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HS2 northern leg cancellation is ‘monumental failure’ of public money, says Andy Burnham

HS2 northern leg cancellation is ‘monumental failure’ of public money, says Andy Burnham

Greater Manchester mayor Andy Burnham has hit back at the government after a cross-party committee of MPs said the cancellation of the northern leg of HS2 will be “very poor value for money”.

The public accounts committee published a report that said it was “highly sceptical” that the Department for Transport (DfT) will be able to attract the private investment needed for the planned London terminus at Euston.

The committee said there are “many uncertainties” in the Government’s assessment that it was better to complete Phase 1 of the project than cancel the whole high-speed railway programme.

It also raises questions about the ramifications of Rishi Sunak’s decision to cancel HS2’s northern section in October last year amid spiralling costs.

Mr Burnham told the Independent that the “level of insult to the north of England” evidenced in the report is “off the scale”.

“The report confirms what what we said: that this was a bad, bad decision on many levels,” he said. “It's going to leave us not just not without HS2, it’s going to leave us with worse rail services than we've already got. That's the staggering thing.

Privately-funded alternatives to a scrapped section of HS2 have been discussed by Greater Manchester mayor Andy Burnham and Transport Secretary Mark Harper (PA Archive)
Privately-funded alternatives to a scrapped section of HS2 have been discussed by Greater Manchester mayor Andy Burnham and Transport Secretary Mark Harper (PA Archive)

“You spend billions to end up with worse train services than you had before. I don't think there's ever been a more monumental kind of failure in terms of use of public money.”

Henri Murison, chief executive of the Northern Powerhouse Partnership, said the challenges identified by the committee should not be a surprise to the government.

He said it had already been “made clear” that it was the northern legs that would “make the cost of the section into London easily justifiable”.

“The Oakervee Review, which reported to the prime minister whilst Rishi Sunak was at the Treasury, made clear that it was the northern legs, including between Birmingham to both Manchester and Leeds, which would make the cost of the section into London easily justifiable,” said Mr Murison.

“Instead, unnecessary tunnels and cuttings on phase 1 which were to placate vociferous local opponents have come at the expense of those of us in the North getting what we were promised.”

Rishi Sunak announced the cancellation of the northern leg of HS2 last year, citing spiralling costs (PA Wire)
Rishi Sunak announced the cancellation of the northern leg of HS2 last year, citing spiralling costs (PA Wire)

HS2 chairman Sir Jon Thompson, who has led the project since September 2023, warned last month that the estimated cost for Phase 1 has soared to as much as £66.6 billion, compared to an original budget for the whole project of £44.6 billion (in 2019 prices).

He said reasons for the increase include original budgets being too low, changes to scope, lower than expected productivity, weak contractual models and inflation.

The PAC report concluded: “HS2 now offers very poor value for money to the taxpayer, and the department and HS2 Ltd do not yet know what it expects the final benefits of the programme to be.

“The department acknowledges that building just Phase 1 will not be value for money because total costs will significantly outweigh benefits.”

However, it noted that the DfT judged that continuing with that section was value for money, partly due to avoiding £11 billion of costs that would be incurred from cancellation.

The report added: “There are many uncertainties in this assessment and we were left with little assurance over the calculations.”

Mr Sunak’s October 2023 announcement also included a new plan to rely on private investment to extend HS2 from Old Oak Common in the suburbs of west London to Euston, near the centre of the capital.

Cancelling the northern leg was meant to save £6.5bn - but the cost of cancellation currently stands at £11bn (Getty Images)
Cancelling the northern leg was meant to save £6.5bn - but the cost of cancellation currently stands at £11bn (Getty Images)

This is aimed at saving £6.5 billion of taxpayers’ money.

The PAC said: “We are… highly sceptical that the department will be able to attract private investment on the scale and speed required to make the London terminus station a success.”

Dame Meg Hillier, who chairs the committee, said: “HS2 is the biggest ticket item by value on the Government’s books for infrastructure projects.

“As such, it was crying out for a steady hand at the tiller from the start.

“But, here we are after over a decade of our warnings on HS2’s management and spiralling costs, locked into the costly completion of a curtailed rump of a project and many unanswered questions and risks still attached to delivery of even this curtailed project.”

A spokesperson for HS2 said: “We’ve been clear about our cost challenges, which have been compounded by significant levels of inflation.

“HS2 Ltd is now under new leadership and implementing changes across the programme aimed at controlling costs and learning the lessons of the past.”

A DfT spokesperson said: “We disagree with the committee’s assessment. Their estimated cost figure for phase one also does not reflect our decision to secure private funding for Euston, or the direction not to proceed beyond the Midlands.

“Our plans for Euston have already received extensive support from the private sector to invest and will offer a world class regeneration opportunity, mirroring the successful King’s Cross and Battersea and Nine Elms development programmes.”