A briefing paper written for the House of Commons Library has revealed that at the time of the 2015 spending review, the Department for Transport set a cost estimate for HS2 of £64.9bn. Instead of making this figure public, over the last four years ministers have kept this figure secret, only stating that the official budget for the project is £55.7bn.
Until now it has never been divulged that the official estimate of costs which was set four years ago is £9.2bn over the stated budget. This is especially concerning as Transport Secretary Chris Grayling and others have regularly answered questions concerning the cost of HS2 with the response that the budget is £55.7bn, including when MPs were voting to give Phase 1 of HS2 final approval in 2017.
The report clearly states:
“Various estimates of costs get circulated in the public domain, most notably the £55.7 billion for the full Y-Network. It is important to note that this is not a cost estimate, but rather a funding envelope. The Government remains committed to delivering the scheme within this envelope but estimates at the time of the 2015 Spending Review put the costs of the full Y-network at around £65 billion (in 2015 prices); although this was not published at the time by HS2 Ltd or the Department for Transport (DfT).”
The report goes on to state that whilst the National Audit Office reported in 2016 that the Government was looking to make £9.2bn worth of savings from the scheme, they too did not publish the £65bn figure. This led to the widespread misunderstanding that HS2 Ltd were seeking to reduce their projected spend from £56bn, not to £56bn. However the NAO also stated that “The Department and HS2 Ltd’s economic appraisal assumes that they will deliver the programme for significantly less than its available funding.”, suggesting even more cuts to the cost estimate which have not transpired were expected at that time.
The report also questions whether HS2 is the best use of resources, if the aim of the project is to deliver capacity on the network. It is suggested it may not be the most cost effective way of addressing the problem, stating “The additional capacity provided by HS2 on the West Coast Main Line appears to be over and above what is required to meet capacity pressures for several decades.” and that “Some have questioned whether it makes sense for such a surplus of capacity to be delivered on one part of the network when other sections remain capacity constrained, particularly the lateral connections in the North of England.”
The paper found that while the alternatives to HS2 would not provide as much capacity, they would provide enough and could be delivered at a much lower cost, approximately between 20 and 25% of the cost of HS2.
Stop HS2 Campaign Manager Joe Rukin responded:
“We have known for nine years that the case for HS2 has been founded on spin but this report makes it absolutely clear that Ministers, the DfT and HS2 Ltd have been carrying out a calculated conspiracy to mislead the public and parliament about the known costs of HS2 for at least the last four years. You have to remember that MPs voted for HS2, completely unaware that ministers and mandarins knew the estimated cost of the project was significantly higher than they were being told. With weasel words, they will try and claim they have done nothing wrong as they have always said the ‘budget’ is £56bn, not the ‘estimated cost’, but to have covered up the fact they were £9.2bn over budget the moment that budget was set, is simply a scandalous subterfuge.”
“Besides showing that the true costs of HS2 have been supressed for years, the report also points out that it is not the best way of achieving its stated aims, proving that the entire case for this white elephant has been founded on deception, deceit and dishonesty. It is well past time the whole thing was scrapped as one thing is sure, whatever the cost estimate was back in 2015, or is today, it’ll end up costing billions and billions more. The next Prime Minister must have the guts to stand up to the vested interest lobbyists driving this gravy train and pull the plug.”
Penny Gaines, chair Stop HS2, said
“For over four years, the government have been covering up the true estimates of the cost of building HS2, citing the funding envelope of about £55 billion, knowing that this was massively below the actual cost estimates for building the railway, of about £65billion. Highlighted by the Commons Library report is the fact that HS2 creates excessive over capacity in relatively small area of the rail network, based on out-of-date predictions, whilst doing nothing to relieve crush hour conditions for ordinary commuters into Northern cities.”
“What is equally shocking is that the Benefit Cost Ratios are not based on the cost estimates or even the funding envelope, but assume that HS2 will be built for significantly less than its available funding. This is a highly irresponsible way of running a government project, especially one that has a cost of tens of billions taxpayers money, and we do not think any inquiry run by a former chair of HS2 Ltd will have the impartiality to properly assess whether HS2 is the right project for Britain’s transport needs.”