This morning the NAO released their latest report into the HS2 building programme. Like most NAO reports, it’s a solid piece of work that details dispassionately the project successes, failures and the challenges it faces as the UK cracks on with the biggest civil engineering project in Europe that’s going to be under construction for (potentially) the next 20 years. You can find the full report here.
Needlesss to say, the media and social media is already full of froth from people who’ve never even read the report, or at best, have skim-read its conclusions. No doubt some journo’s will trot out their usual trite appelation to claim the it’s a “damning” report (it isn’t. The NAO don’t do ‘damning’, they do sober assessments). You’ll also see ridiculous numbers North of £100bn bandied around, numbers that never appear in the NAO report at all and that have no official recognition. It says a lot about the febrile state of UK journalism that many (including the BBC) will regurgitate this spin. Nowadays it seems even supposedly respected organs like the BBC are merely parasites who lazily feed off other sections of the media to report what they say, rather than do some real research to report the actual facts.
So, what DOES the report say? Nothing that new, or earth-shattering. It’s simply an update on previous NAO reports that have highlighted the complexities and challenges of the HS2 project from its inception.
The report notes that the expected savings HS2 Ltd hoped to make haven’t materialised. Instead, there’s been an increase in costs for almost everything (bar the new trains themselves) – for multiple reasons.
These increases include mundane stuff like greater costs in moving utilities (cables, pipes etc) away from the route – which is hardly surprising as I don’t think any major project hasn’t suffered from this. The report also notes that significant costs have been added in the petitioning process by the Hybrid Bill Committee placating NIMBYs. Here’s what the report says, in their own words.
The irony? The NIMBYS who insisted that HS2 must be buried in tunnels or deep cuttings so they didn’t have to gaze upon it will be the same people who’ll now be screaming about the cost of HS2 rising! The rising costs and the reasons for them are summed up rather neatly in this table.
The report also details that costs have risen because the contractors recruited to deliver the construction of the project were expected to bear more of the financial risks than is usual – but that this is now being addressed.
What does the report say about the actual cost of HS2? Not unreasonably, it reports that this is still a figure liable to change, as is the timescale for opening. Here’s the details.
Note the final costs for the whole of HS2 are in the range of £65-88bn (including contingency). NOT £106bn! Of course you can guarantee much of the media will only use the higher of those two figures, whilst others will still insist on using the fictitious figures of £106-108bn which have no validity whatsoever. They’re certainly aren’t official figures.
What does all this do to the expected benefits of HS2 which are crudely calculated on a Benefit Cost Ratio (BCR). Here’s what the NAO say.
Until the figures are updated in the revised business case, HS2 is now regarded as poor value for money, but not so poor as StopHs2 claim, as they’ve invented a 60p in the pound figure, whilst the NAO say it’s 1:1.4! No surprise there then! Of course, as this is an NAO report, there’s a lot of things it doesn’t cover. What these bare figures don’t do is look at what would happen if we don’t build HS2. What would be the costs of the rail gridlock that would lead to, and how would we meet our targets to cut carbon emissions when we’d no loner have the means to get modal shift from road/air to rail? These are crucial matters, but not within the purview of the report. Neither will it mention that the OECD recommends that baseline infra investment is 5.5% of GDP annually for an economy with aspirations to growth. We have only spent this amount twice since WW2 leaving us woefully behind other developed (and developing) countries when it comes to infrastructure.
It doesn’t talk of the wider political aspects of building HS2 or the merits of doing so, such as the Governments aims of rebalancing the economy. That’s not the NAO’s job either – although that won’t stop some of the more bizarre claims and speculation from the pundits.
What we can see from the report is a sober assessment of where the HS2 project has got to so far and the challenges it faces over the next few years as it goes from design to (finally) construction. A decision to go-ahead will be made next month. The report assumes construction will begin in March 2020.
This won’t be the last report the NAO do on HS2. They’ll be keeping an eye of the project right through to completion when they’ll then look at the question of value for money. Their reports always make interesting reading as they’re authorititive and free of hyperbole or politicking. Now, watch how the media spins it…
