HS2 rising costs, falling benefits

From 51M:

As the year draws to a close the total cost of HS2, including payments under the Barnett formula, has broken through the £60bn barrier. The figure now stands at £61.3bn.

A 2013 report from the Public Accounts Committee characterised HS2 as a project with rising costs and diminishing returns. The Committee’s report included the following extract: ‘the Department (for Transport) is 95% confident that it will stay within the £42.6 billion indicative budget it has agreed with HM Treasury for the full Y-network, excluding the £7.5 billion cost of trains. The confidence was misplaced. Within two years the indicative budget has been exceeded and there is every likelihood that before construction gets underway in 2017, costs will increase further.

Major infrastructure projects in the rail sector are currently experiencing substantial inflation. The probability is that HS2 will not only be subjected to similar inflationary pressure but also be a principal cause for creating even greater demand with respect to the most sought after engineering and construction skills.

Where does leave the benefit –cost ratio?

Once the revised budget is factored-in, the strong probability is that the BCR will fall below 1.0 for phase 1 and below 2.0 for phase 2.

No related content found.

Share Button
Share this...
Share on FacebookShare on Google+Tweet about this on TwitterPin on PinterestShare on LinkedInEmail this to someone
2010-2017 © STOP HS2 – The national campaign against High Speed Rail 2