Special offer for British Taxpayers – High Speed 2 only £34 billion!

According to a highly critical report prepared by Wendover HS2 Action Group, HS2 Ltd, the Government-owned company charged with justifying the proposed new high-speed railway from London Euston to Birmingham, has seriously misled Ministers, Parliament and the public by:

Underestimating construction and renewal costs

HS2 Ltd states that the construction and renewal costs would amount to £17.85bn but they have used figures based on 2009 costs. The real cash cost would be 40% higher at £24.55bn and could be as high as £34.7bn, if Treasury guidelines for inflation were used.

Substantially overestimating passenger demand forecasts

By claiming non-HS2 passengers as HS2 passengers, new demand forecasts are substantially over-estimated by up to 92%.

Inflating non-cash indirect benefits

Estimates of non-cash indirect benefits are inflated by at least 45%.

Failing to clarify Regional economic imbalance

HS2 Ltd fails to make clear that 84.7% of HS2’s economic benefits would go to London, the South-East and Birmingham. Rather than benefitting, Scotland would see its economy shrink by £220m.

Using contradictory air travel predictions

HS2 Ltd claims that HS2 would save 90 flights per day yet the proposal states that only 1000 people per day would use HS2 to access Heathrow.

Ignoring the immense environmental damage

HS2 could increase total annual UK transport emissions by at least 0.3%; HS2 could not therefore be carbon neutral as is claimed.

8 comments to “Special offer for British Taxpayers – High Speed 2 only £34 billion!”
  1. If you already have property in Ashford, you are probably very happy someone will pay more money to buy it from you. But that doesn’t create value in the economy nationally, it just rearranges who owns more money.

  2. From a quick perusal of the report, what struck me most was that the government would have to borrow large amounts of cash in order to fund construction. This would incur £15bn in interest payable on the debt which won’t be repaid until 2085. That brings the cost up from £35bn to £50bn!

  3. you are aware that the quoted costs already include the so called optimism bias which the treasury insists upon for major public projects. this is set at 60% but i believe in the case of hs2 40% was used. so the figures quoted already have an additional 40% cost included so in theory the line might be built for less !

    i am not keen on this method as i think i just builds extra cost in. no department in government or private industry ever spends less then its budget ! so there is a danger that if the contract includes this extra amount there is not much incentive to do it for less.

  4. There are conversion sites that attempt to show the relative value of money from time A to time B, e.g. http://www.measuringworth.com/ukcompare. This gives £2.84 billion in 1995 money as being something a little under £4 billion in 2007 money. On that basis the £5.8 billion outturn cost would correspond to a cost overrun rather than ‘on-time on-budget’ – but I’m no expert in these things so maybe someone with better knowledge of fiscal matters could comment!

  5. Interesting information from sturedman. I found this press release dated one year befor HS1 opened:

    As HS1 was unveiled, Rob Holden, chief executive of LCR said: “It is unprecedented that a major construction project of this size and scale is on track to be delivered on time and WITHIN BUDGET. With such a strong track record of success behind us, and as we approach the final run-in, we have chosen this time to name the new railway line, ‘High Speed 1’. High Speed 1 or HS1 will become the name that passengers and beneficiaries of the line will use to describe the project.”

    Then this later in same release:

    “Eurostar international passenger services will commence from Eurostar’s new central London home at St Pancras International when the new railway opens for commercial services on 14 November 2007. The high speed line will be completed with a total project cost of £5.8bn, well within the overall budget for the project’s funding established in 1998 of £6.15bn.”

    What is the explanation? Or is this ‘apples and pears’? Certainly a lot has been made of it being on budget and on time.

  6. When it comes to cost – High Speed rail has an interesting habit of over running.

    Here’s the response I got to an FOI request asking how much HS1 finally ended up costing vs it’s original estimate. As you can see, it makes grim reading for the taxpayer….

    ” We refer to your online FOIA request dated 22 December to the Department for Transport (DfT) concerning HS1. We understand from the DfT that they do not hold any of the information you have requested and they have passed your request to LCR on the basis that we may hold some or all of the information you want.

    Please be advised that LCR has now sold the whole of its interests in HS1 Ltd with effect from 18 November, 2010 together with all of that company’s books records and all construction related historical documentation. However, we do still have some of the information which may assist your FOIA request.

    LCR is able to provide you with the following information related to the construction of HS1 in response to the 5 questions asked in your request.

    1. Based on the November 1994 Environmental Statement plans of which we still hold copies, a total of 222.8 hectares of land was likely to have been identified for use as Main and Secondary construction sites. I have made copies of these plans and will forward a set to you today together with a table showing the breakdown of the aggregate figure.

    2. LCR does not hold any information as to the extent of the land actually used by contractors as Main and Secondary construction sites during the construction process and we hold no maps of the actual construction sites.

    3. LCR’s bid base case cost estimate for the construction of HS1 was £2.838 billion. This figure is in 1995 prices and we hold no up to date comparator for the 1995 figure. It could however be updated using one or more relevant inflation indices.

    4. The actual outturn cost of the construction of HS1 was £5.8 billion (in nominal cost prices). We hold no information comparing the above 1995 figure with the outturn figure on a like for like basis.

    5. Approximately £720 million of the 1995 base case cost figure of £2.838 billion (or 25.4%) was attributed to tunnelling activity. As regards the outturn cost, approximately £1.1 billion of the total £5.8 billion cost was attributed to actual construction of the railways in tunnels (or 18.96%).

    Yours faithfully,

    London & Continental Railways Ltd.”

    A bargain…… !

    • I wonder what it would have cost around 1900 as the next part of Sir Edward Watkins’ great scheme to link Manchester and Paris, via Nottingham, Leicester, Rugby,Brackley, Aylesbury and London.

      Or whenit was tried again in the 1960s, only to be abandoned ,together with the Maplin Airport plan for a third London Airport, with priority being given instead to Concorde.

      Someetimes it seems that we are going backwards…-or is it just that we have short memories?

    • you have established the costs which we know but you have conveniently left out all the benefitsof which there are many not least the 8% of people who use hs1 javelins instead of their cars, out of a total of 7 million passengers and the 9.5 million eurostar passengers who without hs1 would likely have used the plane !.

      property values in ashford have rised significantly since hs1 was opened. if the economic and environmental benefits outweigh the costs then the country as a whole is benefitting ! and cost overruns dont apply to railways and they dont just apply to the public sector either (dreamliner anyone !). we need both sides of the story to make an informed decision this is why i comment on stophs2 to get some balance on here.

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