HS2 must move ahead say business chiefs following damning report

A DAMNING report from the National Audit Office (NAO) suggests the business case for high-speed rail project HS2 has not been made.

There is no evidence that the £33bn scheme linking Birmingham and London would lead to economic growth the NAO’s report suggests.

The NAO further suggested that the project has an estimated £3.3bn funding gap and said the timetable for the planning phase of the project – with work due to start in 2016-17 – is “challenging”.

Transport secretary Patrick McLoughlin said the NAO’s conclusions were based on old data.

And local business leaders say the report shouldn’t lead to a delay in progressing HS2.

The NAO said: “In presenting its case for investment in the project, the Department of Transport (DfT) has poorly articulated the strategic need for a transformation in rail capacity and how High Speed 2 will help generate regional economic growth.”

House of Commons Public Accounts Committee chairwoman Margaret Hodge said: “The DfT has produced a business case that is clearly not up to scratch. Some of their (the DfT’s) 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.”

Transport secretary Patrick McLoughlin said he “did not accept the NAO’s core conclusion”.

“The case for HS2 is clear. Without it the key rail routes connecting London, the Midlands and the North will be overwhelmed,” he said.

“We are not building HS2 simply because the computer says ‘yes’. We are building it because it is the right thing to do to make Britain a stronger and more prosperous place.”

Business leaders in the Midlands have urged the government to press ahead urgently with the development of HS2 despite the report’s conclusions.

Birmingham Chamber of Commerce Group (BCCG) chief executive Jerry Blackett said: “We agree with the Department that the economic modelling is just the start of the story and urge the government to act speedily.

“As the transport secretary Patrick McLoughlin points out, if they had only relied on modelling, the M1 would not have been built.

“The NAO has relied on an out-of-date analysis when it should be taking into account the progress that has been made in the past year.

“Without HS2 we will simply run out of rail capacity and by the 2020s the West Coast Main Line will be full.”

“Figures from the DfT show that in 2011 during the morning peak there were on average 4,000 people standing on arrival into London Euston and 5,000 people standing on arrival into Birmingham.

“This means there are already around 115 passengers for every 100 seats. We need to act now to increase capacity. Britain cannot afford to leave the economic future of great cities like Birmingham to an overcrowded railway that will also be 200 years old by the time HS2 opens.

“If we are to compete globally, Britain needs transport that matches the best but we are way behind. Turkey will soon have over 1,500 miles of high speed line. We have 67.”

CBI director of business environment Rhian Kelly, said: “It is early days in a 20-year project but the Government needs to implement lessons quickly from last year’s franchising failure to make HS2 a success.

“Industry, investors and taxpayers must see a watertight business case and programme management.

“There is very little advantage in prolonging the timetable given the West Coast Main Line is set to reach full capacity by the mid-2020s – squeezing out passengers and freight. Ministers need to secure real consensus on the route now to avoid the project being hit by years of delays further down the line.”