Report shows case for HS2 has been manufactured, is out of control and will cost £53bn.

Just three days after Secretary of State for Transport Patrick McLoughlin presented a Paving Bill to Parliament which asks for a blank cheque for the HS2 project, the National Audit Office has produced a damning report into the project, which demonstrates the project will cost £53bn.

Key findings of the report include:

  • The timescales for the project are over-ambitious, which could lead to mistakes being made.
  • There is a £3.3bn black hole in the budget, and VAT, which may not be recoverable by HS2 Ltd has never been included in the figures. Adding these factors to the current estimated cost of construction (£32.7bn) and trains (£8.2bn) puts the total cost of the project at £53bn.
  • Strategic reasons for developing High Speed 2 are not presented well in the business case, and it is not clear how High Speed 2 would deliver and rebalance economic growth and create jobs.
  • The DfT have used the fact there has been general growth in rail travel to justify HS2, but have not demonstrated that capacity is needed between the limited destinations HS2 would serve. There has been a lack of transparency, and this information should have been necessary to conclude why alternative options which gave better value for money would not deliver sufficient capacity to meet forecast passenger demand.
  • The DfT have used out of date modelling to justify the case for HS2. Examples include assuming passenger numbers will go up more quickly in relation to GDP than they do with other projects, and using 12-year old data to calculate the £12.6bn worth of benefits for business travellers. The later depends on the assumption that no business passenger ever does any work on a train.
  • HS2 Ltd have not assumed there will be any difference in price between HS2 and normal train lines, despite the fact HS1 is a premium priced service.
  • The Department’s internal auditors reviewed the Department’s governance and sponsorship of High Speed 2 in October 2012. The internal auditors reported on progress in April 2013 and found that only one of their recommendations had been fully implemented.

Stop HS2 Campaign Manager Joe Rukin said:

“Just a couple of days after Patrick McLoughlin asked MPs to give him a blank cheque for HS2, the National Audit Office have produced a damning report into the project. They say that HS2 Ltd have used out of date modelling, they haven’t been transparent, that the business case doesn’t make sense and most importantly that the total bill is now up to £53bn. The project is out of control because the politicians involved have been seduced by the words ‘high speed rail’ and have been complicit in fabricating a case for their vanity project.”

“The National Audit Office can’t say HS2 will be value for money, but do say there is a three billion pound black hole in the project, before 20% VAT, which has so far been missed by the incompetents running this project, is added.”

“They say there is no evidence that HS2 will boost growth or help the regions, they say that they have fiddled the figures by using 10 year old data to boost the economic case and they say the timetables put forward are completely unrealistic. To put it simply, they say everything the Stop HS2 campaign has been saying for three years. The Government and MPs haven’t wanted to listen to us, but the surely have a duty to listen to the National Audit Office.”

Penny Gaines, chair of Stop Hs2 said:

“The National Audit Office has identified that the current timetable for HS2 is overambitious.  The Department for Transport is not allowing enough time to do necessary environmental surveys.  In particular, rushing through the current design stage for phase 1, just to meet artificially set deadlines for presenting the hybrid bill means mistakes are going to continue to be made.  These will be costly, both for individuals who have to petition Parliament about the mistakes in the design, and also for MPs who deal with the bill during it’s passage.

“It’s time ministers stopped their headlong rush to build HS2, and listened to what this independent public body is saying.”

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12 comments to “Report shows case for HS2 has been manufactured, is out of control and will cost £53bn.”
  1. I am amazed that any business group is continuing to support hs2 when it’s business case has been trashed by such a reputable body as the nao

  2. I find it very worrying that the govenment transport dept say that margaret hodge team have been working on the wrong information ,if this the case why can not they tell us the correct information so we can see that our taxes are not being waisted so come on give us the info we need .i do not hold much hope of this because it is all smoke and mirrors ,all they want is a blank check book to spend our taxes on hs2 before more bad news comes out .they are worse than the bankers .they are stopping people moving on with there lives

  3. Pingback: HS2: What would it mean for the UK commuter? | Clever Commuter

  4. Not just about the numbers and projections but the design of the route is only one of other overlays with Network Rail with enhancements.

    There are other costs and economic income losses possible not in the estimates and not accounted for currently.

    The opportunity lost will be not to reconsider the wider options that Crossrail, Network Rail and others could evolve if siloism and empire building did not apply.

    The UK needs some large scale developments for example the power stations and grid upgrades as well as some of the bottleneck removals on rail and road. This obsession with HS2 has reduced the focus on the more immedate. Lets hope the MPs will now review the wider needs of the UK.

  5. The SST comparison with HS1 was to compare Dover Chalk with Cheshire Cheese as the Javelin and Eurostar trains share that route for commuters to and from Kent with European travellers. HS2 does not integrate with Network Rail routes compared with HS1 and Network Rail and HS2 have stated not intra-region commuter trains on the one track either way.

    NAO have created the rational for better upgrades to Network Rail compared to the separate parallel routes of HS2 and WCML. MML ECML and WCML provide the opportunity to achieve some equivalent to HS1 dual use but this requires taking a different route to HS2 Route 3.

  6. The National Audit Office just saying what we have been saying for ages. The scheme is ridiculously expensive and the benefits are way overstated.

    The reaction of McLoughlin and Burns is disgraceful and totally expected. They are right and the NAO is wrong !! They must think Professor John Whitelegg from Liverpool John Moores University is also wrong. He gave a devastating analysis of HS2 as an “engine for growth” on Radio 5 this morning.

    McLoughlin said cancelling the scheme would be the easy thing to do. No it wouldn’t. It would be the hard thing to do because it would admit they had got it wrong. No politician likes to do that.

    Just hope there is something on question time tonight. It would be interesting to see if the Ipswich audience was as scathing about HS2 as the one from Lancaster a few weeks ago.

  7. Simon Burns says they are working on out of date figures so is attacking their professional competence
    I hope they prove him wrong

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  9. Well done for the NAO in producing a report that identifies some of the problems with HS2. There are still points that they overlooked: for example the assumption in HS2 calcualtions that when business people are travelling by car they do this 365 days a year, yet when they are travelling by rail they only travel 273 days a year. So not surprisingly HS2 can claim that business travellers make massive time savings but only because HS2 pretends they people don’t travel as much once they take the train.

  10. In simple analysis the HS2 proposal, the Paving Bill and the Hybrid Bill in the context of the NAO report is nothing short of another Coalition Scandal,it is an insult to the Members of the House to try and progress it in its present form. It is most certainly a betrayal of the electorate both fiscally and in terms of their promise for financial probity.
    Shambles.
    I expect if one follows the money (and there is much of it splashing around) and those who will gain financially from this scheme one will see the forces that are shaping this and effectively controlling it.
    It is ludicrous that a scheme as badly planned and as damaging as this will be passed through parliament.
    Very telling if it does.
    Patrick McLoughlins defence of his departments scheme and his request for a mandate to steam ahead regardless of evidence to the contrary is also informative. In as much as his defence relies on
    ‘evidence’ facts (or perhaps more fiction) that is allegedly not known to the NAO but held by his department that proves their case.
    Perhaps that evidence should be made available as a matter of urgency to the NAO, the Houses and the public.

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