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£3.3bn funding gap for HS2 – NAO

The NAO has identified an estimated £3.3bn funding gap in the costs for HS2 over four years from 2017/18 – 2020/21. The Government has yet to decide how to fill this gap, a new review warns.

The Department for Transport said the report was overly simplistic.

The NAO review into the DfT’s planning for the project found that the department has “poorly articulated” the strategic need for a transformation in rail capacity and how the project will generate regional economic growth.

The benefit:cost ratio for phase 1 of HS2 has twice contained errors, the review highlighted, and the DfT should update the data underpinning some key assumptions in the ratio.

The department should also carry out research into how business travellers use their time on trains, to make clear the relationship between the strategic reasons for HS2 and journey-time savings.

Amyas Morse, head of the National Audit Office, said: “It’s too early in the High Speed 2 programme to conclude on the likelihood of its achieving value for money. Our concern at this point is the lack of clarity around the Department’s objectives.

“The strategic case for the network should be better developed at this stage of the programme. It is intended to demonstrate the need for the line but so far presents limited evidence on forecast passenger demand and expected capacity shortages on existing lines. It is also unclear how High Speed 2 will transform regional economies by delivering jobs and growth.

“The Department is trying against a challenging timetable to strengthen its evidence and analysis, which at present provide a weak foundation for securing and demonstrating success in the programme in future.”

Margaret Hodge MP, chair of the Committee of Public Accounts added: “HS2 is one of the country’s largest infrastructure projects, with plans to invest huge sums of taxpayers’ money, up to £17.3bn for phase one and around £33bn if phase two goes ahead.

The Department has produced a business case that is clearly not up to scratch and shows no signs of having learnt the lessons from HS1, which the Committee reported on last year. Some of their assumptions are just ludicrous.

“There is virtually no evidence in this business case to support claims that HS2 will deliver regional economic growth, one of the key aims and justifications for this project. 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. Past experience does not fill us with confidence in this optimism. Unless the Department gets its act together, HS2 will not deliver all intended benefits for travellers and the regions, and it will not deliver value for the taxpayer.”

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