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Spending watchdog warns HS2 regeneration benefits at risk

Published: Thursday, 30th June 2016

The HS2 high-speed rail project has an unrealistic timetable and is facing increased cost and schedule pressures, according to National Audit Office report…

The National Audit Office has warned that the promised growth and regeneration benefits associated with the high-speed rail project (HS2) may not materialise because of continuing uncertainties over funding and value for money as the schedule looks to be slipping by 12 months. Currently the first phase of the £55bn project is due to be completed by 2026.

A report from the public expenditure watchdog published this week highlighted that the HS2 programme is facing cost and schedule pressures with options for extending the opening date for phase 1 by up to 12 months while steps are being taken to bring cost estimates within available funding.

The report pointed out that “the £55.7bn funding package does not cover funding for all the activity needed to deliver the promised growth and regeneration benefits which is the responsibility of local authorities. There is risk that these benefits will not materialise if funding cannot be secured.”

The main exception is Euston where the Department for Transport is planning to carry out works to enable further development above the HS2 station at Euston, at an estimated additional funding requirement of around £417m.

The watchdog noted that the department and HS2 Ltd have developed a structured plan for delivering regeneration benefits at an early stage. “Plans are more advanced than they were on, for example, HS1, where benefits have not materialised as expected.

The report acknowledged that since the NAO reported in 2013, the DfT and HS2 Ltd have made significant progress in preparing to deliver the programme. The preferred route for phase 2b is due to be announced later in 2016.

However this week’s report stressed that “effective integration of HS2 with the wider UK rail system is challenging and poses risks to value for money”.

The watchdog warned that a lot of work needed to be done on how HS2 services will complement or compete with other rail services, and how HS2 will interact with proposed improvements in the North.

“Failure to fully understand these interactions and make decisions in the right sequence will make delivering the programme more challenging. It could also mean decisions are made now which reduce benefits or increase costs across the network in future” said the report.

“HS2 is a large, complex and ambitious programme which is facing cost and time pressures. The department now needs to get the project working to a timescale that is achievable” commented Amyas Morse, head of the NAO.

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Roger Milne