I think all the points made so far are good ones, and I'm not sure I have many other reasons to give. I can, however, flesh some of them out a bit with a few anecdotes.
In my current role I've worked with four different flavours of East-West Rail. The first was for Phase 1 (Oxford to Bicester), where Network Rail wanted to know how much the upgrade of the line (which Chiltern Railways had made happen) would cost extra in terms of operating costs. The second was in the early days of Phase 2, McLoughlin was Transport Secretary, and there was lots of excitement both within the industry and amongst MPs about how the line could be built and what it could be used for (four tracks?! electrification?! ETCS?! a service o Heathrow?!), and I was helping them firm up some of their decisions. The third was after EWR had been separated off as a separate company, Grayling was Transport Secretary and the enthusiasm hadn't so much died down as been hanged from the neck until dead. We were still on board, feeding them information, but the ethos of the project at that time was cutting scope no matter the cost, and my line of work (finding the best balance of capital spend now and operational spend in the future) was disregarded - hence my oft-repeated story of them deciding to avoid an increase of 2% capex by shortening the life of track by 30%, and at one point refusing even to install passive provision for electrification (I don't know if they've backed down from this now).
They're now in a fourth zone, which I haven't figured out yet, we've been contacted for a fourth time to help, but god knows what state they're in. They've begun some construction, they're currently replacing all or parts of the Bletchley viaduct (we advised them to; they said nah; they appear to now be doing it anyway).
East West Rail is a good project. There isn't much dissent that the project is worthwhile and should go ahead. Phase 1 seemed to be sorted, from where I was sat, fairly straightforwardly. However, Phase 2 though is a story of dithering and delay. The DfT have f.cked around again and again and again and again. The line originally was supposed to open in 2018. Now it's 2025. They just seem incapable of deciding what they want in any meaningful timeframe, and then sticking to that. We see this in other areas - the Transpennine Route Upgrade keeps having its scope changed over and over again despite having great benefits. Northern Powerhouse Rail is much earlier on as a project but is now in jeopardy. Crossrail 2 is similar - it's been lined up for f.cking decades
, is an essential enabler of HS2 (people arriving at Euston need to go somewhere; the current underground station's capacity is too low) and is now in the long grass again. And every time every one of these projects gets f.cked around with, more money bleeds away.
Compared to that, HS2 is a model of vision and consistency of scope. What will certainly have made a difference though is the amount of tunnelling that's been specified during the parliamentary committee stage, as well as any number of other mods. But good god, the parliamentary process took a long time.
Another commonly agreed pillar of lowering costs is constancy of work. Again, the government has failed. Network Rail electrified the Great Western main line, and did it badly (they managed to triple the cost from ~£1bn to ~£3bn, and that's with a fair amount of scope reduction). Despite everyone agreeing that decarbonisation of the railway is impossible without significant electrification, Grayling decided to stop all the rest of it. Midland main line electrification got as far as the great metropolis of Corby (which isn't even on the Midland main line and didn't have a station until 2009) and then ceased (bi-mode trains, god almighty) - the dream of electrifying to Nottingham, Derby and Sheffield lying in tatters. Part of the reason for the stupid cost of electrification is the fact that we'd done barely any new electrification since 1992. Yes, some oldies in the rail industry knew about it from back then, but not enough of the industry knew how to handle it, and had to learn on the job. And now that they have learnt, they've all packed up and f.cked off. Another of Grayling's great steaming turds. GBR will probably pick it up again in five years, with just fourteen years to electrify 40% of the railway, and f.ck that up royally due to lack of consistency.
Unit rates of capital works is, in my area, a hugely important factor. I work mainly in planning work and budgets for the five year funding settlements that the railway gets from the government, providing evidence for what's needed. Given a particular level and type of work, you estimate its cost using unit rates. Except that the unit rates for much of Network Rail's estimates are f.cking huge
, and have increased loads in the last ten years. Some of that is better estimating, but much of it is the cost genuinely going up enormously. There are lots of factors which affect this, but a couple include:
- Access to the railway - not relevant to HS2 really, but of huge importance is how frequently and for how long you can ensure you can get onto the railway without being squished. The longer, the better - stopping all trains for a week is brilliant for construction or renewal of assets, considerably more efficient in terms of cost, and much easier to plan and execute. But we don't do that. Access slots have reduced from 48 hours down to 32 hours down to 16 hours down to 8 hours, generally because TOCs and passengers hate trains being cancelled. Once you've confirmed the last train has passed (which could be late), got men to site, set up, got plant in place and ready to operate, you'll often have less than four hours to get stuff done before the first train of the next day wants to start operating. With timescales that tight, if anything happens to perturb the execution of the night's work, the whole thing can get canned. There are stories of rail renewals having been booked in two or three years in advance (the TOCs want that much notice), and having to be cancelled last minute because some f.cker of a signaller has put a freight train through which shouldn't have been allowed to pass. Hopefully, the GBR era will lead to this sh.t getting sorted, but a big problem is that the senior leaders in rail don't care about it as much as they should.
- Trust in planning - Network Rail hasn't been very good at forecasting how much work it's going to do. in Control Period 5 (2014-19), it delivered around 60% of the signalling work that had been estimated to take place. The main reason for the difference was that the costing of the work had been poor (it wasn't me, guv, and the methods have been changed to make them much better now), so much less could be afforded once the CP began. This wasn't exactly a surprise or especially new, and one of the problems with a regular failure to contract as much work as you say you need to do is that contractors stop believing that you'll deliver what you say you will. If they have full confidence in you, they will gear up two or three years in advance, making sure they've trained up enough staff, and things go smoothly. Without that confidence, they don't gear up because they don't want to waste money, and when NR want to get going, the contractors have huge delays before starting, and don't have the capacity to do as much work, and they work they do becomes more expensive per project because of how these things are contracted. The whole thing becomes a vicious circle.
- Senior leadership - the current Chief Exec of NR is ex-BR, but is the fourth CEO of the company in the 11.5 years I've been there. The current one is expected to leave in the next year or two. As happened with pretty much all the previous CEOs, when they are replaced, they will generally replace most of the key Chief and Exec Director roles underneath them with new staff, most of whom will not be from the rail industry and will have no experience of the business planning process that secures our funding. That churn means there isn't sufficient knowledge of where the focus is best put. One of those key focuses should be on unit rates which, as we've gathered, are very high. It isn't. And that's not just the current exec committee, who frankly haven't even reached the stage of deciding whether they give a sh.t, it's also down to the DfT and ORR, who also don't care that much and bizarrely haven't put that much pressure on NR to get costs down. It's mad, and our bafflement at the lack of focus is repeated in meetings at least once a week.
There are spots of light in all this. I am currently involved in an R&D programme looking at how to systematically reduce the unit rate of signalling works, and despite plenty of reasonable-enough scepticism, it does have a realistic chance of impacting things. It needs to, a lot of signalling will need to be replaced in the next twenty years, and the cost of it will be unaffordable without huge reductions in the unit rate. But that approach needs to be rolled out across every other asset area - track, electrification, earthworks, structures, etc. The point about too much bespoke activity is a strong one.
There's also a recent effort to change the project management approach in the railway towards a much swifter and less bogged-down approach, cutely called PACE. It's cross-industry rather than specific to NR. In addition to that, there's also a DfT-led Sector Deal effort going on, to try to get suppliers to agree to lower their rates with negotiating levers (hypnosis? anaesthetic?) I'm not aware of. Again, let's see, but hopefully these things will help.
Anyway, sorry, I've rambled and it's not really much to do with HS2, but there are systemic issues in the rail industry that send costs shooting up, and the focus of chiefs isn't often in the right place.