"HS2 costs spiralling and benefits dwindling" MPs warn

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In a withering report, published today, the all-party Public Accounts Committee, has questioned whether the project represents value for money “in these constrained times”.

The attack by the MPs is the latest onslaught on the Government’s flagship project to build a 351-mile high-speed line to Manchester and Leeds via Birmingham.

Critics have included the Institute of Directors, who dismissed it as a “grand folly”, the Thatcherite Institute of Economic Affairs and two Labour heavyweights, Alistair Darling and Lord Mandelson.

At the same time the Coalition has tried to regain the political initiative with senior ministers including David Cameron, Nick Clegg and Patrick McLoughlin, the Transport Secretary, stressing the importance of HS2.

In a newspaper interview yesterday Douglas Oakervee, the chairman of HS2, said even the name of the company – stressing the speed – had been a mistake.

The raft of ministerial interviews and speeches appear to have been a pre-emptive strike ahead of the report by the most influential backbench committee at Westminster.

In the report, the committee has attacked not only the cost of the scheme, but the way in which the entire project has been handled.

“The Department has yet to demonstrate that this is the best way to spend £50 billion on rail investment in these constrained times,” the MPs noted.

They have questioned Whitehall’s calculations of future demand for future rail travel, questioning whether the figures were “robust and credible.”

The MPs added: “So far the Department has made decisions based on fragile numbers, out-of-date data and assumptions which do not reflect real life.”

These assumptions, based on a survey which was more than a decade old, included the belief that businessmen could not work on trains using modern technology.

“Furthermore, the business case does not include a complete cost for the impact of disruption, for example, to local businesses during construction.”

The MPs have also disputed a key justification for the scheme that it would “rebalance the economy” by boosting employment in the north, rather than sucking more jobs down to London.

They also questioned the DfT’s “95 per cent confidence” that the scheme could be built for £50 billion, including £7.5 billion to pay for the fleet of trains needed to run on the new high-speed line.

They were particularly worried that the amount put aside for unforeseen expenses, known as contingency, did not take into account the possibility of new stations or tunnels being required especially in the second stage of the project – known as the Y – taking trains from the Midlands to Leeds and Manchester.

Underpinning the report was a concern that the DfT lacked the commercial skills needed to project the taxpayers’ interests in a major scheme of this scale.

Margaret Hodge, the Committee Chairman, was scathing in her assessment of how the project had been handled.

“The pattern so far has been for costs to spiral – from more than £16 billion to £21 billion plus for phase one – and the estimated benefits to dwindle,” she said.

She also questioned the time the Government had allowed to carry out the groundwork for the scheme.

“In my Committee’s experience, not allowing enough time for preparation undermines projects from the start.”

Richard Bacon, a Tory member of the committee, added: “The Department for Transport owes it to rail users everywhere to stop itself going down the wrong track. Many existing rail lines, including one in my own constituency, could benefit greatly from even a small slice of the funds currently allocated to High Speed 2.”

Despite the project having the support of the leadership of all three parties at Westminster, there is mounting anxiety at the potential cost of the project.

Both Ed Balls, the shadow chancellor, Nick Macpherson, the Treasury Permanent Secretary, saying there was no “blank cheque” for HS2, while Maria Eagle, Labour's transport spokesman accused the Prime Minister of failing to ''get a grip'' on the project.

Opponents of the scheme seized on the MPs' findings. “We have no doubt that the Government will continue to plough ahead with HS2 despite PAC’s devastating criticism," said Hilary Wharf, director of the HS2 Action Alliance.

"How much longer do they think the tax payer will listen to their bleatings about this £50billion white elephant being vital to the future of the UK’s economy?”

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HS2 Birmingham to London route criticised in House of Lords

The case for the HS2 high-speed rail line has come under fire in the House of Lords.

Peers criticised the project, the first phase of which will run from London to Birmingham from 2026.

Opening a debate, Lord Hollick said: "Much of the evidence presented to justify HS2 is either defective or unconvincing or out of date."

HS2 promises to reduce journey times between Birmingham and London from 81 minutes to 49 minutes.

Businessman Lord Hollick, a Labour peer and chairman of the House's Economic Affairs Committee, said: "We have a £56.6 billion project requiring £36 billion of public subsidy, on which no return is expected, that has failed to be independently and objectively assessed."

Labour former minister Baroness Blackstone said the arguments for HS2 were neither "clear or robust".

"Of course there is a case for it, but much more clarity is needed," she said.

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Labour former minister Baroness Blackstone said the arguments for HS2 were neither "clear or robust".

"Of course there is a case for it, but much more clarity is needed," she said.

Oh the irony!

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"We have a £56.6 billion project requiring £36 billion of public subsidy."

I've been told by people with more knowledge of the subject than myself that a fraction of that amount spent on modernising internet lines would 'revolutionise' business productivity in this country.

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It's purely a vanity project, but some people stand to make lots of money from it.