ups
Our planning system is another important factor. In European systems, infrastructure planning aims to ensure projects meet planning criteria that have been clearly set out in advance. Once the planning authorities accept that the outline of a project meets these rules, then this project is accepted with no prospect of later revisions. By contrast, the emphasis on law in the British system, which was exported to many of our former colonies, is not to consider adverse effects in advance but instead mitigate every possible effect from a project as the plan evolves. This gets expensive, fast.

It also means that planning applications for infrastructure projects are extremely long. As of 2020, the average planning application for a nationally significant infrastructure project in Britain involved the submission of more than 1,000 documents. The environmental impact assessment for phase one of HS2 was 50,000 pages. The upfront costs of this are not insignificant, ranging from a minimum of £10 million for a large solar farm to £260 million for the Lower Thames Crossing in London, which is more than a similar-sized tunnel cost to build in Norway.

Secondly, the sheer number of legal points that need to be considered means that planning applications take a very long time to determine. Current rates are around 22 months for an application sent in 2020. In many cases, the criteria are ill-defined or the government guidance is out of date, meaning that projects are open to judicial challenge from disgruntled local residents.
Inconsistent systems

The other big problem is one of consistency. Most European countries are capable of maintaining a consistent and pre-agreed “pipeline” of infrastructure projects between governments. But in countries such as Britain that have two-party systems, there is less incentive to agree on a long-term plan with your main opposition. Also, due to the centralised nature of British infrastructure funding, there is often a temptation to use infrastructure money for pre-election tax cuts.

Take the case of rail electrification. Less than half of British railways are electrified, giving it one of the lowest rail electrification rates in Europe. Over the past 50 years, the intensity of Britain’s rail electrification programme has varied wildly while Germany’s has remained constant.

As Ben Hopkinson, a researcher at Britain Remade, notes, this creates problems of capacity when infrastructure projects do finally go ahead. Specialised engineering projects require expensive machinery and a workforce trained in highly specific skills.
The European method of predictable and constant commissioning of infrastructure projects means that engineering skills are developed, expensive pieces of machinery can be reused, and engineers and builders improve their methods of working and project design, cutting costs over time.

Meanwhile, in Britain, projects happen sporadically, skills are lost, and machinery depreciates in the large gap between projects. British infrastructure projects are forced to “reinvent the wheel” every time. For example, Hopkinson notes that “at Hinkley Point, Britain’s first new nuclear power plant in 25 years, the constructors had to set up a training programme for nuclear welders for construction to proceed”.
Outsourcing knowledge
There is also a lack of people with the right skills to oversee it all. Chitti notes that “since the 1980s there has been a tendency in English-speaking countries to scrap the engineering capacity within the civil service and rely on private consultants”.
In addition, the French hire many of their civil servants from their “grandes écoles” of engineering, while Britain and America tend to prefer humanities graduates.

This lack of internal knowledge forces governments to outsource both the design and building process to these private subcontractors. For obvious reasons, private companies are not incentivised to give advice that would lower costs. By contrast, in most European countries, the basic design is done by engineering teams within national or even local government. Only then is the contract to build the design given to the private sector.

It also means that there is no one with the right skills to decide what infrastructure to embark on in the first place. As HS2 has shown, if a government sets out on a project which is poorly defined and unrealistic, then the project will run into problems which will force a redesign, costing money and pausing construction.

These factors have all combined to create a vicious cycle where things become very expensive, very quickly, making our infrastructure cost vastly more than similar projects on the continent.

Any attempt to restore some sanity to this situation in the English-speaking world must address all of these issues. Until then, enjoy what’s left of HS2, as it will be the last major transport project we can afford for a while.