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• The DfT have used out of date modelling to justify the case for HS2.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 They say that HS2 Ltd have used out of date modelling, they haven’t been transparent, that the business case doesn’t make sense and most importantly that the total bill is now up to £53bn.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.”