Treasury insiders put cost of HS2 at £73,000,000,000

FT Front Page, 21st August 2013

FT Front Page, 21st August 2013

Treasury officials have told the Financial Times that the cost of building HS2, currently officially at £42.6bn, would be closer to £73bn in cash terms. The official construction costs are already two years out of date as they are set on 2011 prices, and do not include VAT which the National Audit Office believes would be unrecoverable.

While George Osborne, dubbed by Stop HS2 campaigners as the “Six Hundred Million Dog-Leg Man”, after a handbrake turn costing £600m was incorporated into the route avoiding the more affluent areas of his Tatton constituency is said to be all for HS2, but the FT says the Treasury’s senior echelons think HS2 will drain investment from other projects which would do more to boost growth, stating:

Senior Treasury officials who have told the Financial Times of their concern about a scheme that will dwarf other public infrastructure projects over two decades, have privately started using the higher figure.”

Both the £42.6bn and £73bn figures do not include the cost of trains, which are currently set at £7.5bn in 2011 prices, despite the fact it would be around a decade before any trains are needed. This revelation comes hot on the heels of a report from the Institute of Economic Affairs who said that HS2 would cost around £80bn. The IEA arrived at this figure by adding the cost of trains and estimating costs for further mitigation, additional connections to the rail network to ‘plumb in’ HS2 and regeneration funds, not inflation and VAT as the Treasury have done. The Stop HS2 campaign maintains there will be additional costs to HS2 which are not yet factored in, such as the true cost of compensation and other factors as yet omitted from published designs, such as farm and foot bridges.

Joe Rukin, the campaign manager of Stop HS2 said:

“After the IEA reported at the weekend that the HS2 cost could rise to £80bn and only those with vested interest were lobbying for it, exactly those vested interest groups have spent all their time saying their costs were just plucked out of the air. Now the Treasury has come up with a similar figure just for the construction of HS2 simply by adding inflation and VAT, not even the cost of the trains, one wonders what they will say.”

“We have said consistently that the costs of HS2 will keep going up, and now we’ve had two different sources showing how costs will escalate in different ways. How long will it be before the cost over £100bn? Putting together the different things the Treasury and IEA have said, you could say it’s already there. As the Public Accounts Committee said last month, all that has happened with HS2 is that the projected costs have gone up and the projected benefits have gone down. No matter how hard HS2 Ltd and the DfT try and fiddle their updated business case later this year, it will be a transparent attempt to put a ball gown on a white elephant.”

“The IEA and Treasury have said what we have said all along, that there are better infrastructure projects on the table which will be better for the economy, and will deliver more lasting benefits to more people more quickly and create more jobs for less money. It seems insane that the Government remain wedded to HS2, knowing that all the evidence shows that at best it won’t do what is being claimed, and at worst – with the idea of rebalancing the economy and boosting the North and Midlands – it will do exactly the opposite.”

“There is a very simple reason as to why every new revelation about HS2 is bad: because it’s a bad idea, poorly thought out, with no justification that stands up to any scrutiny and it’s being implemented by buffoons. This Whitehall Elephant has to be stopped before it tramples everything in its path.”

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7 comments to “Treasury insiders put cost of HS2 at £73,000,000,000”
  1. Labour on the fast train to win the next election by dropping there support to hs2 and leave Cameron and his crew in the siding to think about how it all could have been .geoffrey acher could not have dreamed up the plot .Give David the idea of his own train set let him play around with the development of it support him to spend billions on the project ,then stick the boot in and drop there support and win over millions of voters to win the next election .what a plan .and our PM fell for it hook line sinker .He only as himself to blame after all of the advise and warning givin to him to drop this project but he knows best

  2. It seems the only three people supporting hs2 is Cameron Osborne and Patrick the three stooges .why o why they can not this project is a total waste of tax payers money is a complete mystery .Do they not no the public feeling about this project and they will loose the next election if they keep up this mad idea .They should drop it now before the next crew give them another battering and stop wasting even more money trying to justifying a dead course

  3. How can it be right when MPs vote on hs2 they are threatened with demotion and no promotion from the whips telling them they must tow the party line and vote for hs2 even when they know it is a total waste of money and should not go forward . It’s a disgrace that our leaders can do this with our taxes on a none starter project just for the rich to save a few mins of time. And put 500k of people’s lives on hold .We all like to think our country is a fair place to live but we could have more rights in china .How our leaders can dictate to other nations how to treat there own people when what they are doing with hs2 is forcing on to there own people something no one wants and think it is just a total waste of there taxes .we have all been sending our MPs our thoughts on hs2 but what can they do when they are blackmailed by there bosses it just not right .

    • @J.davis: “How can it be right when MPs vote on hs2 they are threatened with demotion and no promotion from the whips telling them they must tow the party line”

      Because @J.davis – that’s how the (party) political process works in Britain.

      HS2 strategy, due to its long term timescale and requirement for compulsory purchase / land acquisition / rights of way diversion powers, is necessarily driven by political consensus. It’s become increasingly apparent that the political aspect of HS2 debate is paramount – however whenever I try to raise this feature within these columns, Penny Gaines (moderator) cries foul; off topic?

      Party politics in Britain is inherently tribal in nature, boasting an unspoken yet fierce loyalty to the leadership (who are in turn expected to deliver victory) and an essentially hierarchical structure in which those at the lower echelons constantly strive to climb higher up “pecking order”. Each tribe provides a statement of values, beliefs and aims for the forthcoming period (traditional five year Parliamentary timetable) and the electorate has its chance to judge each tribe on a) its past performance & b) an assessment of future strategies (policy pledges). That summary of future pledges is called a manifesto.

      That’s how the system works – in 2010 virtually all of the mainstream parties (with the exception of the Greens) carried a clear commitment to High Speed Rail (yes, even UKIP) in their 2010 General Election manifestos. So for individual members to renege on a collective pledge is viewed as potential treachery – that’s why censure is brought to bear upon those who fail to tow the party line

      The only surprise here is why you are surprised?

  4. The evidence that, HS2 is a monumental mistake by the government,continues to be shown .When will they just say that they have reconsidered and it is not the right investment at the moment.Ludlow was to have a new hospital,far better that it is built with the money.The plans for railway expansion that have been presented as an alternative could also proceed.

  5. You can’t believe this govenment can be so blind to the figures on what people are putting on hs2 project .Just to get people to Birmingham a few mins quicker ,when you think of what all of us have put up with since the rescission started .people having pensions cut hospitals closed schools having budgets cut and much more .just so the rich can get about quicker .Has soon as we can get rid of this shower running our country the better .labour should take up the lead and call a stop to this waste of money on hs2

  6. With the cost of HS2 going up and up by the day with the amounts that are used to bailing out failing economies,I was wondering what the average speed of HS2 would be to travel the 90 miles from London to Birmingham. Even taking account the accelerating and braking of the train and the slightly longer route if tracks were built next to existing lines,49 mins seems too slow to me.Only a few minutes of the journey time would be at 250 mph.MP,s love to tell us how wonderful this 250mph train would be but it seems as silly as driving a F1 car down Oxford Street in London. I hope this point has been raised in Westminster and that this vanity project is thrown out sooner rather than later

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