Government considering £9bn of cuts to HS2 says National Audit Office.

The National Audit Office has today (Tues 28th June) delivered its’ third report on HS2, which admits the cost of Phase 1 of HS2 has risen by £3bn just since November and that £9bn worth of cuts to the project are being considered. The report can be found here (pdf). In a scathing analysis, the NAO have stated:

  • The 2026 target opening date for phase 1 is at risk.
  • By May 2016, HS2 Ltd had the capability it had planned to reach in July 2015, but did not pass review point 1 owing to concerns about cost and schedule.
  • At the 2015 Spending Review, the estimated cost of phase 2 exceeded available funding by £7 billion.
  • A review commissioned by the Cabinet Office has identified potential savings of £9 billion, £2 billion of which have been secured.
  • There is a risk that the combined impact of cost and schedule pressures result in reduced programme scope, and lower the benefit cost ratio.
  • The £55.7 billion funding package does not cover funding for all the activity needed to deliver the promised growth and regeneration benefits which is the responsibility of local authorities. There is risk that these benefits will not materialise if funding cannot be secured.
  • Effective integration of HS2 with the wider UK rail system is challenging and poses risks to value for money.

The report also raises questions about what the actual official cost of HS2 is. Following the Autumn Statement in November 2015, it was revealed that the official cost of Phase 1 of HS2 was running at £24.3bn, however todays report states Phase 1 is currently forecast to cost £27,384 million (£27.4bn)”  This would suggest a cost increase, just on Phase 1, of over £3bn in the last seven months.

Last month, it was revealed that Cabinet Secretary Sir Jeremy Heywood had been called in to HS2 to mount an investigation into whether it is possible to cut the ever spiralling cost of the project. It has been speculated that his review was looking at getting rid of the proposed Sheffield Station, the link from Crewe to Manchester, and that the London terminus could be Old Oak Common, not Euston. It is hard to see how £9bn could be cut from the final bill of the project, without most of those options being seriously considered.

Stop HS2 Campaign Manager Joe Rukin said:

The National Audit Office has raised serious questions about the timescales for HS2, the increasing costs, reducing benefits and that parts of the project are still unfunded, but none of that should be a surprise, as this has been the story with HS2 since the start.” 

“Of most concern is that it is absolutely clear the costs are still control, and the NAO state the Cabinet Office have identified potential savings of £9bn. If this leads to the speculated outcome of the western side of HS2 only running from Wormwood Scrubs to a field outside Crewe, after links to Heathrow and HS1 have already shelved, you really have to ask if there is any point to it at all anymore. The Government must come clean right away about what level the forecast cost for HS2 is actually at, and what the scope of HS2 being considered now actually is.”

“This is another in a long line of devastating reports about HS2, which in the past no-one has listened to. We can only hope that with a new Prime Minister on the cards, someone will finally pay attention and cancel this white elephant.”

Stop HS2 Chair Penny Gaines added:

“As the report says there are still big question marks over the timetable for HS2.  There are some obvious issues over their timescale, such as the Phase 2 decision which is already two years late and counting, and on Phase 1 the delay to reaching Review Point 1. Even HS2 Ltd are only 60% confident it will open in 2026.”  

“What is most astounding from this report is that over 7 years from when HS2 Ltd was set up, the Department for Transport still does not know how HS2 will work with the rest of the rail network.  And yet this is a fundamental issue with the project. Get it wrong, and many of the supposed benefits of a new high speed railway will turn to costs to the conventional railway.”

“With the Referendum result, there will have to be changes to the government’s priorities.  The new Prime Minister, whoever they are, should have a searching look at the many critical reports over the years, and cancel HS2 as soon as possible.”

2 comments to “Government considering £9bn of cuts to HS2 says National Audit Office.”
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