Taxpayers' Alliance calls for Treasury review into £56bn HS2 after raising fresh value for money concerns

Rebecca Smith
HS2 trains will reach speeds of up to 225mph
HS2 trains will reach speeds of up to 225mph (Source: HS2)

The TaxPayers' Alliance today called on the chancellor to urgently review the £56bn HS2 project, after raising fresh concerns over the project's value for money.

Campaigners said the high-speed network failed a test Philip Hammond had set for large infrastructure projects during his tenure as transport secretary.

Hammond served as transport secretary from 2010 to 2011, and had previously told the Transport Select Committee when discussing HS2: "As rail projects go, a BCR [benefit-cost ratio] of 2.6 is quite reasonable. If it were to fall much below 1.5, I would certainly be putting it under some very close scrutiny."

Read more: HS2 names shortlisted firms for £2.75bn trains contract

The original business case for HS2 said the project had a benefit-cost ratio of 2.6, but the TPA said that was measured against its original lower cost.

An independent expert, Michael Byng, had sparked concerns over the cost of the rail project in July when he estimated that costs for the first stage of HS2 would cost nearly £48bn alone. Byng worked alongside Network Rail to devise its method for costing projects.

The government however, has said it is keeping a tight grip on costs, and HS2 remains on budget at £55.7bn.

New TPA analysis of several reports, including one from the Institute of Economic Affairs and internal Treasury estimates, assesses the benefit-cost ratios below the chancellor's target, coming in at 1.8 and 1.5 compared to the initial consultation benefit-cost ratio of 2.6 and the 2.3 from the 2013 economic case.

John O'Connell, chief executive of the TaxPayers' Alliance, said:

Enough is enough - HS2 is a costly mistake and it's not right to expect taxpayers to pick up the increasingly big bill for it. The chancellor was right in his former role that big-budget projects should demonstrate a big enough benefit to justify the cost, but we know that HS2 doesn't come close to this."

He should act on his words and place it under scrutiny with a formal Treasury review, especially when there are so many more pressing priorities than this out-of-date vanity project.

A government spokesperson said in response:

HS2 is good value for money and will increase our railway capacity and improve journey times for passengers - bringing the country closer together and supporting economic growth across the UK.

These numbers have been crunched and for every £1 spent on HS2, the UK will receive £2.30 back in economic benefits.

HS2 has been back under the spotlight of late over unapproved redundancy payouts at the state-funded rail group.

The Public Accounts Committee last week grilled HS2 executives over unapproved redundancy payments revealed by the National Audit Office in July.

HS2 had made £1.76m of redundancy payments after they were forbidden by the Department for Transport, which had expressly stated the organisation should remain at the civil service limit of £95,000 per person.

It emerged during the PAC session that HS2's former chief executive Simon Kirby, now chief operating officer at Rolls-Royce, had received an email from a senior figure at the DfT instructing that redundancy payments should not top £95,000 per person, and had not forwarded it onto colleagues.

Kirby said in a statement he did not approve the payments at issue and denied any allegation of wrongdoing.

Chief financial officer Steve Allen stepped down over the redundancy payout matter last week.

Read more: HS2 hires new finance director as it looks to tackle governance concerns

Related articles