George Osborne will open up the bidding process to build HS2 to Chinese firms and investors on Thursday, offering contracts worth £11.8bn to build the high-speed rail line.
He will open the competition at an event in Chengdu aimed at wooing Chinese investors to back HS2 and other major UK infrastructure projects, particularly across the north of England.
The seven rail contracts are to build tunnels and track beds for the first phase of HS2 linking London and Birmingham, and the Treasury will encourage British and Chinese firms to partner and bid jointly for the work.
The contracts cover the first of three tranches of construction, with stations and railway systems to follow, although the government has a theoretical target price for building the first phase of £16.3bn at 2011 prices. The full HS2 network has a budget of £42.9bn but the government is expected to issue an updated price figure in the autumn – a sum that will increase Osborne’s desire to see private investment in the line.
Anti-HS2 campaigners criticised the launch of bidding before the high-speed line bill had passed through parliament, but HS2 said no construction would take place before 2017, when the bill would have royal assent.
The chancellor’s five-day tour of China stated aim is to make China the UK’s second largest export market – it currently lies sixth, at around half the value of exports to Germany and a quarter of those to the US. The Conservatives have been criticised for shelving human rights concerns as they seek to boost trade and seek Chinese money – now shunning the Dalai Lama, whom David Cameron had previously met.
Osborne, who has travelled on China’s large network of high speed railways during his visit, said the government was committed to rebalancing the economy and building a “Northern powerhouse” with improved transport links. He added: “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 will also invite Chinese investment in infrastructure projects to forming part of his Northern powerhouse plan – a vision that has been compromised by the pausing of major rail projects in the north. The chancellor has been joined by city council leaders from Manchester, Leeds and Sheffield to tout projects including thousands of homes, offices and regeneration schemes in their city centres.
The government said construction of HS2 would create 25,000 jobs. The transport secretary, Patrick McLoughlin, said: “The start of the procurement process for these significant contracts is a major step towards construction on HS2 getting underway in two years’ time and a massive opportunity to help rebalance our economy long before the trains start running in 2026.”
Opponents of HS2 criticised the move, citing safety fears and accusing the chancellor of promoting partnerships to let Chinese firms negotiate EU rules on tender procurements. China’s impressive pace of construction of high-speed rail networks has seen corruption scandals as well as accidents, including a crash in eastern Zhejiang province that killed 40 people.
Joe Rukin, the campaign manager of Stop HS2, said: “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.
“Everything about the Chinese experience with high speed rail should ring very loud alarm bells.”
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