Philip Hammond has spotted that the cost of HS2 concerns people. Surveys like this, a Yougov poll from last week, clearly show that many people don’t think spending £30 billion or more on a railway that links just four cities is a worthwhile investment.
Philip Hammond has been using the figure of £33 billion since early February: in a letter sent to all MPs which he signed he said:
“Phase I and II together, including the network from London to Manchester and Leeds is estimated at around £33 billion. These figures are calculated factoring in construction risk and optimism bias in accordance with Treasury methodology.”
£33 billion should – as the Secretary of State for Transport quotes it to MPs – should be a reliable indicator of the expected costs (in 2009 figures).
But in an interview (free subscription required) with the Financial Times on Friday, Philip Hammond appears to be distancing himself from the costs of the proposed railway.
‘A survey on behalf of the TaxPayersAlliance by YouGov on Saturday suggests that 48 per cent of people want to scrap the scheme – against 34 per cent who disagree – in order to “save £30bn”.
‘But Mr Hammond sought to undermine that argument by saying the scheme’s costs would be “significantly below” the numbers being discussed at present.
‘He went on: “The figure of £33bn … assumes that we build the stations ourselves, build the trains, build the track, and then, once operating, we keep ownership of it. That isn’t going to happen.”’
However, even in his comments to the Financial Times, he is being misleading.
The HS2 Ltd Consultation document clearly states on p53
2.60 The cost of constructing a Y-shaped network linking London, Birmingham, Manchester and Leeds, as well as the Channel Tunnel and Heathrow, is estimated to be £32 billion (in 2009 prices). This includes allowances for risk and optimism bias of more than 60 per cent. In addition, there would also be capital costs for rolling stock procurement and replacement of £5.3 billion and annual operating and maintenance costs of around £1.1 billion (again in 2009 prices).
So as well as £30+ billion for the tracks, there has always needed to be more money spent on the trains and the operating costs.
So, to summarise:
- HS2 Ltd used Treasury guidance to come up with the capital cost of building HS2, which in 2009 figures is between £32 billion and £33 billion. Philip Hammond signs a letter, s sent to all MPs saying HS2 will cost £33 billion.
- Philip Hammond signed the foreword of the main HS2 consultation document, implying that he agrees with the content of the documents.
- The public looks at the figures and says “it’s not worth it, is it?”
- And now Philip Hammond tries to backpaddle away from the costs of HS2.