Infrastructure megaprojects back in the spotlight following UK government’s HS2 decision

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The UK government’s announcement to axe the high-speed rail project from Birmingham to Manchester has once again brought the future of megaprojects back into the headlines, says Rodrigo Juárez from Mexican consultancy, FOA Consulting.

There is a common belief that once started, infrastructure megaprojects are too big to fail and too advanced to be terminated, particularly during the delivery stage. However, this is not always the case. Megaprojects are actually terminated more often that we are comfortable discussing.

Some of the most recent and relevant examples include the termination of the $13bn Mexico City New International Airport in 2018, or the $8bn Atlantic Coast Pipeline, in the United States in 2020. With the UK government’s announcement of the termination of the Birmingham to Manchester HS2 link (following the previous announcement of the scrapping of the Birmingham to Leeds link), the termination of major infrastructure projects during the delivery stage and its implications become more and more relevant.

In some of the research I have been conducting on this issue, I argue that megaprojects are mainly terminated because of a combination of socio-political opposition, financial distress (from the owner and the project itself), environmental considerations, regulatory, force majeure and technological reasons, and with socio-political opposition and financial distress the most relevant ones.

This combination of factors are issues that I see replicated in HS2. We see increasing levels of social opposition and exacerbated political debates within the UK government that highlight the internal disagreement and views towards the project, which raises many concerns.

How can the general public in the UK be convinced with a project where the government can’t even agree whether to continue it or not? Because of this (and many other reasons), the perception of mistrust towards government institutions is extremely high.

Of course, this has already been fragile for years in the UK – ranging from Brexit to ‘Partygate’, which resulted in the appointment of a new prime minister. So, the public only hears about how HS2 will require further investment from the taxpayer and they will still not be able to see any operational project in the near future.

“How can the general public in the UK be convinced with a project where the government can’t even agree whether to continue with it or not?” – Rodrigo Juárez.

One of the greater concerns that comes to my mind is how can HS2 sustain the narrative of levelling up the Midlands and north, when they have been the first links to be terminated? If this was the initial narrative, why did the project did not initiate from the north in the first place?

I have read multiple reports stating that it is estimated that the termination of the Birmingham to Manchester HS2 link can save up to £32bn. But how are these ‘savings’ contributing to the levelling up process that the UK government is apparently so keen on?

A reasonable question to ask is are the £32bn in savings going to be used to cover for the cost escalations in the London to Birmingham link? Or, are they going to be used for immediate investment on projects such as the Northern Powerhouse rail line or on improving the existing network towards the north?

These questions will undoubtedly come into sharper focus in the weeks and months ahead.

Rodrigo Juárez is a consultant at Mexican infrastructure consultancy, FOA Consulting. He is also the chair of the FIDIC’s Future Leaders Advisory Council.