By Joshua.Chambers

21 May 2014

Once, civil servants hacked away at unfashionable railways in favour of cars and aeroplanes – but now trains are once again seen as transports of the future. Joshua Chambers meets High Speed 2 chief executive Alison Munro


Some 50 years ago, the British government axed half of our stations and nearly a third of our rail network: the dramatic rise of the private car and the looming explosion in air travel appeared to leave this workhorse of the industrial revolution stranded in the Victorian age. Yet today governments around the world are matching their investment in digital communications with investment in the humble train. From China and Japan to France and Germany, countries are scrambling to build and upgrade fast rail connections.


That picture holds true in the UK, which is currently passing a law setting funding and a route for its second high-speed rail line – imaginatively named High Speed 2. “If you go back 20 or 30 years, the railways were seen as being in decline, but what we’ve seen over those past two or three decades is a massive turnaround and really rapid growth,” explains Alison Munro, chief executive of the High Speed 2 project. 


Her team is tasked with planning and delivering the High Speed 2 scheme, which will connect London to Birmingham before heading north to Leeds and Manchester; it may ultimately reach Newcastle, Edinburgh and Glasgow. It’s an enormous project; one managed by civil servants charged with recruiting teams of specialist staff from the private sector and managing contractors. As such, High Speed 2 is a magnified version of the issues that all civil service infrastructure projects face – or, as Munro puts it, “this is not just a transport project; it’s not just about a bright new shiny railway.”


Mixed signals
Why build High Speed 2 – the first phase of which will cost a hefty £22bn? Munro says the answer is twofold: an urgent need for greater rail capacity, and a broader economic case for rebalancing Britain’s regions. On the first point, Munro points out that the number of people using the railways has doubled over the past 15 years, with particularly fast growth in long-distance journeys. “It’s increasingly putting strain on the network,” she says. “And if you project into the future, there’s no indication that the growth is coming to an end. In the middle of the next decade, certain parts of the rail network are going to be full – particularly the West Coast Mainline, which is the key artery between London, Birmingham, Manchester and the North”.


Even if those railway lines receive significant investment, she adds, on current growth predictions they’ll still be full in a further 10 or 15 years – so “we’ve reached the point in upgrading the existing railway where there’s no more that we can squeeze out to meet future requirements.” Trains can only be so long to fit into the stations, she says, so the Department for Transport believes a new railway line is required.


The second argument stresses the wider economic benefits of connecting up Britain’s cities using high-speed rail. Journey times between these cities will plummet, Munro says, “and bringing the cities closer really makes them much more attractive for businesses to locate there, because it gives them greater access to bigger labour markets and a greater span of suppliers.”


Last year, the National Audit Office was strongly critical of the business case put forwards for HS2, stating that it had been “poorly articulated”, suffered from a “lack of clarity”, and provided a “a weak foundation for securing and demonstrating success”. Munro responds that “there was a lot of work in hand, and they were commenting at a point where we were starting” that work. The capacity argument hadn’t been fully worked up at that point, she adds, “so we hadn’t actually put it all out into the public domain and persuasively joined that case up.”

Relocation, relocation
Since then, the Department for Transport has followed its business case with a set of strategic arguments, which pull together the wider economic reasons for building HS2. The business case followed the standard Treasury methodology of working out a cost-benefit ratio, says Munro, but this “doesn’t really capture all of the benefits of a transformational project like High Speed 2.” Further, “by focussing on the standard appraisal methodology, we’ve not spent enough time demonstrating the wider benefits that High Speed 2 could bring.” In particular, the Treasury’s methodology didn’t capture the benefits to northern cities from companies relocating there from London, she says.


Is there strong evidence that companies will relocate? “Certainly, if you look at what’s happened in Lille, where the high-speed station has helped generate a whole new commercial sector around it. And in Lyon, similarly, 800 enterprises have been attracted to locate around the new high-speed station there.”


Have those businesses relocated from elsewhere? “Some will have relocated; some may be new businesses. To some extent, you could be attracting internationally mobile business – but certainly the fact that high-speed stations attract around them clusters of business, new opportunities, that leads to all sorts of retail as well as commercial activities, wider retail activities, leisure activities… There’s definitely evidence that they provide a catalyst for development round stations.”


That’s not quite the same thing as saying there’s evidence of relocation between cities? Are these firms simply moving from elsewhere in town to be near the new station? “Well some of it will be relocation [from elsewhere in the city],” she replies, “but some of it is overall growth; it’s a net addition because you’re reducing transport costs and [making] doing business easier.”

Sounding the whistle
Munro’s team shares responsibility for communicating the benefits of HS2 with the Department for Transport. One of the trickier conversations has been the one about costs – especially since the budgets increased. “The decision was taken to increase the contingency element last summer and I think that was not widely understood: it was perceived as the costs going up,” Munro says. Further, the cost-benefit ratio is much lower for the first phase of the project – connecting London to Birmingham – than for the later stages, which connect northern cities with the Midlands. “You’ve got a lot of additional costs in first phase, and a lot of additional benefits flowing in the second phase,” she says.


That said, “I think there are some people,” she adds, “who will never be persuaded: people who live along the route, whose homes we directly affect. And it’s understandable that those people feel very strongly that they don’t want High Speed 2 to happen.” Those opponents are balanced, she believes, by the people in northern cities who strongly back the project, whilst many have yet to be persuaded either way.


