Member Article

HS2 case for business is flimsy, say MPs

HS2 follows a pattern of spiralling costs and dwindling benefits, and will not benefit businesses, a group of MPs has said.

The Public Accounts Committee (PAC) say the Department for Transport has made decisions based on “fragile, out-of-date data and assumptions which do not reflect real life.”

The suggested benefits to business travellers are said to be based on survey data that is ten years-old.

HS2 is now estimated to cost £42.6bn, a figure which includes a £14.4bn contingency pot. The PAC argue even this is not enough to cover extra station or tunnel requirements.

The report also criticises the Government for a lack of major project experience among the 70-strong HS2 team.

Margaret Hodge MP, chair of the PAC, said: “The Department for Transport has yet to present a convincing strategic case for High Speed 2.

“It has not yet demonstrated that this is the best way to spend £50 billion on rail investment in these constrained times, and that the improved connectivity will promote growth in the regions rather than sucking even more activity into London.

“The pattern so far has been for costs to spiral - from more than £16 billion to £21 billion plus for phase one – and the estimated benefits to dwindle.

“The Department has been making huge spending decisions on the basis of fragile numbers, out-of-data data and assumptions which do not reflect real life, such as assuming business travellers do not work on trains using modern technology.

“As usual with NAO reports, the Department had agreed the facts in the report as accurate before publication. However, as soon as the report was published, the media reported unnamed departmental sources as claiming that it contained errors and was based on out-of date analysis. These claims were quite unfounded.

“The Department has ambitious and, in our view, unrealistic, plans for passing the Bill for High Speed 2. The timetable is much tighter than for either High Speed 1 or Crossrail, despite the fact High Speed 2 is a much larger programme.

“In my Committee’s experience, not allowing enough time for preparation undermines projects from the start. A rushed approach contributed to the failure of the InterCity West Coast franchise award.

“The Department has increased its High Speed rail team, but getting the right mix of skills is challenging and the Department lacks the commercial skills necessary to protect taxpayers’ interest on a programme of this size.”

This was posted in Bdaily's Members' News section by Tom Keighley .