Last week the government awarded £6.6bn in contracts to build the new high-speed HS2 railway between London and Birmingham, to companies including crisis-ridden construction firm Carillion.

Construction work is due to begin next year on new stations, tunnels, embankments and viaducts on the London to Birmingham line, which forms the first phase of the controversial HS2 project. The civil engineering alone is expected to create 16,000 jobs.

It was welcomed as a “shot in the arm for Brexit Britain, providing thousands of jobs and billions investment that helps close the north-south divide,” but is that really the case?

According to CMF Capital’s John Mulheron, perhaps more worrying is the budget to deliver and whether it will support the vision of wider UK growth and prosperity. “The figures are eye-watering and the debate on whether HS2 is value for money a hot topic. Back in January 2012 £32.7bn was set aside for the total project. That figure now stands at £55.7bn.”

“Opponents have warned that the government is underestimating the costs, and that construction has already been delayed. The overall budget was revised up, but estimates drawn up on behalf of Lord Berkeley, chairman of the Rail Freight Group, suggested it could be as high as £111bn which would be a serious overspend and bring into question its value for money.” Commented Mulheron.

Lord Berkeley’s calculation was produced by Michael Byng, an expert for the Department of Transport who devised the standard method used for Network Rail to cost projects. It essentially works out to £403m a mile to build, which is 15 times the ‘cost per mile’ compared to the latest French TGV project extension. The stretch from London Euston to Old Oak Common has escalated to £8.25bn alone.

Whilst that figure was dismissed as nonsense, it’s worth pointing out the Chris Grayling’s submitted budget doesn’t include trains – about £7bn of new ‘state of the art’ rolling stock is needed. With the Government’s focus on Brexit negotiations, the fall-out from Grenfell and the fall-outs within the cabinet, it seems wise to urgently assign a few more bean counters to Grayling’s team for a little more diligence. Diligence to date has cost about £2bn in planning fee’s alone – nice work if you can get it.

So, what are the reasons for the spiralling costs? “The UK is densely populated with high degrees of home ownership (for those over 35 years old) and a high use of the railway infrastructure. All of which makes the price of land and the cost of disruption very expensive. If this was China or Russia the bulldozers would simply pile through. Fortunately, here people have rights and they are prepared to dig their heels in over them, this is likely to slow progress even further.” Said the CMF Capital Managing Director.

Whilst HS2 will create direct engineering and construction jobs, it will also impact employment in the short term. As homes get demolished local business communities that relied on their weekly spend will go under. In a poll, back in November last year an overwhelming 77% of the public would prefer the billions being spent on HS2 to go to the NHS and public services. No doubt given the latest crime figures that percentage might be a touch higher.

Looking at the proposed phase 2 routes also unveiled this week, the obvious omission is there is still no plan to join Manchester to Leeds or Leeds to the North East. The M62 is a daily carpark and the rail network linking these key cities frankly embarrassing.

Transport for the North, the body set up to deliver new infrastructure argues that by just improving transport connections across the Pennines – halving the Leeds to Manchester journey to 30mins – it would bring greater economic benefit than the high-speed link to London ever could. A five-fold boost to rail travel by 2050 could add £100bn to the region’s economy and create 850,000 new jobs.

“The other ongoing argument is that whilst HS2 will increase capacity to our current creaking Victorian network, it will simply make it quicker to travel to London and not benefit the northern powerhouse regions. That phrase that has all but disappeared from Tory manifestos since George Osbourne was told to get a new handful of jobs.” Commented Mulheron.

With businesses scrambling to promote themselves to a wider global audience in the wake of Brexit, it’s no wonder the north of England, with a GDP of £350bn – equivalent to the 21st largest economy in the world and exports 19% of the UK total continually feels like London’s second cousin twice removed. Expanding Heathrow at vast cost is another example of a London centric approach to growth and there are no plans for HS2 to link up to the airport.

Whilst the phrase Northern Powerhouse might have died, the region’s revival goes on. Aerospace, manufacturing, engineering and digital industries are growing at pace. The regional purchasing managers’ surveys show growth faster than the national average. But it’s still not shifting the ‘productivity needle’. Which, is what ministers and economists are pinning on HS2 to help solve.

