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PAC ‘sceptical’ on whether HS2 can deliver value for money

MPs are ‘sceptical’ about whether HS2 can “deliver value for money for the taxpayer”. 

The influential Public Accounts Committee (PAC) said they were “not convinced” that the current crop of expensive transport infrastructure projects overseen by the Department for Transport (DfT) are part of a clear strategic approach to investment in the rail network. 

They highlight, in particular, recent proposals for a railway connecting cities in the north of England – a possible HS3. The MPs suggest that the Department takes a piecemeal approach to its rail investment, rather than considering what would benefit the system as a whole and prioritising its investment accordingly. 

Margaret Hodge MP, chair of PAC, said: “Investment in major rail infrastructure programmes takes a long time and costs a lot of money. It is therefore hugely important to ask the right questions and make properly informed judgements on priorities. Yet the government takes decisions without a clear strategic plan.” 

She said the government “did not carry out an assessment of HS3 before it gave the go-ahead to HS2 and it therefore did not test whether improved connectivity in the north was a greater priority”. 

But a DfT spokesman said that HS2 will have a “transformational effect”, rebalancing the economy and helping secure the UK’s future prosperity, providing high value for money to the taxpayer, adding: “As the project moves forward towards construction we will continue to address the issues raised by the PAC, and, in particular, value for money.” 

The Committee’s latest report – ‘Lessons from major rail infrastructure programmes’ – says the lack of a clear strategic plan for the rail network means it is unclear how the Department makes decisions on the programmes to prioritise for investment. 

PAC wants the DfT instead to set out a long-term, 30-year strategy for transport infrastructure, which would inform decisions about investment priorities. 

The MPs are also concerned that HS2’s overall funding ‘envelope’ of £50bn, which includes a generous contingency, will “simply be used to mask cost overspends, rather than valid calls on contingency funds”. 

HS2 Ltd chair Sir David Higgins, appearing before the Transport Select Committee this week, rejected that concern when it was raised by MPs, promising “rigorous enforcement” on the use of contingency budgets, just as happened on the London Olympics. Higgins is the former chief executive of both Network Rail and the Olympics Delivery Authority. 

Jim Steer, director of Greengauge 21, a not-for-profit group established in 2006 to research and develop the concept of a high-speed rail network, said: “The PAC should be aware that it is the private sector that will design, build and operate HS2, creating a much stronger UK-based rail capability in the process. 

“So whereas the PAC presumes that it is for government to deliver the development around high-speed stations, saying the work around Ebbsfleet (on HS1) has come seven years too late, it’s much better that the private sector makes a leading contribution too. 

“It would only add to wider project costs falling to the taxpayer if government were to ‘force’ development prematurely, rather than leverage private sector investment as is now happening at Ebbsfleet.” 

The MPs noted that they also remain concerned over the Department’s ability to deliver on time and budget. On some past programmes, including modernisation of the West Coast Mainline and Thameslink, the Department has needed to extend timescales and alter its approach to bring programmes back on budget and schedule. 

A Department for Transport spokesman said: “It is the role of the PAC to ask questions that major projects like HS2 need to address as they move from planning to delivery. This scrutiny is welcome. The report sets out some of those questions in detail and acknowledges that progress is being made. 

“HS2 will have a transformational effect, rebalancing the economy and helping secure the UK’s future prosperity, providing high value for money to the taxpayer. With Sir David Higgins as chairman of HS2 Ltd, we are fully focused on keeping costs down and are determined that this vital part of the government’s long-term economic plan will be built on time and within budget.” 

Michael Dugher MP, Labour’s shadow transport secretary, said the report highlights the government’s “piecemeal approach to transport investment” and shows once again why “we need a long-term infrastructure plan rather than a short-term politically driven approach”. 

He added that Labour has repeatedly called for the establishment of an independent National Infrastructure Commission to ensure the government can better identify and deliver for the country’s long-term infrastructure needs. 

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