HS2 rail benefits to economy 'unclear', says National Audit Office

 

Geraldine Barker, NAO: "There needs to be more clarity about how the project will create jobs"

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The economic benefits of the HS2 high-speed rail project are unclear, the National Audit Office (NAO) has warned.

In a report, the NAO said it had "reservations" about how the planned high-speed rail link would deliver growth and jobs.

It added that the project had an estimated £3.3bn funding gap.

Labour described the report as "worrying", but Transport Secretary Patrick McLoughlin rejected the report, saying the case for HS2 was "clear".

The NAO said the Department of Transport (DfT) had "poorly articulated" its case that the rail network needed transformation and that the High Speed 2 project would generate regional economic growth.

It said the department had emphasised that HS2 would provide faster and more reliable journeys, but said the link between this and the strategic reasons for doing the project in first place, such as rebalancing regional economies, was not clear.

The NAO also estimates a £3.3bn funding gap for the controversial project which "the government has yet to decide how to fill".

'Needs more work'

Analysis

This report has certainly riled the government.

Critics are lining up to claim it as proof that there's little or no business case for spending £33bn of taxpayers' cash on a very fast train line.

And I'm not just talking about people whose homes will be affected. There are plenty of business people, economists and politicians who are against this scheme.

But ministers have come out fighting following the report's publication. They feel they've made a great deal of progress recently, announcing the full route up to Leeds and Manchester, seeing off a number of legal challenges against the project, and putting two bills into the Queen's Speech.

They keep reminding me of other schemes that had a weak business case - bits of the M25 and the Jubilee line extension, for example - schemes that the UK couldn't now live without.

There's a lot of money at stake here, and people's homes and lives too. No-one is going to catch one of these trains for another 13 years. There will be many, many more arguments before then.

A new estimate based on a clearer route and more information was likely to be higher than an earlier cost estimate of £15.4bn-£17.3bn, it said.

Meanwhile, it also warned that the government's timetable to start phase one of the project was "over-ambitious".

Speaking on the BBC's Today programme, one of the report's authors, Geraldine Barker, said the government needed to be upfront about uncertainty surrounding the costs and benefits of project.

"We think they need to do more work. [The objectives] they've stated is quite broad - we couldn't find the detail backing it."

Start Quote

If ministers had only been concerned with the economics, we would not have had the Channel Tunnel. And we probably wouldn't have the Jubilee line extension or Crossrail either”

End Quote

Margaret Hodge, chairwoman of the Public Accounts Committee, said the business case for HS2 was "clearly not up to scratch".

She said there was "virtually no evidence" to support the claims that HS2 would deliver regional economic growth, describing some of the DfT's assumptions as "just ludicrous".

"We have been told that it will deliver around 100,000 new jobs, but there is no evidence that all these jobs would not have been created anyway. The department has also set an extremely ambitious timetable for the project, with no room for mistakes."

'Strong and prosperous'

But Transport Secretary Patrick McLoughlin said he "did not accept the NAO's core conclusion".

The report depended "too much on out-of-date analysis and does not give due weight to the good progress that has been made since last year", he said.

"The case for HS2 is clear. Without it, the key rail routes connecting London, the Midlands and the North will be overwhelmed."

The Chancellor, George Osborne, insisted the benefit of HS2 to the UK "will be enormous".

But shadow transport secretary Maria Eagle said the report was a "worrying wake-up call" for the government.

"A new high-speed line between north and south is vital to tackle the rapidly advancing capacity crunch on Britain's railways, yet the NAO is damning about the Department for Transport's ability to deliver it," she said.

Rail Minister Simon Burns: "They are reaching conclusions... based a business case from 18 months ago"

Cut in journey times

HS2, which runs through Tory heartlands, has faced bitter opposition.

Stop HS2 campaign manager Joe Rukin said: "The project is out of control because the politicians involved have been seduced by the words 'high-speed rail' and have been complicit in fabricating a case for their vanity project."

He said: "The NAO say everything the Stop HS2 campaign has been saying for three years."

Last week, new legislation paving the way for development of the HS2 was announced in the Queen's Speech.

The High Speed Rail (Preparation) Bill would allow expenditure on construction and design on the HS2 project "quicker than otherwise possible".

Graphic showing the route for the new highs-peed rail network

It aims to provide Parliamentary authority for ecological surveys and other preparatory work to take place and to pay compensation to property owners along the route.

It is hoped the first trains will run on the HS2 line around 2026.

The Department for Transport says phase one will cut London to Birmingham travel to 49 minutes, from the current one hour and 24 minutes.

The HS2 phase two would virtually halve journey times between Birmingham and Manchester - to 41 minutes - and between London and Manchester from two hours and eight minutes to one hour and eight minutes.

Speeds of up to 250mph on HS2 would reduce a Birmingham to Leeds journey from two hours to 57 minutes.

 

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  • rate this
    +34

    Comment number 618.

    HS2 travels from London to Birmingham non-stop. There will be no ability to get on the train at any other place, such as Watford, Coventry etc. Therefore, it will only mean more people travelling into London to get on this train, adding to the congestion in London and removing all time savings. Just update the current line. I travel from Euston to Brum every week, always get a seat.

  • rate this
    -41

    Comment number 455.

    So we should keep our Victorian railways for another 100 years should we? That's effectively what they are saying. Our current railways are aging and overcrowded - we need to update/upgrade. Let's be realistic - the tax payer has been subsidizing the rail network for decades anyway

  • rate this
    +16

    Comment number 452.

    The only real benefits from this will be big business as usual with anything this gov does. Waste of £38 billion which could be far better spent creating jobs.

  • rate this
    -43

    Comment number 155.

    The NIMBYs are fighting - good luck to them!
    HS2 is about capacity, not time. If we can reduce internal flights and replace with rail, while providing more capacity on local & commuter rail routes then this is win/win for UK transport. Plus the boost from the investment. No brainer - start building now!

  • rate this
    +188

    Comment number 48.

    I studied HS2 at university during my engineering degree & i'm going to be working on it in the summer so i've become quite familiar with all aspects of the project. The conclusion myself, 100 other students, 5 senior lecturers & everyone i've spoken to involved with HS2 is that it's a waste of money - a showpiece. Brilliant project for engineers, but the tax payer will lose out, few will benefit.

 
 

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