Welsh row could see official HS2 cost rise to £66.3bn

A fortnight ago, Stop HS2 reported that the official cost of HS2 had jumped to £63.1bn following the Autumn Statement, not only because of the grossly optimistic inflationary increase to the project which ignores the realities of inflation in the rail construction industry, and puts the addition of the proposed Crewe station at zero-cost which brought the bill up to £55.7bn, but also because the Government finally decided to make some payments under the Barnett Formula, adding another £7.4bn.

At the weekend, some of the national press picked up on the Barnett issue with varying degrees of accuracy, which has seen the argument over the glaring inconsistency escalate in Cardiff. The Barnett formula exists to compensate Northern Ireland, Scotland and Wales for projects which don’t spend money there, but only in England. The Autumn Statement set out that Wales would not get consequentials, but the other two would, which if you’ve paid attention to the claims about HS2 in the business case for the project, suggests the Treasury have got Scotland and Wales mixed up.

Not surprisingly, Plaid Cymru have been up in arms about this. The row kicked off when their Treasury spokesman, Jonathan Edwards MP, said that a series of Parliamentary questions and an FOI request shows the Labour Welsh Government has made no formal representations to any UK Government Minister or Department over the last three years, despite claiming they have. Mr Edwards said:

“It’s bad enough that Labour MPs from Wales supported the project despite being fully aware that it will suck hundreds of millions of pounds out of the Welsh economy each and every year. Now, however, the First Minister and his party have been exposed as having done nothing to back up their rhetoric. Indeed, I would say that the First Minister, including in his letter to me, has tried to pull the wool over our eyes.”

“With every week that passes more and more people recognise that there will be a huge injustice unless Wales has full fairness from HS2. It was growing public pressure that saw the Labour Party u-turn in the first place. But just like so many other occasions, the Welsh Government will play to the gallery but never follow through with actions.”

“The reality is that the Labour party supports HS2 and the Welsh branch office will always put the interests of the Labour party before the interests of Wales.”

Since then, the Welsh Government has hit back, saying Plaid have been making ‘misleading statements’, with a spokesman responding:

“Wales will receive a Barnett consequential of over £755m over the next 5 years because of increased UK Department for Transport budgets, a consequence of the investment being made in HS2.”

However, their justification for this is fundamentally flawed as they have stated:

“The way Barnett works is that we get a share of the departmental spend for transport – not individual programmes.”

This is a direct contradiction of what the document accompanying the Autumn Statement says, and to prove that point, Plaid Cymru swiped our edit of the table (below) for their website to back this up.

Extract from the statement on funding policy. Please note, the £759,863 shown in the table is the expected increase in spending on HS2 in 2015-16, not the total spend.

Extract from the statement on funding policy. Please note, the £759,863 shown in the table is the expected increase in spending on HS2 in 2015-16, not the total spend.

With Wales, it’s not just the fact they won’t be getting the compensation, it’s the fact the infamous KPMG report which was slated as ‘essentially made up’ by economists, and had the sole intention of inventing economic benefits of HS2 that don’t exist, said the Welsh economy would be a net loser if HS2 goes ahead. Incidentally, on the same topic, the KPMG report conveniently ‘forgot’ that Northern Ireland is part of the UK, along with several of the Scottish Islands and even part of the mainland.

Mr Edwards has now submitted an Early Day Motion in the Westminster Parliament, with the hope of getting this issue discussed, and the whole saga mirrors a situation in October 2013, when it was claimed and counter-claimed that Wales was already receiving Barnett money as a result of HS2.

If Wales were to get Barnett funding as a result of HS2, the official bill for the project will stand at £66.3bn. However, Plaid are quite rightly not convinced about the official £55.7bn bill without Barnett, and are estimating the final bill will be closer to £80bn. If Barnett funding were added to their estimate and Wales qualified along with Northern Ireland and Scotland, it would put the overall HS2 bill at £95bn.

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One comment on “Welsh row could see official HS2 cost rise to £66.3bn
  1. The recent overall cost figure of £55.7bn. was a result of spinning a dart board…. since the cost of the Y is not known as the route of the line has yet to be agreed, your overall figure of £95,000,000,000 is getting closer to the £134bn. mentioned in the last debate in the Commons.
    Meanwhile, the petitioning charade continues, with scant understanding as to how badly affected householders will be. HS2 Ltd. are now trying to block significant numbers of petitions relating to AP4, petitioners are so inconvenient…

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