DfT knew Network Rail cuts were inevitable 3 years ago, due to cost of HS2.

The Government have chosen the day they announced cutbacks to Network Rail projects to publish two long-awaited reports from the Major Projects Authority into HS2, which show that the Department for Transport knew three years ago that the cuts announced today to the Trans-Pennine and Midland Mainline electrification projects were inevitable, due to the amount of money HS2 will cost. Additionally, they were not sure if HS2 itself would ever be affordable.

The June 2012 report, published today, clearly states:

“Without a comprehensive budget in circulation it is difficult to have fully meaningful discussions on affordability. The Department [for Transport] believes however that the costs of this project [HS2] are so large, and over such a long period, that it will not be able to afford it alongside all its other likely spending commitments.”

Whilst the November 2011 report states:

“The Department [for Transport] cannot judge with a high degree confidence that the delivery of the London to West Midlands project is affordable.”

Following a Freedom of Information request from Dr Paul Thornton, which the Information Commissioner ruled in favour of, the Government blocked publication of these reports from November 2011 and June 2012, with Transport Secretary Patrick McLoughlin claiming in December 2013 that the publication of the information would “Create political and presentational difficulties at a crucial point in the HS2 project’s development.”

However, they seem to have been published today without advance warning in an attempt to use bad news to bury even worse news. A Judicial Review of the decision not to publish was due to go to the High Court in the next few months, with legal precedent set as a result of the Prince Charles ‘Black Spider’ case suggesting there would be a ruling to publish. Deciding to publish now avoids such a ruling which may have meant more recent MPA reports, such as the most recent one from November 2014 which stated there were still 75 serious issues regarding HS2, would have had to have been published as well.

Both the November 2011 and June 2012 MPA reports on HS2 rated the project as amber-red, meaning: “Successful delivery of the project/programme is in doubt with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed, and whether resolution is feasible.”

Specifically, the November report questioned the readiness of HS2 and the governance and management arrangements. It prophetically, it stated that the “Timetable through to Royal Assent in 2015 is considered to be extremely challenging”, and that despite the fact HS2 had been announced over a year and half before that point, that “At the time of the review the business case was incomplete and a considerable amount of work was still required to get it to an acceptable level” and that a current economic case was not available.

The June 2012 report echoed many of the concerns raised by the previous report, such as the lack of governance and communication with the Treasury, and that the price for Phase 1 quoted at the time as £16bn “Is in danger of being mistaken for the expected cost of Phase 1 – whereas it is only a partial estimate made in 2011 prices with significant exclusions.”

The report raised the issue that missing from the official costs were: inflation, rolling stock costs, DfT costs, costs to train operating companies, VAT, stamp duty on land purchases, compensation payment costs, costs of over-site development, and project costs accrued prior to 10 January 2012, many of which still seem to be excluded from the costs today, which at £50bn for both phases and rolling stock are still expressed in 2011 prices.

The Government also chose today to publish the end of year accounts for HS2 which shows a £190m spend for the financial year, with an average salary at the quango of £73,515.

Stop HS2 Campaign Manager Joe Rukin responded:

“We have been fighting to get these reports published for three years, and now all of a sudden the Government sneaks them out, trying to use the bad news of the Network Rail cuts to bury even worse news that HS2 is the real reason they have happened. It is now clear that three years ago the Government knew they couldn’t afford HS2 along with everything else they were promising, but instead of shelving the high cost project which only benefits the richest in society, they have punted the lower cost projects which give so many more benefits to so many more people into the long grass. All of the talk about creating a Northern Powerhouse has now been proved to be bluster, and all this Government intends to do is build their white elephant and drag more economic activity to London”

“We have always said that the amount of money the colossal white elephant of HS2 needs would mean cuts to other rail upgrade projects, and now we have been proved right. The reason for the cuts announced today is because all the rail projects are going over budget. With the £50bn cost of HS2 still based on 2011 prices, it will be no different, and it will prove to be a price too high to bear. Now we know that the DfT knew three years ago that if HS2 did not need so much money, these cancelled projects would be going ahead, but because of HS2, these projects will never happen.”

Dr Paul Thornton had asked the Cabinet Office to publish the Major Projects Authority  reports back in May of 2012 and it has taken 3 years of battling through the courts before the Government have been forced to publish, accepting that the use of a publication veto to defy the Information Commissioner was unlawful. These reports should have been published when they were first requested, as should the more recent ones which are still outstanding.

Dr Thornton said:

“At the time these reports were written, the Government were publicly claiming a myriad of benefits from HS2 while reassuring all and sundry about the costs. These reports show clearly that behind the scenes, they knew they could not substantiate those claims.”

“The situation is no better now. MPs should be demanding that the government must now publish the more up to date reports that have been requested.”

5 comments to “DfT knew Network Rail cuts were inevitable 3 years ago, due to cost of HS2.”
  1. How the tables turn in govenments two previous transport ministers Justine greening and Phillip Hammond who called us all nimbys now the same two are acting like nimbys towards the third runway at Heathrow .I wonder if it as something about that is on their door step

  2. Pingback: Freedom of information request finally granted

  3. Pingback: HS2 still in danger of failing says official Government report.

  4. It is impossible to know where/how to begin with this travesty of the DfT.
    Of course, they cloud everything in the “£38 bn” spending / investment “plan” – not admitting that this is the total running cost of NR – over 5 years ie the cost of running 10,000 miles of rail and many stations etc etc plus renovation and upgrading etc etc ie £7.5bn pa.

    They now have to cut back on this basic essential in order to fund their flagship project which everyone knows is heading for the rocks. Rule Britannia!

  5. Now is the time for MPs from all parties to join together in a cohesive campaign to stop hs2
    To do otherwise is gross negligence

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