Articles
George Osborne has announced the next phase of the bidding process for the High Speed 2 rail project (HS2), with at least seven new contracts with a total combined value of £11.8 billion now opened up to companies.
The Chancellor of the Exchequer made the announcement at an event in Chengdu, China, aimed at wooing some of China’s biggest investors to be part of the project as well as a raft of other major UK infrastructure projects. The event is part of a wider five day tour of China by the chancellor, aimed at deepening cooperation between the two countries and making China the UK’s second largest export market.
Osborne said: “This government is committed to rebalancing our economy and building a Northern Powerhouse, and improving transport links and launching is key to supporting long-term economic growth across the North and Midlands. That’s why I’m here in China today opening the bidding process for construction contracts worth £11.8 billion, which will propel forward.”
Transport secretary Patrick McLoughlin said: “HS2 provides an excellent opportunity for businesses across the UK with 25,000 jobs created during construction and 3,000 when up and running.”
However, senior executives from the steel industry attending the biennial UK Steel Forum conference raised concerns over loss of contract work to China. Speaking at the event, Niall Mackenzie, the director of energy, materials and agri-tech in the department for Business Innovation and Skills (BIS) stressed that there must be a “fair” competition if the UK government is to abide by the principles of the free market, but pointed to the Crossrail project as a successful example of a major infrastructure project utilising the UK supply chain. He said: “The Crossrail project ran careful bidding processes and around 80-90% of contract work has gone to UK based companies. I am confident that HS2 will be able to do the utmost to ensure the UK supply chain gets a big portion of the work. I suspect there is enough work to go to UK and China, but it is the Chinese investment we are after.”
Terry Scuoler, chief executive at EEF, the manufacturers organisation, said: “With Chinese imports of steel increasing there is a fear in the UK steel industry around the word 'fair' and the repetition of 'abiding by World Trade Organization rules', that will simply allow non-British steel to be the backbone behind the infrastructure of HS2.”
He added: “British businesses must be at the heart of delivering this important and high profile project at every stage, and all arms of government must look to unlock opportunities for UK industry. It is a significant opportunity to further strengthen supply chains and help revitalise Britain's industrial heartlands."
Construction of phase 1 of HS2 is due to start in 2017. Work is also under way on developing plans to transform East-West rail links. The launch of the bidding process for HS2 takes the form of a pre-qualification questionnaire for the ‘Main Civils Works’ contract that cover surface routes and tunnels. ‘Tranche 2’ comprises stations, and ‘Tranche 3’ comprises railway systems. These will be launched in 2016 and 2017.
At the event in China Osborne also announced a new ‘partnering day’ between British and Chinese firms to explore joining up on bids for contracts, as well as launching the Northern Powerhouse pitch book.
The government is currently organising an ‘partnering day’ to give Chinese companies an opportunity to meet UK firms and establish potential partnerships to join up on bids. The Chancellor is also inviting Chinese participation in the skills college, which is due to open in 2017.
The government said that 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 Chancellor is also encouraging Chinese companies to take part in an ‘regeneration tour’, which would involve visiting areas of huge commercial opportunity in London, the Midlands and the North. Investors would have the chance to meet with relevant local authorities and visit station sites.