Blank cheque for HS2

BBC News references IEA HS2 research

Labour has cast doubt on the future of HS2 but just what are the arguments for and against a new high-speed rail link between London and the north of England?

Shadow chancellor Ed Balls still supports the government's scheme but warned there should be no blank cheque.

Until this summer, HS2 was priced at £32.7bn. But in June the government revised its estimate up by a further £10bn to a maximum of £42.6bn. Rolling stock is expected to cost another £7.5bn.

The Department for Transport says it will not necessarily use the entire £42.6bn, which includes a large contingency fund. It has set HS2 Ltd, the company it owns, a target price of £17.1bn for phase 1 (London to Birmingham). That contains a small contingency fund. But in case of unforeseen problems, the upper limit for phase 1 is £21.4bn, with £21.2bn for phase two. £14.4bn of the £42.6bn budget is contingency money.

The London Olympics, which organisers claim came in under budget, might make people wary. When London's bid was chosen in 2005 it was supposed to cost £2.4bn. In 2007 it was revised up to £9.35bn.

It ended up costing £8.77bn, less than its final budget but more than three-and-a-half times the original budget.

The Public Accounts select committee is alarmed by spiralling costs - from more than £16bn to £21bn plus for phase one - and the fact that contingency spending accounts for a third of the total budget.

Free market think tank the Institute for Economic Affairs (IEA) has suggested the cost could rise to £80bn. But that figure was reached by adding in lobbying from local councils for extra infrastructure and design changes.

Read the full article here.

 

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