The Government HS2 Cost Cover-Up

13th November 2018 / United Kingdom
The Government HS2 Cost Cover-Up

By TruePublica: In July this year, Andrew Gilligan at the Sunday Times reported that the HS2 high-speed rail project is “highly likely” to exceed its original budget by as much as 60% with a new estimate put at “more than £80bn”. However, this does not take account of a number of plans ditched by the government to curb the soaring out-of-control cost or additional projects added that were not correctly scoped in the first place. A Cabinet Office report by the government’s Infrastructure and Projects Authority (IPA) has now been classified as “official-sensitive” and “not for publication” in what can now only be described as a cover-up by a government beset with political scandals and economic mismanagement. The report describes the scheme as “fundamentally flawed” and is now in a “precarious position”. The result is that a group of Conservative MPs have mounted a new bid to cancel HS2. 

 

Eighteen months ago it was determined that HS2 will be the most expensive railway in the world with costs per mile expected to reach £403m, according to Government calculations. The line is estimated now to cost 15 times more than the cost per mile of the TGV in France. Yes, Fifteen times more expensive than the high-speed rail system next door.

 

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Lord Berkeley, chair of the Rail Freight Group has renewed calls for Transport Secretary Chris Grayling to put the brakes on HS2, citing a 4,000-page cost-analysis which suggests the entire budget for HS2 would be blown just on Phase 1. In the latest of a series letters, Berkeley notes that Grayling himself has admitted that “The final [phase one] target price will be agreed in 2019”, and reminded him that Great Western electrification was originally meant to cost £800m, but looks like it will come in at £4bn after significant descoping, and whilst Phase 2 has been recently descoped there is little option to do that with Phase 1 anymore, in fact, the opposite is now happening.

We should not forget it was the current Chancellor of the Exchequer that said as Transport Minister back in 2010 when referring to HS2 that – “If we used financial accounting we would never have any public spending, we would build nothing … Financial accounting would strike a dagger through the whole case for public sector investment.

To keep costs from rising the government is now blatantly lying to the general public. Since it was first unveiled in 2010, the official projected cost of HS2 has gradually risen from £32.6bn to £55.7bn, with the latest estimate calculated on 2015 prices. Over the years we have seen the proposed links to Heathrow and HS1 cut, along with plans for a new station at Sheffield. Last month it was announced that the much heralded ‘Crewe Hub’ would actually consist of an extension to platforms 5 & 6 of the existing station.

Last July, Micahel Byng, who had been contracted by Network Rail to re-write the book on costing rail projects after a never-ending parade of them going massively over-budget, used his methodology to estimate the cost of Phase 1 of HS2 would be £48 billion, almost double the official £23.5bn cost for that part of the project, or in other words, the entire budget for building the whole thing would be blown just to get it to Birmingham. For clarity, Byng has not included the cost of trains – the official £55.7bn full cost of HS2 includes £7bn for rolling stock – without that the official cost is £48.7bn.

Crucially, the history of projects such as HS2 is that a budget including a contingency is set, and besides the obvious descoping that anyone can see, what happens behind the scenes is that the contingency starts getting spent. Sometimes, project leaders decide they need to try and hide a massive increase in baseline costs and cut the contingency, like when in 2015 the baseline cost of Phase 2 went up by 39%, but to mask this, the contingency was cut by 20%. In that instance, the overall effect of cutting contingencies massaged a headline £7bn increase in cost for the whole project down to ‘just’ £5.6bn. Of course, the punchline was that Government said the ‘route was more certain’ as an excuse for being able to cut the contingency, when a year later they scrapped their route through Sheffield, moving the bulk of Phase 2b through Yorkshire miles to the East.

Then there’s the amount of construction work that somehow was not anticipated, not properly scoped in the first place or very quietly added since the project was announced. The list is huge. According to the Stop HS2 campaign, there are no costs put to these additional items – but you can only imagine the billions involved.

 

  • Increased area of footprint at the proposed London Euston Station, apparently to make provision for extensive over site development.
  • Major engineering structure west of the proposed Old Oak Common Station to facilitate trains to crossover
  • Several connections from the proposed HS2 railway to the “classic” railway in the London area, on the Chiltern line and in the West Midlands in the Birmingham area
  • Provision of a traction maintenance depot at Washwood Heath in Birmingham
  • Major works around the proposed Birmingham Interchange Station involving a design and construction of a “people mover” from the station to Birmingham International Station, the Airport and the National Exhibition Centre
  • Alteration to motorways, M6/M42 and M6 Toll as well as to major trunk roads, A452/A446 and A45 in the Bickenhill area
  • Extensive concrete structure forming portals to tunnels along the route
  • Additional enabling works requiring the movement of commercial petroleum, gas and electricity lines
  • Diversion or relocation of watercourses in their floodplain at several locations along the route
  • Increase in the scope of the enabling works required along the entire route to mitigate disruption and damage to those affected by the project.

 

When the cost of the project was valued at £32bn there wasn’t much between those for and against HS2 when it came to public opinion. When projections were raised to £50bn, opposition jumped to 55% while only 29% were in support.

In a survey carried out by Ipsos MORI at the same time, only 4% thought a new high-speed rail line was the best way of boosting the economy, just beating ‘Don’t Know’.

By 2017, 84 per cent of the general public didn’t believe HS2 will benefit them personally whilst two-thirds of the population thought HS2 was a bad idea all round.

When asked to choose two priorities from a list – only 6 per cent thought HS2 should feature on the list at all.

  • 49% said repairs on minor roads are a priority
  • 34% said high-speed broadband across the country is a priority
  • 31% said improving commuter rail lines into major urban centres is a priority
  • 23% said road repairs on motorways are a priority
  • 8% said new motorways are a priority

 

HS2 will go down in history as little more than a flawed vanity project for an out of touch glory-chasing political class who have demonstrated a taste for wasting valuable time, resources and taxpayers money in times beset with national crisis. HS2 just adds to a long list of political failures. The Tories should grow up and face this failure, stop the cover-up before more is wasted.

 

 



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