High Speed 2, aka HS2, was conceived in 2009 as plan to build a rail line between London and the North of England to reduce the North/South economic divide in the country. Construction was planned in phases with London to Birmingham being Phase 1, Birmingham to Crewe being phase 2a and Crewe to Manchester being phase 2b. Phase 1 was planned to open by 2026 with additional links to Manchester and Leeds hoping to be completed be 2033, with trains topping speeds at 250 mph.  The Gordon Brown Labour Government initially estimated the HS2 would cost around £37.5bn. The trainline was deemed to be massively beneficial to the country. From an economic standpoint, it was estimated to generate £2.40 for every public pound spent. Socially, it was going to relieve overcrowding on existing rail services and environmentally, it was expected to take cars off the roads and reduce the need for domestic flights which led to its construction in 2017. Yet on the 4th of October 2023, the Prime Minister, Rishi Sunak, announced the cancellation of the second phase. This has sparked a huge debate with experts from both sides arguing for and against this action.

Rishi Sunak announced the cancellation primarily due to its spiralling costs. From the original estimate of £37.5 bn, between 2011 and 2013, the cost of HS2 rose £12.6 bn before construction was even underway. Later, a 2019 review of the project suggested that final costs would be between £72.1bn and £78.4 bn (relative to prices in 2015) admitting that earlier estimates were ‘overly optimistic’. The year after, in April 2020, another figure was put forward with the total costs likely reaching up to £108.9bn. By February 2023, a total of £24.7bn had been spent, of which £22.5bn had been spent on phase 1. These clear continuous increases in estimates of the final costs demonstrated the uncertainty pertaining to a single reliable figure. It is unknown how much more money would be needed to finish the project if it had been continued.  Using the current estimate for the final costs, only £24.7 billion of the £108.9 billion was spent on the project meaning £84.2 billion would have to be spent in order to finish it. To Sunak, the reward no longer seems worth the sacrifice. The opportunity cost seems to outweigh this decision and so instead, the funds would be better spent elsewhere, for example towards other large infrastructure projects such as the electrification of the London train network, smaller projects like building new roads and improving junctions all over the UK, or more general services like education, health and social care. These billions of pounds have the potential to drastically improve the quality of life of UK residents though alternative strategies.

Due to the increased projections of the final costs, the value of the economic, social and environmental benefits for the amount spent has drastically decreased. Initially, it was estimated that for each pound of public money spent, there would be a £2.40 return. Already in 2013, this decreased to £1.80, proving an almost immediate decrease in the predicted value-for-money. Lord Berkeley, a member of the Institution of Civil Engineers and a fellow of the Chartered Institute of Transport, estimated that HS2 would only deliver £0.66 for each public pound spent which suggests a net decrease in profit from the project. Even after billions of pounds are spent and time has gone by, the government would lose money on the investment deeming it to be foolish to go ahead .

The government has accepted that only delivering Phase 1 to Birmingham “will not be value for money, as its total costs significantly outweigh its benefits”. It is widely understood that the main benefits of HS2 were mainly to be found in the second phase of the operation linking up London to the north of England. Delivered in full, HS2 was to create 175,000 new jobs and £20 billion of additional economic output for the West Midlands alone. The building of the HS2 was an attempt to decrease the North-South divide and boost the Northern economy. Birmingham’s economy was to see an increase of at least 4.2%, with similar increase likely to be found at other locations along the route. Looking at the HS2 from a purely economic standpoint, most of the return on investment was to come from the second leg, which has already been scrapped, making the project a colossal disaster.

Finally, an extremely important factor that must be accounted for is the loss of confidence in investors who expected economic benefits but were severely let down. This major failure will put off future potential investors as the UK develops into an unreliable investment. Cities of comparative size in countries such as Germany, France, Spain, Italy and Portugal are much more productive than the cities of the north. HS2 took millions of taxpayers’ money, making a huge and long term investment into building up the economy of the north, but now it can be argued that with the cancellation of the project, it has had the opposite effect, scaring away all future potential investment. On top of all this, it is likely that all future large scale infrastructure plans will cost much more than it should, as the government has lost the confidence of contractors. From the contractors’ perspective, the likelihood of plans being changed and costs rising seems all too insecure leading to a higher risk premium (a measure of extra earning that is required by an individual in compensation for tolerating a higher level of risk).

Overall, the initial idea of HS2 upheld good intentions to boost the economy of the north and reduce the north-south divide of the country. Yet the costs of this project have spiralled out of control, meaning if continued, it would leaving a gaping hole in the government budget that would not have been replenished by its benefits. Scrapping the project saves the country from further possible problems yet serves as an accepted defeat. This defeat may scare off future investors resulting in a stronger north-south divide. This outcome is the cause of such a divided debate.