MPs ‘amazement’ as £9bn of HS2 savings ‘pop up’ to wipe out a £9bn overrun.

HS2 Ltd have appeared in front of the Public Accounts Committee following the publication in June of the latest report about the project from the National Audit Office.

Possibly the most contentious point came as a result of the revelation that when the official costs had been updated to £56bn last November, it was not revealed that there was a £9bn overrun, and since then exactly £9bn worth of potential savings have been found. The Stop HS2 campaign believes that as only around £2bn of those savings are confirmed, HS2 Ltd should now state that the official cost of the project currently stands at £63bn.

Committee member David Mowat MP said:

“It is dramatic—you have taken £9 billion off it. That is fantastic. The Cabinet Secretary needs to be congratulated if that is what he can do on projects. That is a third of the thing [of Phase 2 costs] gone out, by doing things that don’t appear to be miraculous.”

“If you can change the estimates like that, it makes one wonder how solid stuff is behind it.”

“It does seem a little odd to me, given how complicated it is—the route isn’t finished and all the rest of it—that you can vary your estimates by 50% like that even at this stage, and seem to be telling the Committee that that is a normal process.”

PAC Chair Meg Hillier MP seemed equally sceptical, saying of the £9bn savings:

I share David Mowat’s amazement, really, that it seems that just popped up.”

However, later on in the session HS2 Ltd Chief Executive Simon Kirby admitted these savings have not been confirmed, reporting:

Just to clarify, we have identified how we are going to drive down costs; we have yet to drive down the costs, which is obviously not unimportant.”

Also on the subject of costs, Philip Rutnam, Permanent Secretary of the Department for Transport contradicted what the National Audit Office had reported last month about Review Point 1. It had previously been stated that passing Review Point 1 was required to delegate authority to commence procurement of the main infrastructure works, up to contract award stage.

Rutnam claimed that the assessment about cost and schedules as part of Review Point 1 was a ‘positive assessment’ and that: “The message coming out of Review Point 1 was that the company was fit and ready to proceed with the tenders; there was no doubt about that.”

However, the National Audit Office report published a fortnight ago clearly states:

“By May 2016, HS2 Ltd had the capability it had originally planned to reach by July 2015, but did not pass the first review point due to concerns about cost and schedule.”

Other points which came out during the hearing include:

  • HS2 Ltd are only 60% certain they can deliver Phase 1 on time.
  • The Sheffield route change proposal is ‘just a proposal’ at this stage, and if it goes ahead, services from the city would go down from the original proposal of 5 or 6 per hour to 1 or 2 per hour.
  • The Phase 2 route should be announced in ‘Autumn’. (However this was also the stated projection in 2014 and 2015)
  • HS2 Ltd plan to submit a Hybrid Bill for Phase 2a next year.

Stop HS2 Campaign Manager Joe Rukin responded:

“It seems absolutely beyond imagination that HS2 Ltd have said they have a £9bn cost overrun on the £56bn bill for the project, and then as if by magic £9bn worth of savings appear from thin air. Only £2bn of those savings, partly derived by moving the route around Sheffield seem to be confirmed, so the reality at the moment is HS2 is on course to cost £63bn, which should be the final nail in the coffin of this white elephant.”

“This all just demonstrates that the costs of HS2 are all over the place, and you simply cannot trust anything coming out of HS2 Ltd. The National Audit Office clearly stated that HS2 Ltd recently failed their review point on the costs and schedule, which should have stopped them from going ahead with the tenders, but we’ve just had the head of the DfT saying exactly the opposite and that there was no doubt they were ready to go out to tender on billions and billions of pounds. This demonstrates perfectly that HS2 is totally out of control and even when it fails Government tests, they simply ignore them and press ahead without a care in the world. Theresa May must urgently review this project as a matter of course.”

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2 comments on “MPs ‘amazement’ as £9bn of HS2 savings ‘pop up’ to wipe out a £9bn overrun.
  1. Pingback: STOP HS2 | May has cancelled overblown white elephants before, and HS2 have already blown £1.4bn.

  2. All these numbers now mean nothing and no one knows what the cost/scope will be
    Why don’t we send Teresa May a blank cheque to sign?

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