Question to the Department for Transport:

To ask His Majesty's Government, given current economic conditions, what assessment they have made of the likely additional costs of labour and materials on the overall cost of delivering the HS2 project; and what impact these additional costs will have on the benefit-cost ratio (BCR) of HS2.

Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)

The HS2 programme is experiencing high levels of inflation, consistent with the rest of the economy and construction industry. Whilst I am clear that HS2 Ltd and its supply chain must do all they can do mitigate inflationary pressures, the overall cost of the programme is not affected in real terms because the budgets are set in 2019 prices.

Inflation affects the value of the costs as well as the benefits and using a consistent price base removes the effects of general inflation from the benefit-cost ratio (BCR) calculation. If materials cost inflation and general inflation are significantly different, the BCR could change. Labour and materials costs are modelled as part of the BCR analysis and will be updated for the next iteration of the HS2 business case.

Question to the Department for Transport:

To ask the Secretary of State for Transport, if he will publish the Treasury internal review into HS2 reported in the Financial Times on 17 October 2022.

Answered by Kevin Foster

We will not comment on the detail of leaked reports or on commercially sensitive matters. HS2 is well underway delivering vital infrastructure investment to contribute to Britain’s economic growth with 27,000 people working on it already.

We do not intend to publish the review as this was internal advice to the Minister for HS2. We report on the programme's status to Parliament every six months and Ministers will provide their next update to Parliament shortly.

Question to the Department for Transport:

To ask the Secretary of State for Transport, whether she has made a recent estimate of the potential cost savings of (a) cancelling and (b) postponing HS2.

Answered by Kevin Foster

There are no plans to cancel or postpone HS2, which remains at the heart of this Government’s plans to boost economic growth. HS2 is transformational and will act as a catalyst to help level-up the economies of the Midlands and the North.

With construction now well underway, HS2 and its supply chain is already supporting 27,000 jobs, including over 950 apprenticeships and over 2,500 businesses, 97% of which are UK-registered.

I look forward to updating the House shortly on the progress of the programme through the next six- monthly update.

Question to the Department for Transport:

To ask Her Majesty's Government whether a cost-benefit analysis was undertaken for (1) the Eastern leg of HS2, and (2) HS2 Phase 2B West, prior to their decision to cancel those rail projects; and whether they will publish the financial analysis which was undertaken prior that decision.

Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)

The Government has not cancelled either the Western Leg or Eastern Leg of HS2 Phase 2b. The Integrated Rail Plan sets out that HS2 will be built from Crewe to Manchester, and from the West Midlands to East Midlands Parkway. In addition, £100m has been provided to include work on looking at the best way to take HS2 trains to Leeds The Government will publish an updated Strategic Outline Business Case for Phase 2b Western Leg alongside the deposit of the Western Leg hybrid bill in early 2022.

Question to the Department for Transport:

To ask Her Majesty's Government which parts of HS2 Phase 2B have been cancelled.

Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)

As set out in the Integrated Rail Plan we will take forward the Phase 2b Western Leg. We will also progress a new high speed line to the East Midlands and electrify the Midland Mainline, enabling HS2 trains reach Nottingham, Derby and Sheffield. We are investing £100 million in development work on the West Yorkshire mass transit system, as well as looking at the most effective way to run HS2 trains to Leeds.

Question to the Department for Transport:

To ask Her Majesty's Government what assessment they have made of the impact on (1) the operational costs of HS2, and (2) ticket prices, as a result of the recent increase in energy prices.

Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)

There has been no specific assessment of the impact of recent increases in energy prices on HS2 operating costs. HS2 is not due to be operational until between 2029 to 2033, and it is uncertain if the current energy price fluctuations will still be relevant at this time. Operational cost predictions, including energy prices, are updated regularly and future analysis will use the most relevant energy price projections. Detailed decisions on HS2 fares and services will be taken nearer to when the railway commences operation.

Question to the Department for Transport:

To ask Her Majesty's Government what is the latest (1) capital cost, (2) revenue forecasts, and (3) Benefit-Cost Ratio, assumed in the continuing use of HS2 Phase 1 and 2A, (a) with, and (b) without, the inclusion of HS2 Phase 2B West.

Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)

As noted in the most recent Parliamentary Report, the overall Phase One cost is estimated in the range of £35bn to £45bn, with a Target Cost established of £40.3bn (2019 prices). The overall Phase 2a cost is currently estimated as in the range of £5-7bn (2019 prices). The Department will be updating the Strategic Outline Business Case for Phase 2b Western Leg which will include a refresh of the Phase 1 and 2a assessment published in April 2020. This will be published alongside the deposit of the Western Leg hybrid bill.

Question to the Department for Transport:

To ask the Secretary of State for Transport, what steps he is taking to ensure that homeowners are adequately compensated in cases where the construction of HS2 public works have diminished the value of their property.

Answered by Andrew Stephenson - Minister of State (Department of Health and Social Care)

A comprehensive range of compensation schemes is in place across the whole route, following consultation. These in most cases go beyond what the law requires; they are generous and comprehensive and available until one year after the start of operations on the relevant section of the HS2 route. Property compensation schemes are subject to regular review, most recently in 2020, when 36 proposals for improvement were put forward, over half of which have now been implemented, and with more to come.

Question to the Department for Transport:

To ask the Secretary of State for Transport, what steps his Department is taking to help ensure that UK produced steel is increasingly used in the building of HS2.

Answered by Andrew Stephenson - Minister of State (Department of Health and Social Care)

HS2 Ltd does not currently have any plans to buy steel directly. However, HS2 Ltd continues to uphold the principles of the Crown Commercial Service’s Procurement Policy Note (11/16): Procuring Steel in Major Projects; which aims to reduce the barriers faced by UK steel producers when conducting procurement activity. For instance, the company’s contractors are required to tender all steel requirements in open and transparent competition, applying a series of evaluation factors that take into account relevant social and environmental benefits.

HS2 Ltd has met with the UK Steel Board and pledged to work with UK Steel members and has also met with British Constructional Steel Association (fabricators) Confederation of British Metalforming, UK Steel Long Product Groups and the Galvanisers Association. HS2 Ltd has engaged extensively with the British steel industry over the last five years to ensure that it is in the best position possible to compete for contracts to build Britain’s new high-speed rail network. The success of this engagement is underlined by the fact that, at tier 3, 28 of the 29 reinforcement fabrication contracts supplying the HS2 piling category today have been awarded to a total of 9 UK-based companies, as an example. HS2 Ltd also publishes a dedicated ‘Steel Pipeline’ to UK Steel and the BCSA on a quarterly basis (the last one being September 2021), which sets out upcoming steel-related contract opportunities.

Question to the Department for Transport:

To ask the Secretary of State for Transport, what proportion of steel that has been ordered to be used in the construction of HS2 as of 30 November 2021 will be produced in the UK.

Answered by Andrew Stephenson - Minister of State (Department of Health and Social Care)

HS2 Ltd and the Department for Transport are committed to working with the UK steel industry to ensure it is engaged, informed and prepared to seize the contract opportunities that will be generated by HS2. HS2 Ltd’s contractors are committed to signalling demand pipelines and tendering all steel opportunities in open and transparent competition. Social and environmental benefits and the impacts of proposals will be evaluated as part of a Balanced Scorecard approach to procurement, in alignment with the Procurement Policy Note 11/16: Procuring Steel in Major Projects. HS2 Ltd is currently providing its latest steel procurement data to the Department for Transport. This will in turn be provided to the Department for Business, Energy and Industrial Strategy (BEIS) and published as a single industry steel pipeline around Spring 2022.

Question to the Department for Transport:

To ask the Secretary of State for Transport, what proportion of steel used in the construction of HS2 was produced in the UK as of 30 November 2021.

Answered by Andrew Stephenson - Minister of State (Department of Health and Social Care)

HS2 Ltd and the Department for Transport are committed to working with the UK steel industry to ensure it is engaged, informed and prepared to seize the contract opportunities that will be generated by HS2. HS2 Ltd’s contractors are committed to signalling demand pipelines and tendering all steel opportunities in open and transparent competition. Social and environmental benefits and the impacts of proposals will be evaluated as part of a Balanced Scorecard approach to procurement, in alignment with the Procurement Policy Note 11/16: Procuring Steel in Major Projects. HS2 Ltd is currently providing its latest steel procurement data to the Department for Transport. This will in turn be provided to the Department for Business, Energy and Industrial Strategy (BEIS) and published as a single industry steel pipeline around Spring 2022.

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