Out-Law News | 10 Sep 2013 | 9:47 am | 4 min. read
The Department for Transport's (DfT's) aim to present the High Speed 2 (HS2) Hybrid Bill before the end of the year was "ambitious" and its timetable for receiving Royal Assent by the end of March 2015 "appears to be unrealistic", the PAC said. It added that the DfT had "not yet demonstrated" that HS2 was the best way for the Government to spend an estimated £50 billion on rail investment, in a new report on the DfT's early work on the project.
"The pattern so far has been for costs to spiral – from more than £16bn to £21bn plus for Phase One – and the estimated benefits to dwindle," said Margaret Hodge, committee chair.
"The Department has ambitious and, in our view, unrealistic, plans for passing the Bill for HS2. The timetable is much tighter than for either High Speed 1 or Crossrail, despite the fact HS2 is a much larger programme. In my Committee's experience, not allowing enough time for preparation undermines projects from the start. A rushed approach contributed to the failure of the InterCity West Coast franchise award," she said.
Hodge said that the DfT had "not yet presented a convincing strategic case" for HS2. Its spending decisions to date had been taken on the basis of "fragile numbers, out-of-date data and assumptions which do not reflect real life, such as assuming business travellers do not work on trains using modern technology", she said.
The DfT must produce a response to the PAC's report within 60 days. The Government is also due to publish its own report this week arguing that HS2 will generate billions of pounds for the economy, according to the BBC.
Infrastructure planning expert Robbie Owen of Pinsent Masons, the law firm behind Out-Law.com, said that the PAC's remarks on the legislative programme for the Hybrid Bill were "only to be expected". Owen, who advised on the hybrid bills for HS1 and Crossrail, pointed out that these took 25 and 40 months respectively to get through Parliament.
"Whilst HS2 Ltd and the DfT appear to be on track to have the Bill ready for introduction by the end of this year, this is looking like being at the expense of fully considering the comments received in July from the public and stakeholders on the project's expected environmental impact and making changes to the design accordingly," he said.
"The result is likely to be to put even more pressure on the time taken for the Bill to go through Parliament, as the Parliamentary Committees are going to be looking for more changes to the project than they would be otherwise," he said.
HS2 is a planned high speed railway between London, the Midlands and the north of England. The initial London to Birmingham phase of the line is scheduled for completion in 2026, and is intended to cut journey times between the two cities to 45 minutes with trains running at up to 250 miles per hour. A proposed second phase of the project envisages the construction of an onward 'y network' connecting the line to Manchester and Leeds, as well as a spur to Heathrow Airport, by 2033.
New legislation is due to be introduced to Parliament later this year which would allow development and construction work to begin in 2017. If approved, the proposed HS2 Hybrid Bill will allow for quicker construction and design expenditure, and give Parliamentary authority for ecological surveys and other preparatory work to take place. The Bill would also allow for compensation payments to property owners living along the route.
In its report, the PAC called on the DfT to publish detailed evidence showing why it considered HS2 to be the best option for increasing rail capacity into London and improving connectivity to regional cities. In particular, it should be able to show that its figures predicting future demand were "robust and credible" and that the project would "enhance growth and activity in the regions" rather than merely "sucking more activity into London".
The PAC also questioned the "large contingency" included in the project's indicative budget, which at £14.4bn currently amounts to a third of the total cost. It said that the DfT should allocate this contingency to specific risks to the programme, as well as set out the processes it will use to keep this additional budget under tight control.
The report follows similar criticism of the Government's business case for HS2, published by the National Audit Office (NAO) in May. Business groups, including the Institute of Directors (IoD), have also questioned the value for money of the project, while at least one Treasury official has warned that there will be "no blank cheque" for the project if it appeared to be going over budget.
However, transport law expert Patrick Twist of Pinsent Masons said that the growth in rail traffic over the past 20 years, combined with projected population growth, demonstrated the business case for HS2.
"The PAC's report is emblematic of the short-termist approach to infrastructure that cannot see beyond the next three years," he said. "It's an approach that left us with fourteen years of Eurostar trains running on French high speed rail up to the Channel Tunnel and then dawdling through the Kent countryside on classic train lines while we waited for HS1 to be constructed."
"England's population is projected to grow from 53 million in 2011 to 60 million in 2030 and 70 million in 2050. Rail traffic, both passenger and freight, has been growing inexorably for 20 years. These two facts necessitate that a new North-South railway connecting our principal cities is required," he said.
In a recent letter to the Daily Telegraph, the heads of some of the UK's largest construction firms said that the project would be delivered on time, on budget and would boost the country's economy.
"HS2 is a much-needed investment in infrastructure for the future. Building it on time and within budget is well within the capabilities and ambition of the British construction industry," said the letter, which was signed by representatives of eight firms including Atkins, Balfour Beatty and the Kier Group.
"The funding secured for HS2 rightly includes a contingency – this is the responsible way to plan a project on this scale. Yet the artificially inflated figures circulated by opponents in recent weeks in no way represent our anticipated outcome," the letter said.