Commons Library Alters Briefing to Prove £65bn HS2 Cost Estimate Came From Government.

A briefing paper written for the House of Commons Library has been edited following accusations from the Department for Transport, that the £64.9bn HS2 cost estimate it cited had effectively been made up by the National Audit Office. The paper now specifically references a 2017 Department for Transport document which shows that at the time of the 2015 spending review, the estimated costs of HS2 were running at £9.4bn more than the stated £55.7bn budget.

When the House of Commons briefing was first published on 20th June, it claimed that £55.7 billion, which has been the official stated cost of HS2 since 2015 was misleading because this represented the available budget, not the actual estimate of costs. The report stated:

“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).”

This prompted an angry response from the Department for Transport, who said the report was wrong and effectively accused the National Audit Office of making up the £65bn figure in their 2016 report. Their official response was to say:

“We fundamentally disagree with this report and this figure is incorrect. The Spending Review in 2015 established a long term funding envelope of £55.7bn and we expect HS2 Ltd to deliver to this budget.”

Their response went on to say that:

  • The £64bn [actually £65bn] figure is based on 2016 NAO guidance and is not a Government figure.
  • This stated cost pressures of c. £7bn and efficiency opportunities of up to £9bn had been identified on Phase 2.
  • To include the pressure figure, ignore the efficiency opportunities, and report that as Government’s view of costs at the time is fundamentally incorrect.

It has been claimed that DfT also told reporters that they were attempting to get the House of Commons report changed, and whilst this has happen, it has not worked out how they wanted. The HOC report now specifically details the forensic mathematics process which has been used on figures taken directly from the Department for Transport report on the Phase 2 business case, which now raises their 2015 cost estimate to £65.15bn. The DfT report in question was produced in July 2017, and specifically stated that the numbers used in it related to cost estimates at the time of the 2015 spending review.

That official DfT report stated that at the time of the 2015 Spending review, Phase 2a would need £745m of savings to hit the £3.72bn budget, putting the 2015 estimated cost of that part of the project at £4.465bn, whilst the costs of building Phase 2b were presented in a chart. That graph very specifically shows that the pre-contingency cost of building phase 2b was £20.973, which would rise to £29.362bn after adding the contingency. The data available in the report puts the cost of rolling stock for Phase 2 at £4.17bn. Adding those three figures; £4.465, £29.362bn and £4.17bn, puts the total cost estimate of Phase 2 of HS2 at £37.997bn, which when added to the official £27.18bn budget for Phase 1, puts the overall cost estimate of HS2 at £65.17, at the time of the 2015 spending review. This number is £9.5bn above their stated £55.7bn ‘budget envelope’.

A chart from the 2017 DfT business case for HS2, which has now been added to page 37 of the House of Commons report.

 

So whilst the number £65.2bn does not specifically appear in the HS2 2017 Phase 2 business case, the simple mathematical process of adding the figures which the Department for Transport did publish in that report to their own Phase 1 cost estimate comes out at £65.2bn.

Stop HS2 Campaign Manager Joe Rukin responded:

“When forensic mathematics first revealed that in 2015 the Department for Transport had estimated the actual cost of HS2 at £65bn, they unbelievably tried to suggest that the House of Commons library researchers had got it all wrong and that the National Audit Office had made the numbers up. Just because they did as much to camouflage the costs and never actually used the number £65bn, the Department for Transport seem to think that adding up the numbers their own report contained is somehow unfair and ‘fundamentally incorrect’, which is typical of the levels of denial we regularly see from proponents of HS2.”

“The excuse being used to pretend the numbers from 2015 don’t add up to £65bn seems to be that the DfT are saying the House of Commons has used the wrong type of numbers! Whatever the truth is, the publically available cost estimates for HS2 are years out of date and have not been revised to reflect significant changes to the actual proposals. Both the former and current chairs of HS2 Ltd have admitted the project cannot be delivered on time and on budget to the specified scope, and it is long past time for the DfT come clean about where the estimated costs are now.”

The paper as published on 20th June is here, the one from 26th June is here. The landing page on the House of Commons website is here.

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