The UK government has announced the companies that will be building the first phase of the HS2 high speed rail to connect London and Birmingham.
The total value of the contracts is around £6.6bn and is expected to employ 16,000 people.
What is HS2?
HS2 is the long-planned high speed project that will improve rail connections between London and the rest of the country.
For instance, at the moment it currently takes 1 hour and 22 minutes on average to travel from Birmingham to London by train. HS2 hopes to cut this journey down to 49 minutes.
The first phase is focusing on improving the connections between these two cities, before adding in Manchester and cities in Yorkshire. The announcement of where the next phases of the project will go is expected later today.
The chairman of HS2, David Higgins, said in a statement today:
HS2 was always designed to be much more than just a high speed railway and today we can see the opportunities it brings right around the country – spreading prosperity, acting as a catalyst for investment and rebalancing our economy 10 years before the railway even opens. Business now has the surety to invest with confidence to build a legacy for Britain.
Work is expected to begin on the first phase later this year, with a completion date set for 2026.
Which companies are working on the first phase?
1. Balfour Beatty
UK contractor Balfour Beatty will be tasked with building the Northern stretches of the new line, in a joint venture alongside the French construction company Vinci. The two contracts the partnership will take on are valued at a total of £2.5bn
The company’s group chief executive, Leo Quinn, said in a statement:
This is a generational engineering project. HS2 will provide vital infrastructure not only to rebalance the economy, but also to fuel growth in skills, jobs and prosperity across the UK for the future.
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The company’s shares were up 3.5 percent today, at 272.0, after the announcement this morning.
Balfour has been on a winning streak of late after struggling through the 2008 recession and its attempts to get back on track. A few years ago, its competitor Carillion was trying to leverage a takeover of the firm in a £3bn deal, before Balfour rejected the bid three times.
As well, with all the trouble that has been going on at Carillion, Balfour will be more than happy that it didn’t take the deal in 2014.
One of Balfour’s main rivals, Carillion has been in and out of the headlines recently after its chief executive, Richard Howson, stepped down amidst difficulties at the firm. Earlier on in July, the company announced its full-year profit was lower than expectations and it would be pulling out of three construction markets in the Middle East.
It lost 70 percent of its market value, writing off £845m of cash expected from customers.
The new HS2 contracts, worth £1.4bn, should go some way to helping repair this damage.
It will be working on the central route lines alongside the French construction company Effiage’s civil engineering division and Kier Infrastructure.
The UK’s minister for transport, Chris Grayling, told Sky News he hoped Carillion will recover from its current issues.
We’ve had secure undertakings from all of the members in the consortium that they will deliver that contract. My wish is that Carillion get through their current problems but we’ve made sure that it’s not an issue for these contracts.
Following the announcement this morning, the company’s shares were up 11 percent, at 64.86.
Carillion’s interim chief executive, Keith Cochrane, said in a statement:
We look forward to working in close collaboration with HS2 to deliver this iconic project.
Engineering firm Costain has also been awarded contracts to build the high speed rail.
It will work on the Southern aspects of the project, including working on London Euston station’s tunnels and approaches, which is where the trains coming from Birmingham and beyond will terminate in the capital.
Costain announced earlier on in July it will be on track to deliver its full-year results in line with expectations and its tendering levels “remain high”.
Despite the new HS2 announcement today, its shares remained flat at 444.0.
4. Kier Group
The construction company Kier will be working alongside Carillon as part of the new project, after facing its own struggles earlier this year.
In June, it announced that it will take a £73m hit in its full-year results after deciding to close its Hong Kong and Caribbean businesses.
Kier’s share price has reached a monthly high of 1,250.0 after the announcement earlier today.
Not everyone is excited about HS2
Despite being a high speed project, HS2 has taken a lot longer to pull off than it was first thought. In particular, the decision over where the route would go in the North of England has been delayed for several years.
This is because the government’s preferred route through Yorkshire would take it straight through a newly built £30m housing estate, named Shimmer, in Mexborough. Families living on the estate are worried about what will happen to them if the route is approved.
Grayling has said that those affected by the railway would receive “appropriate support and are treated with fairness, compassion, and respect.”
In addition, campaign group Stop HS2 has been against the project from the start due to the effect the lines will have on the environment and the issue of the sheer cost of the project.
Recently, it was announced that HS2 will end up costing the government an estimated £111bn, double the £55bn figure which is currently being touted.
The group’s campaign manager, Joe Rukin, said at the time:
Since the start, the case for HS2 has been invented by the very cheerleaders who intend to rake in billions of taxpayers’ money which is desperately needed elsewhere, so it really is time to ditch this gigantic white elephant, before it is too late.
As part of the announcements today, the Department of Transport has said the work is on track and spending under control, despite concerns raised.