The controversial high speed rail has been severely criticised in a report by the National Audit Office (NAO) over how HS2 will help generate regional economic growth and how a £3.3billion funding gap will be filled.
The NAO which scrutinises public spending on behalf of Parliament, highlighted concerns surrounding the business case drawn up by the Department for Transport (DfT), in particular its case for investment in the project.
The report states that the Department has not made clear the need for a transformation in rail capacity, how High Speed 2 will benefit the economy or generate jobs adding that it focuses too much on journey-time savings.
It is also unclear to the NAO whether the business case covers phase one (the route between London and the West Midlands) which is due to be completed in 2026, or phase two (the entire Y-shaped network with lines from Birmingham to Manchester and Leeds) which is due to open in 2032.
So what is the economic benefit of HS2? The report states the most recent figures (published in August 2012) calculate that for every £1 investment the return for the economy will yield £1.40.
Though the DfT says that is just phase one and the entire network will yield £2 for the economy for every £1 invested in HS2.
The report criticises the fact that calculations for phase one have twice contained errors and that the Department has been slow to carry out its own research to validate the figures. It goes on to advise the DfT and its advisers HS2 Ltd to update the data from which these calculations were drawn.
Amyas Morse, head of the National Audit Office, said today the case for HS2 should be clearer at this stage of development:
One of the campaigners against HS2 says the findings of the report is proof that the project will not benefit the economy.
Campaigner Joe Rukin added that the total cost of HS2 when including the £3.3 billion funding gap highlighted in the report, the cost of trains and VAT, comes to over £53 billion.
When ITV News put this to the DfT a spokesman said “we do not recognise the funding gap that the NAO quotes.”
With regards to the cost of manufacturing the actual HS2 trains the DfT spokesman said the Department has a separate budget for that:
The Transport Secretary has rejected the NAO’s report findings saying the progress made since the last figures were released have not been taken into consideration. Transport Secretary Patrick McLoughlin said:
Despite the damning report by the NAO, business leaders believe HS2 is needed to enable economic growth. The President of the Birmingham Chamber of Commerce says the high speed rail infrastructure is essential: