Just how blow-out is the HS2 budget?

Helen Thomas
Newsnight business editor
@helentbbcon Twitter

image copyrightGetty Images
image captionThe cost of HS2 is reportedly set to soar to more than £100bn

One thing is certain about HS2: it doesn't generate much in the way of agreement.

The latest debate around the high-speed rail line, which could be Europe's largest infrastructure project, concerns a revised cost figure of £106 billion, reported earlier this week.

But experts close to the independent review of HS2 have cast doubt on the significance of that figure to a forthcoming report, led by former chairman of HS2 Doug Oakervee.

Andy Street, the Conservative Mayor of the West Midlands and a member of the review panel, told Newsnight that "£106 billion was a 'could be' number.

It was never a base case." Others involved in the process said they did not believe the figure had even featured in the version of the report they had seen.

The review panel's work finished in October, at which point those involved were allowed to read a "final draft" of the report before handing it back.

"The draft I read did not, to my recollection, give an opinion of costs as high as £106 billion," said one.

Another expressed surprise in seeing the figure linked to the report this week.

But the review had, indeed, identified risks that the costs could rise above the £81-88 billion estimate, they added.

The panel, they said, had discussed steps that should be taken to help control the projects costs, including beefing up the project's governance with an independent, permanent review body.

It had also considered whether the approach to contracts should be revised, with the government assuming more of the project risk to bring costs down.

PM to decide HS2 fate

The Prime Minister Boris Johnson is expected to make a call within weeks on whether HS2 should proceed.

The fate of the mammoth infrastructure project is seen as closely linked to the new government's ambitions to boost growth in constituencies in the North and Midlands.

Andrew Sentance, a former member of the Bank of England's monetary policy committee and one of the Oakervee review panel, this week suggested the leak of the report was government "spin" against the project.

He told Radio 4's PM programme: "Number 10 are trying to spin the fact that they are sitting on the report and they are trying to condition the public to their own conclusions. Some of the aspects of the reporting....are not, if the report was properly published, the way it would be interpreted".

Another person involved in the review told Newsnight: "It was a yes recommendation", adding that they shared Mr Sentance's concerns.

Others questioned whether the report could have changed since the version shared with the panel last year.

"I stand behind the report and have no reason to think anything has changed," said Mr Street. "I would like to see the report published as soon as possible so that we all know exactly what the facts are".

A DfT spokesperson said this week: "A draft of the Oakervee Report was delivered shortly before Christmas.

"The Transport Secretary, Chancellor and Prime Minister will take a final decision on HS2 shortly."

The FT, which first reported the new details from the Oakervee review, said that £106 billion was the price of the project put forward to the review by Michael Byng, an infrastructure consultant.

A separate report published by Lord Berkeley, the former deputy chair of the Oakervee review, had mentioned a figure of £107 billion as the latest cost of the project.

Lord Berkeley published his own report, saying that he disagreed with the conclusions of the draft review and "was not given an opportunity to amend it."

Supporters of HS2 argue that the large price tag reflects the scale of the project, which will be delivered over two decades and has the potential to transform the UK's rail infrastructure.

But to give the go ahead to HS2, the government will (implicitly at least) be required to show the project's value at the latest expected cost. Whatever that might actually be.

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