UPDATED – HS2 costs jump by £10bn, almost wiping out Spending Review savings in one hit.

Introducing his ‘Blank Cheque’ Paving Bill for HS2, Transport Secretary Patrick McLoughlin has announced an amazing £9.9bn increase in the costs of the project, just hours after Chancellor George Osborne outlined £11.5bn of ‘essential’ cuts in his Spending Review.  The construction costs for Phase 1 will now cost £21.4bn, whilst Phase 2 will cost £21.2bn. These costs are already out of date as they are based on 2011 figures, with construction not due to start until 2017. Included in the £42.6bn is a £14.4bn contingency, which McLoughlin wrongly announced as being £12.7bn. DfT and HS2 Ltd officials have always said until now that the costs of HS2 would never increase because there was an £11.1bn contingency built into the previous cost.

The cost until today was stated to be £32.7bn, but neither this, or the new £42.6bn figure included the cost of trains. The rolling stock cost was today estimated as £7.5bn by McLoughlin, but the National Audit Office recently reported it to be £8.15bn. Whichever cost of trains is accurate, the total bill for HS2 has now topped £50bn, which campaigners believe will continue to escalate due to the number of things clearly not included in the costs.

MPs voted for the ‘Blank Cheque’ Bill, which will now go to committee stage before coming back to the Commons and on to the Lords at a rate of 10 to 1. Stop HS2 will be giving evidence to the committee on 9th July, but the next focus will be the Public Accounts Committee, who have previously been highly critical of HS2 on Monday (1st July).

Despite the rocketing costs of the project, HS2 Ltd CEO Alison Munro issued an unbelievable statement, saying: “We have managed the scope for Phase One to arrive at a reference design that meets the objectives set by DfT for HS2 and have done so broadly within the cost and contingency envelope of £16.3 bn set out by the previous Secretary of State in Jan 2012.  My team will continue to be focused on control of costs”

Stop HS2 Campaign Manager Joe Rukin said:

“The casual way in which a 30% jump in the costs of HS2 has been announced by the Transport Secretary, which almost completely wipes out the cuts made in the spending review is unbelievable. We are now looking at a total cost of over £50bn on a train which will only benefit the richest in society. The DfT have always said the costs wouldn’t go up as there was an ample contingency built in, but now we know, like everything else which has been said about the case for HS2, that this was completely false. As Frank Dobson pointed out, there are still loads of items which have yet to be added into the costs and the costs for this project will only continue to spiral. To push ahead with HS2 blindly because it sounds like it must be a good idea is simply insane and a kick in the teeth to everyone affected by the cuts.”

“The MPs who have voted for the blank cheque have only shown that they are totally out of touch with the common man, and HS2 Ltd have responded to the fact they are ten billion by saying they are ‘broadly within the envelope’. I don’t know what planet they are on, but I wouldn’t want to be picking up their stationery bill.”

Penny Gaines, chair of Stop Hs2 said:

“We’ve been saying for some time that HS2 has gone over budget years before construction was due to start. In the House of Commons today, the Secretary of State was finally forced to admit that by upping the budget by £10bn making the headline cost £42bn. And that still doesn’t buy any rolling stock. it’s clear there are too many unanswered questions about HS2. We’re still waiting for the publication of the Major Projects Authority reports from the last two years, which have given HS2 three consecutive amber/red warnings, the National Audit Office had major criticisms, and just last week the New Economics Foundation said there were far more effective ways of spending £33 billion, but now it’s £43 billion”

“It was an incredibly cynical move to announce this increase in cost without giving MPs time to absorb the implications of this massive price rise, or provide an updated the benefit cost ratio, and with these extra costs it’s going to take some very creative accounting from HS2 Ltd to try and say this project won’t lose money. The Government clearly decided to rush on with a vote before more people have looked at it closely, because when they do they see the many flaws in the HS2 proposal.”

