Private investment ‘could cut HS2 budget by £10bn’

The Tory peer and former Deputy Prime Minister, who advises the Government on regional and industrial policy, will use a speech this evening to highlight the massive savings he believes Ministers could make from the project’s £42.6bn budget by harnessing private investment.

Lord Heseltine has given his firm backing to HS2, insisting it will bring massive investment to the North once it opens in 2033.

“Why does the Government need to hang onto the track?” he will ask, in a speech at the Royal Town Planning Institute. “We have a clear precedent. This Government sold a 30 year concession in 2011 for HS1 to a Canadian Pension Fund for £2.1bn.

“I understand that at the same ratio, something in the order of £10bn could be realised for a similar concession on HS2.”

The Government recently appointed the current head of Network Rail, Sir David Higgins, to take over the HS2 project and look for ways to deliver it more cheaply – and Lord Heseltine will offer a number of suggestions as to how this could be achieved.

“He should consult appropriate institutions about the financing of the project in part during construction in order to ensure their participation in the long term concession,” the Tory peer will say. “He should also explore the possibility of accelerating the whole project, thus offering further savings.”