“As ever, there is no one silver bullet and we need more immediate solutions than a project set to take decades to complete. Currently, not a single metre of track has been laid. To compete in a global economy the region needs to take advantage of new trading opportunities beyond Europe. There is capacity at Manchester and Leeds airports, so opening new trans-Atlantic or Asian routes would send an instant signal that we’re open to business across the country.” Concluded Mulheron.

The news that HS2 is progressing should be met with gentle applause, but more needs to be done in the short term to build confidence that in turn fuels investment. One final point to note, HS2’s announcement coincided with Elon Musk receiving verbal approval from the US Government to take his Hyperloop concept to the next stage.

Journey times from Washington to New York City would be around 29mins. Edinburgh to London, phase one of his European ‘Hyperloop One’ would be about 50mins of travel. Given the pace at which HS2 is likely to progress, Musk might still beat us to the ticket barriers.

The search for world-class architects, designers and developers to deliver four ambitious and iconic new HS2 stations has begun with the publication of contract opportunities for station designs and a development partner for London Euston.

The winning bidders will work with High Speed Two (HS2) Ltd to develop and refine the detailed plans for three brand new stations, at Birmingham Curzon Street, Birmingham Interchange and London’s Old Oak Common, as well as a major expansion of London Euston.

The stations will welcome tens of thousands of passengers every day from all over the UK, providing easy and accessible onward connections to local transport, airports and connecting rail services as well as step-free access from street to seat. In total more than 170,000 new jobs are expected to be created in the wider development areas surrounding the four stations.

A separate contest, will seek a Master Development Partner to advise on, and later take forward, development opportunities for new homes, offices and retail space above and around the revamped London Euston. The winner will work with HS2 Ltd, Network Rail, the station design contract winner and local authorities to deliver a unified plan to unlock the full potential of the area.

This comprehensive approach has the potential to deliver up to 21 hectares of development space as well as improving accessibility and creating new public and green spaces across the wider Euston site.

Welcoming the launch of the competition, Transport Minister Andrew Jones said “The search for design teams to produce plans for new stations and world-class amenities for London Euston, Old Oak Common, Birmingham Interchange and Birmingham Curzon Street stations is a major step towards making HS2 a catalyst for growth across the country. The winning bidders will need to ensure the stations provide the best possible customer experience. There are also huge opportunities for development near all the HS2 stations. HS2 Ltd is progressing its search for a partner to deliver new homes, shops and offices around Euston station once the core HS2 work is complete.

HS2 Ltd Commercial Director Beth West added “We’re looking for the brightest and the best from across the industry to help us deliver one of the most tangible legacies of the HS2 project – three brand new stations and a major expansion of London Euston.

“All four present unique challenges and opportunities for the winning bidders. Together we will deliver world-class designs that help unlock wider local regeneration opportunities and provide unparalleled levels of accessibility, ease and convenience for the travelling public.”

Group campaigning against HS2 have highlighted large disparities in figures predicted by HS2 officials and politicians and the actual financial cost to Britain.

George Osborne announced as part of the Autumn Statement that there would be a £20bn increase in transport infrastructure spending. However, what he didn’t mention is that over a quarter of this is accounted for by an 11% increase in the cost of building HS2. Paragraph 2.85 of the Autumn Statement states:

“Construction will begin on HS2 during the Parliament, and the Spending Review confirms a funding envelope of £55.7 billion in 2015 prices, which will deliver HS2 from London to Birmingham by 2026, and to Leeds and Manchester by 2033.”

Up until now, the official cost of the construction of HS2 has been stated as £42.6bn in 2011 prices, with a further £7.5bn added for the cost of trains, so £55.7bn represents an increase of £5.6bn, or 11%. This figure for the overall cost of the HS2 project is almost double the original estimate published in 2010.

Mr Osborne also said that along with HS2, the Great Western, Trans Pennine and Midland Mainline electrification projects can go ahead. As all of these projects have been beset with serious budget problems, it is likely that the increase in capital spend within the Department for Transport is simply to cover the cost over-runs which have been caused by chronic mismanagement.

Back in July the Trans Pennine and Midland Mainline projects were ‘paused’ by Government due to mismanagement and cost over-runs, only for them to be given the go-ahead in September. However, the costs of these projects is unclear. Just last week the Public Accounts Committee said it was “staggering and unacceptable” that current estimates for Great Western Electrification stand at £2.8bn, against a budget in 2013 of just £874m.

This news comes just a day after it was revealed that 46 members of staff at HS2 Ltd are paid more than the Prime Minister.

Stop HS2 Campaign Manager Joe Rukin responded “HS2 is abysmal value for money, and the increasingly dogmatic support for this white elephant and its’ spiralling costs is completely unfathomable. An 11% increase in the projected costs for construction is shameful after promises that the costs would be kept under control, but it is just another in a long line of HS2 cost hikes, and there will be more to come.”

“With trains not due to run for over another decade, who knows where the cost of this vanity project will end up and what else will have to be cut to pay for it? A responsible chancellor would be asking serious questions about whether HS2 is really worth it, not chucking more money at a boondoggle which would only benefit the richest in society. This is simply rewarding chronic mismanagement, and signalling that there is no need for budgetary control when it comes to HS2.”

Penny Gaines Chair of Stop HS2 added “HS2 is clearly a white elephant. Transport in the North does need improvement, but it isn’t the links to London which are holding back the economies of the North. It’s the ability to cross the Pennines, it’s getting into city centres from local towns. This is where the money needs spending on transport, not on one big showy railway line.”

“The government should make the decision to cancel HS2. There are far better uses for the money, which will have far better long and short term results. The people in charge of Network Rail when the now-delayed electrification programme was being developed are now in charge of HS2. They made a mess of that, and now they are making a mess of HS2.”

“Time and again, the government and HS2 Ltd have been overly optimistic about the cost of building HS2. It’s almost as if they picked a figure for the costs which was just about politically bearable, and then they hope no-one will notice when they increase it.”

The section of HS2 that connects Birmingham with Crewe is now set to open six years ahead of the original schedule in 2027.

This announcement follows last week’s Autumn Statement revealing that the overall cost of HS2 is now rising to over £55bn, £5bn more than the projection made two years ago of £50.1bn.

In the Autumn Statement the Chancellor also announced £200 million to support the operations of Transport for the North (TfN) and its delivery of Oyster-style ticketing across rail, bus, metro and trams across the region. He also confirmed at Spending Review 2015 that £13 billion would be spent on transport in the North over this Parliament. TfN and the Department for Transport have also jointly launched their Autumn Report on the Northern Transport Strategy.

Chancellor George Osborne said “bringing forward this part of the HS2 route by six years is a massive step in the right direction for the Northern Powerhouse where high speed rail will play a big role in connecting up the entire region with the rest of the country.”

HS2 Ltd Chairman Sir David Higgins added “This is another significant milestone in the development of Britain’s high speed rail network. By accelerating the second phase between Birmingham and Crewe, we will bring the capacity, connectivity and regeneration benefits of HS2 to the North-West and Scotland years earlier than originally planned. It has also been very gratifying, as we develop the plans for Phase Two, to see a consensus grow among the city regions in the East Midlands and Yorkshire on the siting of future hub stations at Toton and Leeds city centre respectively. We all recognise the huge contribution this infrastructure investment can make in helping to rebalance our economy.”

The plans, coined ‘Phase 2a’, is raising concerns among those who disagree with the building of a High Speed Rail in Britain. Many feel that bringing forward the completion date for just 40 miles of track will surely raise questions as to whether if HS2 is built, it would ever get further than Crewe.

Stop HS2 Campaign Manager Joe Rukin criticised the announcement, saying “the supposed ‘fast-tracking’ of the route to Crewe, coupled with the rising costs of HS2 and real problems with the practicality of the rest of the proposed route, will surely lead many to conclude HS2 would never get further than Crewe. Far from showing a commitment to the North of England, going ahead with this proposal punts the links to Manchester, Yorkshire and the East Midlands firmly into the long grass, and if being a rail hub equaled economic prosperity, Crewe would already be the most prosperous town the the country.”

“HS2 is abysmal value for money, and the increasingly dogmatic support for this white elephant and its’ spiralling costs is completely unfathomable. The costs of HS2 went up 11% in the Autumn Statement and with trains not due to run for over another decade, who knows where the cost of this vanity project will end up and what else will have to be cut to pay for it? A responsible chancellor would be asking serious questions about whether HS2 is really worth it, not chucking more money at a boondoggle which would only benefit the richest in society. This is simply rewarding chronic mismanagement, and signalling that there is no need for budgetary control when it comes to HS2.”