Where’s the extra HS2 annual spend coming from?

Last November, when David Higgins was “tasked with reporting on how to reduce the £42.6 billion cost of the scheme” and asked to report in March, no doubt, the Government hoped that he would pull some cost-reduction rabbit out of the hat that could be used to bolster the flagging scheme.

But his extensive review failed to cut a pound from the budget.  Instead he cut the link to HS1, described last year by organisations such as Centro as “essential”.  According to the latest statement from McLoughlin, he will withdraw safeguarding from the HS2 Hybrid Bill as soon as possible.

However, McLoughlin also said that the construction of Phase 2 should be speeded up.  Even if you believe his claims that this will reduce the overall cost, building more in any one year will mean the costs in that year will be higher.  Proponents of HS2 have long argued there’s no problem for the Treasury in spending two billion pounds a year on HS2 construction, arguing that it will simply transfer over from Crossrail. This simplistic argument ignores the fact that over 60% of Crossrail funding comes from Londoners and London businesses, leaving over a billion of unfound spending per year.

 

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