Watchdog questions benefits of costly HS2

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The HS2 high-speed rail project has come under renewed attack from a public spending watchdog which said the apparent benefits were dwindling as costs spiralled.

In a withering assessment of the proposed £50bn link, the Commons public accounts committee accused the Department of Transport of failing to present a “convincing strategic case” for the proposed ‘Y-shaped’ line which will link Sheffield, Leeds and Manchester to London via separate east/west routes from Birmingham.

The committee said it was based on “fragile numbers, out-of-date data and assumptions which do not reflect real life” with no evidence it would aid regional economies and not simply “suck” even more activity into London.

It also warned an “unrealistic” target of securing the necessary legislation by 2015 risked a repeat of costly errors such as the botched West Coast mainline franchise award.

And it demanded an urgent explanation of how quickly the Department would plug significant gaps in the commercial and major project expertise in its teams.

But Transport Secretary Patrick McLoughlin rejected the findings, insisting the case was “absolutely clear” that without HS2 key rail routes would be “overwhelmed” by rising passenger numbers.

“The project will free up vital space on our railways for passengers and freight, generate hundreds of thousands of jobs and deliver better connections between our towns and cities,” he said.

“HS2 is a vital part of our plan to give Britain the transport infrastructure it needs to compete.”

Prime Minister David Cameron has announced a campaign to bolster support for HS2 in the face of what he called an “unholy alliance” of sceptics.

Recent critics have included Labour’s Alistair Darling, who first approved it as Chancellor, and the Institute of Directors which dismissed it as “a grand folly”.

It is also fiercely opposed by some Tory MPs – many representing communities which will
be disrupted by construction work and train noise along the route.

The Government’s commitment to HS2 has been questioned in recent days after the Treasury’s top civil servant, Sir Nicholas Macpherson, said there was “no blank cheque” for the project.

Official estimates of the cost were increased by £10bn to £42.6bn earlier this year, and some observers have argued that even this sum is too low.

The Institute for Economic Affairs think-tank put it as high as £80bn. But the Prime Minister said he was “passionately in favour” as fresh figures were promised to back the case.

The first phase of the scheme between London and Birmingham is due to open in 2026 with extensions to Leeds and Manchester operating from 2033.

Calling for more detailed evidence to back the case, the MPs concluded: “The Department has yet to demonstrate that this is the best way to spend £50bn on rail investment in these constrained times.”

And the scale of the contingency built into the budget – at £14.4bn the equivalent of a third of the total – appeared to be “compensating for weak cost information”.

A case in favour of phase two should be “prepared using up to date information and realistic assumptions, particularly on the benefits to business travellers”, the report recommended.