The Public Accounts Committee have once again questioned the case for HS2 in a letter sent to the Department for Transport this week.
The letter follows on from an oral evidence session in October which covered a number of issues.
Programme uncertainties within HS2
We welcome the HS2 Minster’s first update to Parliament and hope that it will be the start of a more open and transparent relationship with Parliament and the public regarding this programme. We also particularly look forward to the Minister’s review of the land and property programme. However, it is frustrating that there are still signs that HS2 Ltd and the Department are not taking our concerns over transparency seriously. We spoke about the FOI log and Board Minutes being out of date and the surprisingly high number of non-disclosure agreements in use in the programme. You agreed to investigate the issues with the FOI log immediately.
We remain concerned that there continues to be a large amount of uncertainty within the Programme, such as the outcome of Phase 2b and the implications for rail connections in the north, as well as decisions on Euston station. There will also be uncertainty over the environmental impacts of the programme. You explained that an environmental sustainability committee has been set up to consider these impacts. However, this seems late in the day considering construction work has already begun in many places.
In addition to the uncertainty within the programme, the value for money could also be significantly affected by changes in passenger demand post COVID. You told us that the programme is expected to deliver for passengers over the next 100-150 years and so you have not updated your investment appraisal to reflect the pandemic. Your answers appeared to assume that travel patterns and growth will return to, or be the same as, those before the pandemic. This assumption should be thoroughly tested and explicitly justified, if it remains the government’s best estimate.
Given that the aviation sector is seriously grappling with the potential for structural changes, including online meetings reducing the demand for short stay international business trips, we are concerned that your approach and sensitivity analysis may already be out of date and therefore an incomplete basis for investment appraisal. We note that the April 2020 business case provided some sensitivity testing on reduced passenger demand but was prepared prior to the full impact of COVID. We also welcome your ongoing work to review how best to undertake investment appraisal during these uncertain times, but this does not address the urgency of the need for up to date analysis informing decision-making on this £98 billion project.
• We strongly recommend that you perform an up to date assessment of the different scenarios that could affect the long-term business case of HS2 as a result of the pandemic, particularly passenger travel patterns, in order to help you to establish what action you need to take to ensure value for money for taxpayers;
• Please write to us within six months with details of your scenario analysis and the impact on forecast benefits. With the nature and extent of the Department’s commitment to high speed rail in the East Midlands and Yorkshire remaining unclear we ask that this analysis includes a consideration of trade-offs on benefits and costs which are informing the government’s choice between different investment decisions on the future of Phase 2b’s eastern portion and its relationship with other rail connections in the north