Yahoo Finance French merger could push HS2 costs even higher, watchdog warns
The cost of HS2 risks spiralling even higher as the merger of two French contractors leaves the taxpayer at risk of a worse deal on a £300m contract.
The Competition and Markets Authority (CMA) said the £6bn merger of engineering companies Bouygues and Equans “could result in a higher-cost final contract, which would have an adverse knock-on effect on taxpayers”.
Bouygues-owned Colas Rail has been shortlisted alongside a consortium led by Equans in HS2’s £300m tender to install the cables. The other two bidders for the lucrative contract are Balfour Beatty, and the China Railway Electrification Engineering Group.
Colin Raftery, senior director at the CMA, said: “Competitive tenders help make sure that taxpayers get the best possible deal when large public works, like HS2, are undertaken.
“The HS2 tender for overhead catenary systems is at an advanced stage, but the remaining bidders are continuing to compete on the final aspects of the contract. It’s important to ensure that this process isn’t undermined, as this could result in unnecessary additional costs, ultimately leaving taxpayers worse off.” HS2 has been contacted for comment.
HS2 has suffered from spiralling costs over the years and been forced to axe parts of the line more recently to limit the burden on taxpayers amid concerns over dwindling post-pandemic demand for rail travel.
The latest official estimate for the cost of the full "Y-shaped" scheme was £98bn, prompting ministers last year to cull HS2’s costly eastern spur to Leeds, a move that drew criticism from red wall MPs.
More recently, HS2 minister Andrew Stephenson quietly cancelled a £3bn section of HS2 that would have allowed Scotland to benefit from the controversial high-speed rail line. The 13-mile “Golborne Link” near Manchester was dropped, with ministers promising to review other options.
Founded by Francis Bouygues in 1952, Bouygues has grown to become one of the world’s biggest engineering companies. It is a constituent of the CAC index of France’s 40 largest listed firms.
Equans, meanwhile, is a subsidiary of another CAC 40 company: utilities giant Engie.
A spokesman for HS2 said: “We are committed to running open and fair procurement competitions with robust processes in place to deliver the best value for the UK taxpayer. Strong competition across the rail and construction industry is vital and we support the Competition Markets Authority’s interest in this area.”
