HS2: Budget and Costs

Baroness Sugg Excerpts

Tuesday 24th July 2018 Lords Chamber

[Lord Berkeley]

To ask Her Majesty’s Government when they intend to update the cost estimate and business case for HS2 Phase One.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)]

My Lords, HS2 cost estimates and business cases are periodically updated as the scheme design is progressed to ensure that the scheme remains affordable and viable. HS2 Ltd is currently developing an updated phase 1 cost estimate, to be finalised prior to the completion of the phase 1 full business case accompanying the authorisation of notice to proceed in June 2019. The Government remain confident that the phase 1 cost estimate will remain within the SR15 funding envelope of £27.18 billion.

[Lord Berkeley (Lab)]

My Lords, I am grateful to the noble Baroness for that Answer. It is good that HS2 is regularly updating its budget, but it is a pity that no one knows about it. The last public budget given was in 2013, which is five years ago. Since then, we have had reports of the land purchase costs going £2 billion over budget and well behind, while a report in the Sunday Times last weekend by the consultant to the Infrastructure and Projects Authority using Treasury figures said that the project is up to 60% over budget and was in a “precarious” and “fundamentally flawed” position. Many other reports have also cited increased costs and delays. How can Ministers go on saying that they do not recognise the figures that are coming from all these different sources? Indeed, the Minister has almost repeated that today. Is it not time that we had a review of this project in costs and programme terms, because spending £100 billion with no budget for five years is surely not a good use of public money?

[Baroness Sugg]

My Lords, I thank the noble Lord for his question, and I greatly respect his lifetime of experience in the rail industry. I am also grateful for the noble Lord’s continuing scrutiny of HS2. As I have said, we continually update the cost estimates, but we do not share the details of those estimates as they are commercially sensitive. However, the headline figures will inform the business case as published in 2019. I understand that the article in the Sunday Times was based on an end-of-role report from a few years ago, and of course we do not comment on leaked documents. HS2 does not recognise or agree with either the analysis or the figure it contains, while the Infrastructure and Projects Authority recently described the HS2 programme as on target to be completed on time and on budget.

[Lord Framlingham (Con)]

My Lords, can I beg the Minister to do all she can to persuade the Government to abandon this insane vanity project? It is causing misery to thousands of people along the proposed route whose lives it is damaging. It is cutting great swathes through our environment, including damage to ancient woodlands up and down the country. All the billions it is costing would be much better spent on improving the whole of the railway network throughout England and Wales to the benefit of many people.

[Baroness Sugg]

My Lords, what is needed is a step change in railway capacity, and HS2 will deliver this way beyond what would be delivered by improving existing lines. I am afraid to inform my noble friend that the Government are committed to delivering HS2. It remains on track, with strong cross-party support. The new railway line will bring huge economic benefits that will be felt across the country.

[Lord Adonis (Lab)]

My Lords, I hope that the Minister will stand by HS2 as one of the great things that is happening in the country at the moment. In this dismal decade of Brexit and austerity, two of the shining lights that people will remember are the Olympic Games and HS2. One of the leading figures responsible for delivering both of them is Sir David Higgins, who will stand down as the chairman of HS2 Ltd at the end of this month. Will the Minister convey to Sir David the thanks of this House and the country for his brilliant work on our behalf in helping both to deliver the Olympic Games and to equip us with 21st century infrastructure? It is about time, after the intervening 20th century, that we started to mirror once again the great achievements of the Victorians.

[Baroness Sugg]

My Lords, I pay tribute to the part that the noble Lord played in HS2. I will certainly pass on his good wishes to the outgoing chairman. This is one of the biggest infrastructure projects that our country has ever seen. Eventually, more than 100 million people are expected to use HS2 trains when the network is fully completed.

[Baroness Randerson (LD)]

My Lords, Sir Terry Morgan is the new chair of HS2, following a very efficiently run spell at Crossrail. Could the Minister confirm whether Sir Terry’s remit includes a complete review and reassessment of existing HS2 plans in view of the doubts that are being expressed about the cost envelope?

[Baroness Sugg]

My Lords, I am sure that the incoming chair will absolutely look at the details of the project very closely. As I said, HS2 is preparing a full business case, which will be the robust and comprehensive assessment of the scheme. That will inform the next phase of the project, when we assess whether it is correct to continue.

[The Lord Bishop of Leeds]

My Lords, would the Minister agree that there is a problem if you can get up north 20 minutes quicker but you cannot get anywhere once you get there, and that any business case will have to take on board massive infrastructure improvements in the north of England?

[Baroness Sugg]

My Lords, I very much agree. Of course HS2 will benefit the north, but we are also looking at the connectivity of rail across the north and working closely with Transport for the North to deliver that.

[Baroness Young of Old Scone (Lab)]

My Lords, in view of the escalating size of the HS2 costs and considering what we hope will be today’s publication of the new National Planning Policy Framework giving increased protection for ancient woodland, will the Minister commit to the minimal cost—peanuts, indeed—of the Whitmore tunnel, compared with the total scale of the project, to reduce by 60% the destruction of ancient woodland by HS2 phase 2a?

[Baroness Sugg]

My Lords, in phase 1 we are creating nearly three times as much new woodland compared with the non-ancient woodland affected by HS2. Ancient woodland is, of course, irreplaceable. To compensate for that loss, we have committed to using best-practice measures such as enhancing linkages between woodlands, reusing the ancient woodland soils and creating new mixed deciduous woodland alongside the track.

[Lord Cormack (Con)]

My Lords, my noble friend has made a splendid debut in her job, but I wish that she did not have to defend the indefensible. Will she please consider the enormous cost of this cost envelope, tell the House how many jobs are being provided and spend the summer reflecting on the wisdom of this vast project?

[Baroness Sugg]

My Lords, as I said, we are confident that phase 1 will be delivered within a funding envelope of just over £27 billion. During construction, HS2 will generate 25,000 jobs and 2,000 apprentices. It will also support growth in the wider economy, which will be worth an additional 100,000 jobs.