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20 comments to “UPDATED – HS2 costs jump by £10bn, almost wiping out Spending Review savings in one hit.”
  1. The recruitment of people into HS2 suggests some missing costings and interfacing. SST Hammond in TSC gave a number which is probably passed now for phase 1 as built costs and lower utikisation prior to phase 2. HS2 is entering write down zone and economists use vat ni and build claw backs to justify such low returning projects. The terms subject to value for money and deliverability are used. Suggest the project as currently planned is wasteful and a misuse of opportunities for some transport gains. Moving from diesel to electrification does not add capacity on thr announced schemes. The nation needs better projects for the more pressing issues of getting around. A new SST may bring a better plan that is affordable but that bring more journey destinations than HS2.

    • John I fear they are ,and expect them the householders to put the bill for this mad project no one wants they all should be ashamed of themselves driving people away from there homes they have lived in for yrs ,and made there homes .lets hope all the hard working people against hs2 can put a stop to the project that only a few can use

  2. Today’s news in the times France plans huge cuts in super fast trains due to cost .david Cameron lets rip at scandal of eu waste .he should stop hs2 before any more of our taxes are wasted and practice what he preaches to other countries hs2 is such a waste of money for only the few to use .we can only afford to go to Birmingham and then they will, run out money the pm is always quoting what France have with high speed rail we must have now they are going to invest in local trains because fast trains are taking away from local business .the complete opposite to what our pm is stating on top of all this our MPs follow like sheep and vote for hs2 to contuie with this project they should all be ashamed of themselves .but now France is going to put a stop to this madness he will follow them and cancel hs2 after all he seems to use them as is platform

    • To me it seems Cameron and cronies are beyond contempt and more importantly beyond credulity…..he just can’t deliver . Better for the nation, he returns to marketing something that does no harm such as soap,crisps or celebrity scent of the moment.
      A professional ‘PR Consultant’ who has melded politics into his profession with all that entails….spin as opposed to fact and total massage of the facts to serve him ! Other parties Sound Bites do not equate to a convincing orator.
      His time has past ( a failure) and indeed is up (he is I hope un-relectable). He is I am ‘reliable’ informed despised by the majority of his own party albeit my informants are likely prejudiced or hopeful of change . He had no mandate save a self laudatory role of ‘acting in the National Interest’ (bxxxxxxx, failure!) or just as an (un) honest Joe actor… and he is ‘supported’ in the most noxious of coalitions where the parties have little in common other than a seeming fetish for power over seeming integrity.

      HS2 affects real lives and will do so in perpetuity: the flagrant waste of money on a ‘punt’ with little merit and with such over-riding and public disregard for proper ‘self regulatory’ check and balance is deserving of a ‘Public Inquiry’ indeed it is difficult to find an exemplar of something so costly and directly and adversely effecting 300,000 individuals and likely 1.5M b y geographical association that has not merited a Public Inquiry.
      The truth is that Parliament has acquiesced to stitch up the electorate and is too vain to acknowledge their failure despite all the evidence…….this will only occur if leakage of the embarrassing truth becomes such that it cannot continue to part of the political masquerade.
      Did any members of the PAC voted for the Paving Bill?
      Frankly our politicians collectively have shown themselves to be unworthy of their electorate and more importantly are frankly more ill-informed and unaware of what they have unleashed. Only 37 members voted according to the evidence. The rest voted according to bias in the face of contrary evidence.

  3. No JW, it simply isn’t true that HS2 is the “only practical solution to ease congestion”. Mind you as an untruth that isn’t good enough to get into my top 5 chart of Porkies. In reverse order :

    5 ) ” HS2 has precious little to do with journey times ” — ( regular pro HS2 blogger )

    4 ) ” HS2 has a very strong Economic Case ” — ( Birmingham Chamber of Commerce ) NEW ENTRY THIS WEEK

    3 ) ” HS2 compensation is HS1 compensation with a turbo charger ” — ( HS2 Ltd )

    2 ) ” HS2 runs alongside existing roads and railways for almost all of its route ” — ( regular pro HS2 blogger )

    1 ) ” HS2 will create 1 million jobs ” — ( Campaign for High Speed Rail ) STILL NUMBER ONE AFTER NEARLY 100 WEEKS

  4. Surely the benefit cost ratio is now less than 1. It was only just hovering above 1 before they announced it is now going to cost an extra £10bn. Its just madness!!! How did this get voted through?! Politicians = actually bumbling idiots.

