Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Accepted
HS2 Phase 1 alone does not achieve value for money as previously asserted
Conclusion
The inclusion of an allowance for remediation costs if Phase 1 were to be discontinued, and the exclusion of sunk costs, had a significant impact on the calculation of a positive BCR in the range 1.1 to 1.8, and thus on the AO Assessment. In addition, the figures quoted for these elements are in 2019 prices and would be significantly higher in 2023 prices, though benefits would also be higher in 2023 terms.13 The Accounting Officer 6 HS2 6-monthly report to Parliament: November 2023 7 Q 15 8 Q 20 9 Letter from DfT to PAC (original dated 4 October, reissued on 14 November with correction to BCR range) 10 Q 46; Letter from DfT to PAC (original dated 4 October, reissued on 14 November with correction to BCR range) 11 Q 12 12 Qq 12, 13 13 Qq 15–17 HS2 and Euston 11 reiterated the point she had previously emphasised in her letter, stating that “if you step back, as it were, and look at the totality of benefits and of costs as if you were starting on day 1 with Phase 1, it would not achieve value for money.”14
Government Response Summary
The government agrees to address the committee's findings on the Benefit-Cost Ratio by preparing to publish an updated programme business case in 2024, which will set out revised benefits and provide updated benefit-cost ratios for HS2 Phase 1.
Government Response
Accepted
HM Government
Accepted
1.1 The government agrees with the Committee’s recommendation. Target implementation date: during 2024 1.2 The Department for Transport (the department) is preparing to publish an updated programme business case in 2024. This business case will set out the updated benefits of the revised programme and how the department will continue to monitor the delivery of programme benefits, and will provide updated benefit-cost ratios. 1.3 The programme has a well-established process for measuring the significant benefits already being delivered through construction. The programme is currently supporting over 28,000 jobs, thousands of UK businesses and has created over 1,400 apprenticeships since 2017. 1.4 The department will continue to work across government to support the ongoing realisation of benefits, with particular focus on the operational benefits as the railway comes into service, and the regeneration benefits at places along the line of route including around the new stations.