Why Higgins' HS2 gamble may just pay off

As I dragged my tired, sorry self into the bleak and equally tired-looking enivronment of Euston station on Monday morning at 6.45am, the point being made today in Manchester by David Higgins couldn’t have been clearer.

By forcing the largely London-based media pack to experience the reality of commuting to Manchester for a morning meeting, he was not-so-subtly pointing out the dire deficiencies in the experience of travelling between the north and the south. As well as hinting that shaving off an hour from the experience might not be such a waste of money after all.

But then the Australian former Network Rail and Olympic Delivery Authority chief executive is, if nothing else, a master politician. And his gambit - entitled HS2 Plus - is undoubtedly a bold bid to secure the future of the £43bn scheme. Ultimately he has wrong-footed all the expectations of what he was hired to do by David Cameron: to scrutinise and reduce costs on the project.

Because Higgins’ report doesn’t suggest a single ruse to squeeze costs significantly; on the contrary, it presumes to make a virtue out of the fact the original budget hasn’t increased. HS2 budget today remains the same as it was yesterday, barring the £700m HS1-HS2 link that Higgins recommends scrapping. But even this doesn’t disappear entirely from the project, instead it simply becomes part of its contingency.

The political reality of how these reports are produced means Higgins would only have been allowed to publically make these recommendations if the government was behind them

In fact, one of the main thrusts of Higgins report is in fact that more needs to be spent - on east-west links in the north - if the link is to be a success. While this is dressed up in the language of “re-prioritising” existing Network Rail funding, let’s be clear about what this means: the bringing forward of spending that would otherwise have got to these projects later.

While this brings political risks it may also be his smartest move. Many of the northern councils that are so concerned about east-west links are Labour-led. Letting them know in no uncertain terms that HS2 won’t steal the funding for their more cherished projects, that in fact they can get the best of both worlds, may be enough to deliver the crucial support of that party. Ed Balls has already made noises about supporting a review of HS2’s second phase alongside other northern rail enhancements, using language startingly similar to that employed by Higgins.

Higgins’ refusal to reduce costs with politically soothing cost cuts that would have made delivery much harder in itself provides confidence in the project: here is a person with a track record of delivery indicating that he thinks he is going to be sticking around to deliver it, and is therefore reluctant to provide hostages to fortune. He has also refused to save money by cutting back on the noise abatement and environmental protections that will be key to winning the argument for HS2 in affected communities.

The most comforting thing, from the construction industry’s point of view, is that the political reality of the formation of these reports means Higgins would only have been allowed to publically make these recommendations if the government was broadly behind them - as Patrick McLoughlin’s House of Commons statement has already shown.

But, for all these deft political strokes, there is no doubt there is a huge risk to this report. By not heeding the clamour for budget cuts, critics have been given extra ammunition to fight it on cost grounds. The Treasury cost-benefit sums still look very poor in relation to other projects, and in a time of such funding contraint there is no doubt that £50bn is an enormous sum to be spent on one project. It’s a gamble, but a bold one.

The hope is that Higgins’ intervention will re-set the political debate in favour of the project. Certainly you wouldn’t bet on anyone more likely pull off that trick than Higgins.

Joey Gardiner is assistant editor, Building