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Cancelling HS2 would drive up future project costs, major contractors warn

The cancellation of HS2 would drive up costs in the UK infrastructure market due to added risk premiums, a group of several major contractors has told the Oakervee review.

Balfour Beatty, Bouygues TP, Mace, Skanska and Costain were among companies who signed a letter to the review, which was organised by the High Speed Rail Industry Leaders group.

The letter, which also revealed that contractors have spent “well over” £100m on bidding for HS2 contracts, contained a request from the 24 organisations to meet Doug Oakervee.

The review is looking at whether and how the high-speed rail project should proceed.

If the project is cancelled, the letter continued, future UK construction projects will “attract an added risk premium”, and the market would become more expensive.

It added: “HS2 is ready to build. It is attracting private sector investment into our great regional cities already.

“At a time when the country is looking to demonstrate its post-Brexit credentials, what signal would it send if we cancelled our highest-profile infrastructure project and weakened our commitment to share prosperity around the country?”

The letter concluded by expressing the signatories’ keenness to meet Doug Oakervee and his review panel over the coming weeks to discuss the industry’s perspective.

A Department for Transport spokesman said that the HS2 review will “consider all available evidence”, and added that the department would not “pre-empt the outcome”.

Doug Oakervee’s review into HS2 is ongoing, with a report planned for autumn this year.

Last week HS2 chair Allan Cook revealed that the project can no longer be delivered to the previously agreed timescale or budget, and would cost at least £72bn.

It was revealed in April that Bechtel spent £3.5m on its failed bid for the Old Oak Common station contract, which became the subject of a legal dispute.

Signatories of the HSRIL letter

  • Ian Funnell, CEO, ABB
  • David Barwell, CEO UK, Aecom
  • Nick Crossfield, MD, Alstom UK & Ireland
  • Mark Cowlard, UK CEO, Arcadis
  • Philip Hoare, President, Atkins
  • Mark Bullock, CEO, Balfour Beatty Rail and Utilities
  • Phil Hufton, President UK, Bombardier
  • Vincent Avrillon, Deputy CEO, Bouygues TP
  • Antonius Deelen, CMO, British Steel
  • Alex Vaughan, CEO, Costain
  • David Lowery, Director, Eiffage Kier Limited
  • Noel Dolphin, MD, Furrer + Frey GB
  • Donald Morrison, SVP and GM, Jacobs
  • Karen Boswell, OBE, Hitachi
  • Mike Haigh, Executive Chair, Mott MacDonald
  • Simon Babes, MD, Movement Strategies and Railway Industry Association SME Group
  • Kathryn Nichols, CEO, The Nichols Group
  • Darren Caplan, CEO, Railway Industry Association
  • Mathew Riley, Managing Director UK, Ramboll
  • James Richardson, MD, Skanska
  • William Wilson, CEO, Siemens Mobility
  • Steve Higham, MD, Engineering, Systra
  • Noel Travers, MD, Unipart Rail and Unipart Manufacturing Group
  • Mark Naysmith, CEO, WSP

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