Ex-Treasury chief says HS2 would fail cost-benefit analysis

The former Treasury top civil servant who was in the role when ministers approved Britain’s high-speed rail project HS2 has said the £56bn plan would now fail “a rigorous cost-benefit analysis”.

Nick Macpherson, who was permanent secretary at the Treasury from 2005 until March 2016, also said the rail scheme was based on technology that was likely to be outdated by the time it became fully operational at the start of the next decade.

His intervention will add to the mounting questions over the future of HS2, one of the most controversial infrastructure projects in recent history and one beset by delays and concerns over poor management.

“HS2 has always had a low economic return compared to other transport projects,” Lord Macpherson told The Sunday Telegraph. “Its costs are rising. And it is based on technology which looked advanced in 1980s France but is likely to look a little obsolete when it is fully on stream in the 2030s, not least because of the transformational effect of driverless cars.”

He added: “Public investment will be critical to driving up performance in a post-Brexit UK. But resources are limited. And so it needs to be allocated on the basis of rigorous cost-benefit analysis. HS2 fails that test.”

Lord Macpherson has previously said HS2 was a “political decision”— it was championed by former prime minister David Cameron’s government, including his chancellor George Osborne.

In a speech in the House of Lords last week he said public investment needed to be focused “on projects that yield the highest return”.

“That probably means more expenditure on roads and, although I know I am in a minority of around three, that also suggets that we should cancel HS2.”

The scheme is designed to run trains at 400km/h from London to Birmingham by 2026 and then to Leeds and Manchester from 2033. A third of the government’s £6.4bn support for rail in 2017-18 was spent on HS2, according to the Office of Rail and Road’s annual statistical release.

The Department for Transport has insisted HS2 will keep within its £56bn budget. However, a report by the National Audit Office, parliament’s spending watchdog, found last year that the cost of buying land for phase one, between London and Birmingham, had tripled in six years to more than £3bn. The NAO warned the cost could rise further.

The Treasury’s own Infrastructure and Projects Authority has given HS2 an “amber/red” rating for each of the past six years, meaning there is a “high risk” of it not delivering value for money.

HS2 Ltd said the scheme was “expected to generate around £92bn in benefits to the UK economy, helping Britain compete on the global stage by increasing economic growth, productivity and tourism and supporting hundreds of thousands of jobs”.

The HS2 programme “continues to enjoy cross-party support in Westminster and across the country”, it added.


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.