HS2 rail service to link Manchester and London stuck with £3billion funding gap, say spending watchdog

By Glen Keogh

The HS2 high-speed rail project, which is set to create quicker links between Manchester and London, could be hit by a funding crisis, as a Whitehall spending watchdog revealed a £3.3billion gap today.

The National Audit Office (NAO) said it was not clear how HS2 would deliver and rebalance economic growth.

The timetable for phase one of the project – the link between Birmingham and London – was also attacked and described as ‘challenging’, however the NAO said it was unclear whether the business case covered just phase one or the full route.

The full route will consist of phase one and phase 2 – a Y-shaped network from Birmingham to Manchester and Leeds due to open in 2032/33.

The NAO report said: “This challenging timetable makes delivering this work difficult and increases the risk that the programme will have a weak foundation for securing and demonstrating success in the future.”

Phase one work is due to start in 2016/17, despite the current gap in funding which government is yet to decide how to fill.

Not only did the report question the optimistic timetabling of the project, it also said the benefit-cost ratio of the scheme – the cost of the project set against the likely benefits it will bring – had twice contained errors.

Current estimates of £1.4 in benefit to every £1 spent are ‘likely to change’, the report said.

The gap in funding was revealed by NAO when calculating the budget allocated to phase one of the project.

“The department capital forecast for these four years is £33.7 billion but its capital budget if kept constant at 2014-15 levels would be only £30.4 billion,” the report said.

HS2 is designed to support 100,000 jobs through the construction and development of the line, but this estimation was criticised by the report.

It said: “The Department for Transport does not know how many jobs would be created without the investment.”

House of Commons Public Accounts Committee chairman Margaret Hodge said the department has set an extremely ambitious timetable for the project, with no room for mistakes.

“Past experience does not fill us with confidence in this optimism,” she added.

HS2 has been met with strong opposition as it will run through countryside previously untouched.

The 250mph train would cut Manchester to London journey times to 1hr8mins.

Picture courtesy of JamesZ, via Flickr, with thanks.

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