The first phase of the route – London to Birmingham – doesn’t open until 2026, while the lines to Manchester and to Sheffield, Leeds and York won’t open until 2033. Meanwhile, China’s putting in high-speed lines spanning the width of the country in far, far shorter timescales. What’s taking so long? “The preparation and planning process clearly takes quite a significant amount of time, so we were established in 2009 and we’ll have spades in the ground in 2017 – that’s eight years before we get a spade in the ground,” Munro notes. The business case, environmental assessment, consultation period and parliamentary process all take up a great deal of time, she notes. Further, the construction period itself is lengthy, “mainly determined by the fact that we have to rebuild Euston Station at the same time as keeping it functioning. If we could just close it for a length of time and rebuild, that would be quicker.”


It’s an incredibly long period of time to wait until the physical work begins – isn’t there a better way of doing this? “In a democracy, there is always a certain amount that you need to do,” she replies. “I think we’ve done more consultation on this project than any other project before – so we had a major consultation in 2011, which was before the decision to proceed; and we’ve had a further consultation last year on our draft environmental assessment; and now we’re into the Bill, so people can object to particular proposals and petition against the Bill.” In fact, she says, “I think in a democracy like ours, you’re not going to be able to take a big project like High Speed 2 through without having that [long timescale].”


So how do democracies such as Japan or France build lines so much faster? “They do have their own difficulties, but we’re not directly comparable – in terms of what we’re doing with High Speed 2 – to France, because they’re a much less densely populated country than us. Because we’re so densely populated, it’s impossible to avoid affecting people.”

 

Keeping the wheels turning
Once the planning, consulting and preparing is out of the way, Munro’s organisation will move onto the delivery of the project. They’ve brought in a private sector development partner, CH2M HILL, to help prepare the Bill and recruit the project team.


Munro’s organisation is still planning how much of the project management it’ll directly control, and how much will be done by the private sector. “One of the differences with High Speed 2 compared to Crossrail or High Speed 1 is that we actually have two phases of the project, and there could even be phases beyond that,” she comments, “so there’s more benefit for us in building up internal capacity.”


That’s the big decision to make over the next year, she says. “With a delivery partner, you’re buying in tried and tested expertise – but the trouble is, when they go, all their accumulated knowledge goes with them, so there’s some benefit to us making sure we can carry on what we’ve learned from phase one into phase two.” 


Munro’s team is also developing its procurement strategy, she adds. The choice is between early contractor involvement – where you get the people who are going to build the project assisting with the design phase – or the cheaper option of splitting the work between designers and builders. “One of the challenges that we’ve set ourselves is looking at the cost of delivering major infrastructure – not just transport infrastructure, but infrastructure generally in this country,” she says. “We seem to be more expensive than European countries.” One way to keep costs down is to ensure that everyone’s working to a single, workable plan, thus minimising the need for alterations during the delivery phase. 

Railing against restrictions
Munro’s organisation, High Speed 2 Ltd, has a company structure but is run as a non-departmental public body, meaning it’s covered by Treasury restrictions on salaries and recruitment. “We’re constrained by those rules,” Munro says (see news). At present, her organisation is negotiating with the Treasury to see if it can be freed from the restrictions, like the Highways Agency


“It’s a challenge getting project managers and the right skills on board quickly in government,” she notes. “We will increasingly need to be able to pay market rates as we go into construction. We’ve bought a lot of resource in through our development partner [CH2M HILL], partly due to the speed with which we had to move, but as we go forward, we work in a market and building a £17bn project is not a traditional civil service activity. We are competing for people who could be out in the Middle East delivering projects so, increasingly, we do need to be able to pay market rates – and that’s one of the discussions we’re having at the moment.”


Munro notes that “the way the company operates will evolve over time, as we go through the different stages of the life of High Speed 2. The original justification for setting us up as a company was to recognise that we would need, growing over time, more freedoms and more distance to really be able to deliver High Speed 2 efficiently.”


While recruitment is expected to get tougher if the organisation remains subject to the pay controls, retention hasn’t been a problem. “The people who are here, are here because they want to be, and are incredibly committed to High Speed 2,” says Munro. “That’s what drives them, and it really helps morale.” Perhaps the staff’s commitment also reflects the fact that “more risk-averse people might have been put off”: after all, projects this controversial can get stopped, and some potential applicants may have avoided “giving up a secure job to take what they’d see as a less secure job.” 


Munro herself is a civil servant by background, having begun her working life as a government economist in the 1990s. “I particularly focussed on major projects, that side of transport,” she recalls, “and more recently I spent about four years in the railways part of the department, where I was a sponsor for High Speed 1 when it was called the Channel Tunnel Rail Link.” The department was then trying to make arrangements for CTRL’s second phase, from Ebbsfleet in Kent to St Pancras, “so I’ve had that experience of the other major high speed line,” she adds.


That project was “delivered on time and on budget, and demonstrates that in this country we can deliver major infrastructure projects if you get the right sort of arrangements in place,” says Munro. She knows only too well, though, that a successful build isn’t the end of the story: CTRL’s operator subsequently collapsed, and the line had to be rescued by government.  


Only the bravest of analysts would make a firm prediction as to whether HS2 will avoid a similar fate. But Munro is confident that it will achieve its economic and infrastructural objectives, supporting growth outside London and tackling the West Coast Mainline’s capacity problems. So far, the project has avoided being derailed; and Munro is hoping that soon she’ll win greater freedoms over pay and recruitment processes – demonstrating the government’s commitment to this huge infrastructure project, and helping to ensure that this high-speed civil service organisation gets to its destination on time. 

See also: HS2 boss calls for pay flexibility

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