Axing HS2 North leaves remaining line ‘poor value for money’, MPs say
The decision to scrap HS2 beyond Birmingham means the beleaguered rail line is “very poor value for money to taxpayers”, a damning report from a cross-party panel of MPs has said.
The Commons Public Accounts Committee (PAC) also demanded further answers from ministers over the Government’s decision to scrap the Birmingham to Manchester leg of the project.
Rishi Sunak took the decision to axe the new line north of Handsacre during the Conservative Party conference, promising to reroute the £36bn earmarked for high-speed link into hundreds of transport schemes across the country.
But in its verdict on the scheme, the committee has raised significant doubts over how the Department for Transport will reallocate the cash over the next 20 years, and how it intends to manage such a diverse range of long-term projects.
MPs also posed several questions over the ramifications of the decision to drop HS2 phase 2, including how land and property no longer needed will be disposed of; the impact on other rail projects dependent on the cancelled phases; and how HS2 trains will operate on existing lines.
Last month, HS2 Ltd executive chairman Sir Jon Thompson – who has led the project since Mark Thurston left his role as chief executive in September last year – warned the estimated cost for Phase 1 has soared to as much as £66.6bn, against a budget of £44.6bn (in 2019 prices).
He said reasons for the cost increase include original budgets being too low, changes to scope, lower-than-expected productivity, weak contractual models and inflation.
The PAC report states: “HS2 now offers very poor value for money to the taxpayer, and the department and HS2 Ltd do not yet know what it expects the final benefits of the programme to be.
“The department acknowledges that building just Phase 1 will not be value for money because total costs will significantly outweigh benefits.”
However, it noted that the DfT judged that continuing with that section “was value for money”, partly due to avoiding £11bn of costs that would be incurred from cancellation.
The report added: “There are many uncertainties in this assessment and we were left with little assurance over the calculations.”
Mr Sunak’s October 2023 announcement also included a new plan to rely on private investment to extend HS2 from Old Oak Common, in the suburbs of west London, to Euston, near the centre of the capital.
This is aimed at saving £6.5bn of taxpayers’ money. But the PAC said: “We are… highly sceptical that the department will be able to attract private investment on the scale and speed required to make the London terminus station a success.”
Labour MP Dame Meg Hillier, who chairs the committee, said: “HS2 is the biggest-ticket item by value on the Government’s books for infrastructure projects. As such, it was crying out for a steady hand at the tiller from the start.
“But, here we are after over a decade of our warnings on HS2’s management and spiralling costs, locked into the costly completion of a curtailed rump of a project and many unanswered questions and risks still attached to delivery of even this curtailed project.”
A spokesperson for HS2 Ltd said: “We’ve been clear about our cost challenges, which have been compounded by significant levels of inflation.
“HS2 Ltd is now under new leadership and implementing changes across the programme aimed at controlling costs and learning the lessons of the past.”
The DfT was approached for comment.
