High-speed train on the Beijing-Tianjin Intercity Railway. In just over a decade China has built the world’s largest high-speed network (DF4D-0070/Wikimedia Commons)

Anger at home as UK woos Chinese bidders for high-speed rail scheme

24 September 2015 | By GCR Staff 3 Comments

The UK chancellor George Osborne has encouraged Chinese companies to bid for major contracts in the building of Britain’s proposed high-speed rail network, drawing an angry backlash from the scheme’s opponents.

Speaking in China, he urged Chinese firms to join UK firms to bid for seven contracts together worth $18bn (£11.8bn), which comprise the first phase of the $76bn “High-Speed 2” (HS2), from London to Birmingham.

Osborne used a visit to Chengdu, China, to officially open the bidding process for the mega project today.

He said there would be an “HS2 partnering day” for British and Chinese firms to explore teaming up on bids for contracts.

The government wants to start phase 1 construction in 2017. When operational, the line will cut travel time between London and Birmingham from 81 minutes to 49 minutes.

“Far from HS2 being good for British business, it looks like the Chancellor is turning it into a way of diverting British taxpayers’ money to the coffers of Chinese construction firms”– Penny Gaines, Stop HS2

But opponents of HS2 slammed Osborne’s invitation as undemocratic, since parliamentary approval of HS2 is still at least one year away.

The campaign group, Stop HS2, also criticised China’s record for poor safety and corruption in the building of its vast high-speed rail network.

Osborne, who is on a five-day tour of China to boost economic ties, also invited Chinese bids for $36.6bn (£24bn) worth of property development schemes in northern England.

‘Golden era’

“We are truly entering a golden era of cooperation between our two countries, and it’s crucial that businesses and communities from across the UK feel the full benefit of forging closer economic links with China,” Osborne said.

HS2 Ltd chief executive Simon Kirby said: “The start of the civil engineering bidding process is a major milestone for HS2 as we continue to move towards the start of construction in 2017.

“Over the next decade, the winners of these contracts will go on to build 230km of bridges, tunnels and earthworks and create thousands of jobs across the construction industry.

“Together we will transform intercity rail travel in the UK, build specialist skills and expertise across the country, create at least 2,000 new apprenticeships and build a legacy to inspire the next generation of young engineers.”

China opened its first high-speed rail service only in 2007, but now claims to have 16,000km of high-speed railways in operation, the world’s largest high speed network.

The government is organising an “HS2 partnering day” to give Chinese companies an opportunity to meet UK firms and establish potential partnerships to join up on bids.

The chancellor is inviting Chinese participation in an HS2 skills college, which is due to open in 2017. A skills-swap programme would allow the UK to benefit from China’s expertise as a world leader on high speed rail, and help Chinese investors better understand the UK market, the government said.

The chancellor is also encouraging Chinese companies to take part in an HS2 “regeneration tour”, which would involve visiting areas of huge commercial opportunity in London, the Midlands and the North. Investors would meet with local authorities and visit station sites.

‘Huge concerns’

Opponents of HS2 have been quick to criticise Osborne’s overture to the Chinese, saying it preempts the democratic process because the enabling HS2 Hybrid Bill has not yet passed third reading in parliament.

“There are huge concerns about setting up such large contracts with foreign firms when the start date is as uncertain as it is at the moment”– Penny Gaines, Stop HS2

The group, Stop HS2, also criticised the poor safety record, high-level corruption and financial problems besetting China’s high-speed rail industry.

It pointed to the 2011 Wenzhou high-speed rail collision that killed 40 people, and the sentencing to death in 2013 (later suspended) of former rail minister Liu Zhijun for corruption after he was convicted of siphoning $2.8bn into an offshore bank account.

China’s high-speed rail network, the group alleged, is also facing financial problems because ordinary people can’t afford the fares.

“The Chinese way of doing things certainly seems to be rubbing off on George Osborne, as he has decided to start a £12bn bidding process without any democratic mandate to do so, as Parliamentary approval of HS2 is still at least a year away,” said Stop HS2 campaign manager Joe Rukin.

Penny Gaines, the campaign group’s chair, said: “There are huge concerns about setting up such large contracts with foreign firms when the start date is as uncertain as it is at the moment.”

She added: “Far from HS2 being good for British business, it looks like the Chancellor is turning it into a way of diverting British taxpayers’ money to the coffers of Chinese construction firms.”

Chinese cash welcome

With its estimated cost having risen so far to $76bn (£50bn), HS2 would see in its first phase a new railway line between London and Birmingham carrying 400m-long trains at speeds of up to 400km/h – faster than any current operating speed in Europe. This would be followed by a V-shaped second phase taking services from Birmingham north to Manchester and Leeds.

Chinese investment in HS2 will be very welcome to UK government, which has come under pressure to explain how it can afford the scheme at a time when it is pursuing aggressive spending cuts.

In March the Economic Affairs Committee of the UK’s House of Lords said the government had not made a convincing case for one of the most expensive infrastructure projects ever undertaken in the UK.

The committee calculated that the cost per mile of HS2 is currently up to nine times higher than the cost of constructing high speed lines in France.

China’s interest in building HS2 emerged last year when Chinese Prime Minister Li Keqiang proposed allowing British firms a role in the construction of a 123-km-long undersea tunnel in northern China in return for granting Chinese contractors a role in HS2.

How the bidding will work

According to the UK government, the launch of the bidding process takes the form of a pre-qualification questionnaire (PQQ) for the main civil engineering works of the surface route, and tunnels for phase 1. At this stage suppliers will be allowed to express an interest into all seven packages.

Following the PQQ, successful applicants will be invited to bid for a maximum of four packages at tender stage, with a maximum award of up to two contracts per tenderer.

The seven contracts are split over three geographical areas (North, Central, South), along the phase 1 route from London to Birmingham.

There will also be the option for additional contracts covering the route North of Birmingham, subject to ministerial decisions later in the year.

The civil contracts are the first tranche of the Main Works Packages and cover surface routes and tunnels. ‘Tranche 2’ comprises stations, and ‘Tranche 3’ comprises railway systems. These will be launched in 2016 and 2017, the government said.

Photograph: High-speed train on the Beijing-Tianjin Intercity Railway. In just over a decade China has built the world’s largest high-speed network (DF4D-0070/Wikimedia Commons)