Analysis

Is Higgins considering French style PPP for HS2 phase two?

A privately financed solution for constructing much of HS2 could to be on the table following publication of Sir David Higgins report “Rebalancing Britain – from HS2 to a national transport strategy” on Monday.

Higgins calls in the report for an investigation into how other countries are delivering high speed railways and in particular refers to the Tours to Bordeaux section of line in France. This is being built by VINCI-led private finance concession LISEA at a cost of £6.8bn for 302km of line in just under six years – up to 10 years faster than conventional public sector forms of contract according to its VINCI led contractor COSEA, in a report in Transportation Professional last year. The drive to start earning a return on the investment encourages management and technical innovation to speed up the project and keep costs down.

"We need to use that time and space to learn the lessons from elsewhere in the world where by applying new design and construction techniques, as well as private finance, high speed projects have been built quicker and for less”

In his report Higgins rules out alternative delivery techniques for the complex London section because the cost of transferring the risk would be too high. But for the route from the Chilterns to Birmingham, and particularly Phase Two, other options could be considered he hinted.

“Because of the legislative process, Phase Two is three years behind Phase One. We need to use that time and space to learn the lessons from elsewhere in the world where by applying new design and construction techniques, as well as private finance, high speed projects have been built quicker and for less”, Higgins said.

"We need to ask how we can apply such techniques in this country. We should explore best practice. The current project underway in France, the Tours to Bordeaux high speed train line, which is to provide capacity relief as well as reducing journey times from Paris to Bordeaux by an hour is an example of an innovative approach to contractors, design and risk.

“While parts of HS2 Phase One are very different, with Old Oak Common and Euston being very complex, the sections of the route North of the Chilterns to Birmingham, and particularly on Phase Two, could benefit from delivery techniques developed on projects such as this."

On the Tours to Bordeaux line LISEA will earn its money by charging track access charges to passenger train and freight operators. So critical to the success of the 50 year concession and confidence of its investors is the fact that route is part of a growing pattern of high speed line with an established operator and confirmed passenger and freight demand. There are also plans to extend the route which will encourage more traffic. The concession was granted by Reseau Ferre de France (RFF) which owns and maintains the French railway network and RFF wants to build more high speed line south to Spain and east to Toulouse.

Passenger and freight demand for a new route north in Britain is predicted to be high given that part of the business case for HS2 is based on the West Coast Main Line being at capacity in the near future. What will be needed to attract a PPP investor will be a clear service pattern and train operators to confirm it.

So far HS2 does not have that but there are plans to cover those bases. “The intention is for HS2 to staff up as a proxy operator and bring in expertise from the train operating companies where appropriate to help with the design decisions,” according to HS2 technical director Andrew McNaughton.

The current line from HS2 is that the thinking so far is around conventional funding. But Government’s enthusiasm to access pension fund investment for infrastructure is high as is that of other political leaders, as demonstrated this week’s by Mayor of London Boris Johnson’s suggestion that he wanted to access “the jam jars” of the funds to help pay for Crossrail 2. All of which suggests that a PPP option for HS2 would get a warm welcome.

HS1 was initially a PPP scheme of course but ran into financial difficulties when the income from its share of the Eurostar operation was slower than expected and was taken back into public ownership.

However even the National Audit Office was comfortable with the speed and efficiency with which the line was built by its private owners. And the route is now back in private hands, jointly owned by Borealis Infrastructure and the Ontario Teachers’ Pension Plan.

The question is often asked as to why we don’t build railways like the French. Maybe we will be soon.

You can read the Transportation Professional article on the PDF attached to this story. Many thanks to the magazine's Ty Byrd for permission to reproduce the story.