    • You are obviously not thinking like a politician …..

      “Yes, its HS2, the brand new fantasy game, where everyone is a loser!

      Game includes:
      – Lots of bright shiny new things
      – Unlimited amounts of money
      – Extra large magnifying glass to enlarge any claimed benefits
      – Special dice (if you roll a number you don’t like you can always choose a new number of your own)
      – Ear plugs to reduce unwanted distractions from critics

      Just the game to play on a rail journey. After all, you’re not expected to get any work done!

      NB Majority of Components Manufactured Overseas”

      • There are winners but these will likely be those who have selfish, vested interest (as opposed to the nebulous national interest) and have lobbied successfully, it would appear. I am reliably informed that the lobbying has been quite intense and specific. The reliance on the “hybrid bill’ to sort out the problems of the route, environment and social issues is misplaced.
        The work and formulation re these issues should have preceded the introduction to the House.

        More than a fantasy game, the last time I witnessed such ill informed cross party support against the national and academic will was over Iraq. There are similarities with the type of politics and propaganda that resulted in the parliamentary endorsement of the then Cabinets determination for the Iraq War.
        One should not and morally cannot conflate the two examplars, which I do not, however there are issues as to the political process that are of concern and relate to our democratic process. After Iraq, I personally found it hard to trust parliamentary process or to accountability.. Recent disclosures show that to be a sensible stance.

        I am reminded that both seem driven by Cross Party Government determination against wise public opinion and contrary evidence. (Blix and WMD for one) Ministers appear driven by dogma as opposed to evidence and when challenged resort to relativist moral arguments based upon (ultimately) fantastical premises.
        Both were/are being hurried through (whilst legal/evidential cases were pending) without due scrutiny of the evidentially based checks and stops. Independent National Bodies’ evidence and contrary opinion was/ is denigrated and rejected.
        Both were/are supported by unevidenced notions of widespread social gains and benefits (with some regrettable collateral damage;the few sacrificed for the wider good). That damage is publicly under-estimated although likely known.
        Both have/will accrue huge, irreversible societal and financial costs.
        The spin or sociopolitical justification was/is mutable, i.e. not absolute or even relativist but based upon what was politically preoccupation of the moment and the facts were made to fit.
        WIth Iraq it was the need for regime change, the threat of WMD or democracy etc.
        With HS2 we have have been ‘fed’ the need for speed, reduction of airplane/heathrow need (When Heathrow a hot issue), carbon footprint reduction (when this was politically expedient and all that carbon exchange stuff was going on, North/South Divide, capacity and now the engine of economic growth; all mutations of the political justification.

        Equally those who don’t share the political creed (of the moment) are crudely denigrated.
        In the Paving Bill I thought the Ministers comments that the current rail service was 200 year old technology was akin to saying that our politics were 1000 years old and we were still serfs and vassals to our master. Or that the M1 was Roman technology.
        His comments regarding Victorian scare stories re rail travel were frank denigration and deliberately scripted (by someone) to draw on the ‘Luddite’ notions that are interchanged with NIMBY. Cheap politics.

        ‘We cannot do without HS2’
        ” Saddam could deploy weapons of mass destruction at 45 minutes, ….

        The continual reference to HS1 as a favourable comparator by Ministers is also deliberately or knowingly misinformative; on their logic the HS2 route is clearly in the wrong place and should follow the M40 or M1 motorway corridors.HS1 skirts around the AONB adjacent to motorways.

