Further questions raised of economics of HS2
Select committee chairman written to transport secretary
THE chairman of the Treasury Select Committee, Andrew Tyrie MP has published another letter to the transport Secretary to express concern over HS2.
In a letter dated January 4, Mr Tryie tells Chris Grayling MP, that a recent analysis published by the Department for Transport (DfT) “raises further questions on the economic case for HS2”.
The DfT’s report said there has been an increase in the benefit-cost ratio on the basis of increased business demand, whilst Mr Tyrie argues that without this latest data, “HS2 is scarcely worth the candle” adding that by the department’s own guidance, it would be delivering “low” value for money.
“The credibility of this sharp rise in forecast demand is crucial to the whole HS2 project” added the MP for Chichester.
Mr Tyrie then proceeded to pose several direct questions for the Transport Secretary, asking what new evidence there is for an increased demand that wasn’t available in November 2015, and how confident they are that the forecasted growth will not be reversed.
He also questioned what is being done to improve HS2 Limited’s forecasting model.
He then continued to challenge the forecast of high business demand for the service before pointing out that the rail demand forecasts are predicated on the Office for Budget Responsibility’s outlook for the economy and that the forecast was in fact downgraded on November 24.
Commenting on the correspondence, Mr Tyrie said: “The Department claims that it has been underestimating the growth in passenger demand in support of the economic case for HS2.
The Transport Secretary needs to explain why the latest projection for growth in demand will be any more reliable than its predecessor. Over the last seven years we’ve had six of these – each different.
“In the last Parliament, the Treasury Committee examined the proposals for HS2.
A lack of rigour in the economic case was manifest. On the basis of the evidence provided so far, many people remain to be convinced that the £55bn projected costs for HS2 offers better value for money than a lower speed, lower cost alternative.”
It is not the first time the treasury committee chair has raised concerns over HS2, with a letter written in September to the Transport Secretary stating: “HS2 has the weakest economic case of all the projects within the infrastructure program, yet it is being pushed through with the most enthusiasm.”
The letter also asked whether the department had examined the economic case for a higher capacity at lower speeds before citing a twelve year old study commissioned by the Strategic Rail Authority that proposed the route through the Chilterns.
“The Government has failed to explain clearly why it regards this feasi-
Many remain to be convinced that HS2 offers better value for money
bility study as providing the evidence to select the corridor through the Chilterns.”
Concern: Transport secretary Chris Grayling