        Most objectors to HS2 do so on very contemporary financial, sociopolitical and environmental grounds, it is the supporters that seem determined to adhere to outmoded notions of power, speed, greed (huge benefits from small investment is a capitalist fantasy someone has to lose somewhere in the world otherwise ethical growth is modest, organic and hard won).
        HS2 as presented is a modern fools gold. A panacea for political ills not human ills.

  5. I’m shocked this is a real slap in the face for the public. Cutting budgets of our nations essential services and then announcing a huge cost increase on a crazy project all in one day, Have our politicians lost all connection with the public…….yes I think they have.

  6. watched the debate live
    Rt Hon Cheryl Gillan showed her strength and capacity.
    Sadly the House voted to give a blank cheque and proceed without full frank information.

    • Indeed, Paul, Cheryl Gillan did indeed make a real contribution to yesterday’s Commons debate- in fact she was able to make so many interventions that I lost count, as I watched the live speeches and exchanges lasting from half past two until six.

      At least a large number of Members were able to propose and challenge – at the start it wasn’t even clear if the Transport Secretary would ever manage to complete his introductory speech as each sentence attracted a comment to question or support .

      As he said some hours later in his summing up, it had been good that so many opinions had been aired- though whether any Members changed their views one way or the other I cannot say.

      The votes would seem to confirm the Government’s position- while many speakers expressed reservations as to details of the plans and others called for better explanations from HMG and HS2 ltd, and for much more generous compensation, yet even so agreed that something was needed to prevent congestion and that HS2 was the only practical solution- or at least the least worst,

      Ms. Gillan is indeed fighting for her constituents, living along the leafy outer reaches of Metroland.- the Transport Secretary recalled the comments from a century and a half ago when rails first came…but she didn’t hear his final words as by then she had left the Chamber.

      • “the Transport Secretary recalled the comments from a century and a half ago when rails first came”.

        It would appear the Transport Secretary and many of our uninformed or ‘deaf’ MPs are still in the world of 150 years ago. Could someone tell them we have the internet now, and this new fangled thing called wi-fi. And, of course, there are mobile phones, aeroplanes, radio, television, microwaves. They’d be amazed!

        In the new world, HS2 has the relative snail pace of Stephenson’s Rocket.

        We have INSTANT communications now. FAST trains are SLOW! Someone please tell them.

        • Quite so ,Geoff, we do have all of these available… and so all those promised transport developments; the largest road building scheme for decades, the improvements to the existing railways, the aspirations and alternative schemes for upgrading or relocating ‘hub’ airports, new river crossings…are these now and henceforward to become redundant according to your understanding?

          And isn’t there a get together at Stafford – real people meeting face to face- due to take place on Saturday, 29th?

          • “And isn’t there a get together at Stafford – real people meeting face to face- due to take place on Saturday, 29th?”

            Yes, and I’m sure they all managed to get there without travelling on a high-speed train.

            I think you are rather distorting the issue to imply my reasoning would mean we needed no new road, train or airport infrastructure. But the main criteria should be: is it needed, feasible and affordable.

            Of the government new infrastructure plans, to which you refer – they haven’t actually got the money for that either. A lot of flim-flam to sound good, without real substance. They’re good at that – or perhaps not.

    • That’s a great question John. But I doubt if you would get an answer from many of them — too many shades of Lady Astor.

      Perhaps one of our pro HS2 bloggers would like to venture a figure ? ( but only if they can keep it short and not use the phrase “within a short distance of the line” ).

    • In fact it’s such a good question that it has been asked by no less than John Cridland, Director General of the CBI. Unlike Jerry Blackett at the Birmingham Chamber of Commerce he represents a national body , not one trying to engineer a marginal local advantage at great national cost.

      In calling for a rethink Mr Cridland’s exact words were reported as ” At what point does it ( HS2 ) cease to be value for money ?”.

      Come on boys, don’t be coy, let’s have a figure.

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