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HS2 in the House of Commons over the last week

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HouseOfCommons

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Hi all, we thought you'd be interested to know about the recent HS2-related activity in the House of Commons: a Westminster Hall debate, the completion of the Commons stages of a Bill, and a couple of relevant library briefings.

Westminster Hall debate:

On Wednesday 10 July, Andrea Leadsom MP held a Westminster Hall debate on the business case for HS2. In her opening speech she outlined her position on the project:

“Those of us who expressed concerns about HS2 even while it was still in consultation were dismissed by others as nimbys and told that we were flat wrong about the wider benefits that HS2 would bring to the north. I was then and continue to be willing to be proved wrong, but with the delay to the notice to proceed, growing concerns about the project’s spiralling costs, ongoing engineering and design difficulties and, even now, the rumours that the line past Birmingham might never be built, it is high time for the project to be thoroughly reviewed to ensure that it will actually deliver for taxpayers.”

Liam Byrne MP (Labour - Birmingham, Hodge Hill) argued that:

“As is traditional now, the argument against HS2 is couched in terms of value for money. In any value-for-money calculation, the money is easy to calculate, but the value is much harder to put your finger on... If we measure what we treasure, we will clearly see that HS2 is one of the best value-for-money projects that this country has contemplated for many years [...] What I treasure above all is jobs.”

The Parliamentary Under Secretary of State for Transport, Nusrat Ghani MP, responded to the points raised during the debate stating that:

“The debate provides an opportunity to reinforce the importance of HS2 not only for its capacity or for shortening rail journeys, but for fundamentally boosting the economy and smashing the north-south divide [...] 70% of the jobs created across our economy will be outside London, bringing prosperity to the north and the midlands, just as the first railways did, and not only to the cities on the high-speed line. HS2 trains will call at over 25 stations across the UK, from London to Scotland. It has already created 9,000 jobs and 200 apprenticeships. We expect that to rise to 30,000 jobs at peak construction, including over 2,000 new apprentices, many of whom will be trained at the national colleges in Doncaster and Birmingham… I stand here to state confidently that the budget is £55.7 billion and that the timetable is 2026 and 2033.”

You can read her full response, as well as the contributions from other MPs to the debate on Hansard. You can also watch the debate on Parliamentlive.tv.

Third Reading: High Speed Rail (West Midlands - Crewe) Bill 2017-19:

On Monday 15 July, the High Speed Rail (West Midlands - Crewe) Bill 2017-19 completed all of its stages in the Commons and had it’s first reading in the House of Lords on Tuesday 16 July.

The House voted against two New Clauses which
  • would have required the Secretary of State to commission an independent peer review of the project, and
  • would have prevented contractors from entering into non-disclosure agreement connected with the HS2 works, unless an independent assessor had certified that it was in the public interest.
You can check how your MP voted on CommonsVotes, read the Hansard transcript, watch on parliamentlive.tv and track the progress of the Bill.

Commons Library briefings:

For further information you may be interested in a research briefing produced by the House of Commons Library called ‘High Speed 2: The business case, costs and spending’ which looks at what HS2 is designed to address, as well as the estimated costs, environmental and community impacts and more.

The Library has also produced ‘High Speed 2 (HS2) Phase 2a’ which provides an overview of the scheme, its costs, compensation arrangements and more details on the Bill, which would give statutory and planning authority for the construction of Phase 2a of the scheme between the West Midlands and Crewe.
 
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matacaster

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"I stand here to state confidently that the budget is £55.7 billion and that the timetable is 2026 and 2033.”

The budget may well be that, its how much it will ACTUALLY cost that is the issue.
 

Wilts Wanderer

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"I stand here to state confidently that the budget is £55.7 billion and that the timetable is 2026 and 2033.”

The budget may well be that, its how much it will ACTUALLY cost that is the issue.
I think it's important to recognise that the budget includes a margin for cost escalation and overspend, and the actual cost of constructing HS2 could well come in UNDER this figure.
 

Bessie

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I think it's important to recognise that the budget includes a margin for cost escalation and overspend, and the actual cost of constructing HS2 could well come in UNDER this figure.
And today's news say HS2 will now cost £30bn more. With Boris as PM from next Weds and Failing Grayling finally consigned to the knackers yard I can see big changes ahead.
 

Ianno87

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And today's news say HS2 will now cost £30bn more. With Boris as PM from next Weds and Failing Grayling finally consigned to the knackers yard I can see big changes ahead.

*Could* cost £30bn more, not "will".
 

Metrailway

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*Could* cost £30bn more, not "will".

The internal review by Allan Cook, HS2 Ltd's new chairman, has identified an additional £30bn of costs to construct the railway. The cost now is expected to rise from £56bn to £70bn-£85bn. The FT was the first to break this:

Financial Times said:
The cost of Britain’s new HS2 high-speed railway line is to spiral by as much as £30bn, according to an internal review, plunging the project into fresh uncertainty as the UK prepares to usher in a new prime minister.

Allan Cook, the new chairman of HS2 who took over in December last year, has written to Bernadette Kelly, permanent secretary at the Department for Transport, to warn that the entire rail project cannot be completed for the official £56bn budget.

Mr Cook’s preliminary findings predict the final cost of building the line could now rise to between £70bn and £85bn, according to two people close to the HS2 project.

News of the likely cost overruns will add to mounting questions over the future of HS2, one of the country’s most contentious infrastructure projects. It has been beset by delays, contract scandals and concerns over poor management, as well as allegations by whistleblowers that parliament was misled on the budget for land purchases.

...

The other person close to the project said the costs had increased because of a “combination of poor ground conditions found during the surveying work, the costs of engineering a railway to a very high specification, and the further additional costs of it being designed to run at even higher speeds than other comparable rail projects”.

Full article here: https://www.ft.com/content/27ab2f5c-a976-11e9-984c-fac8325aaa04
 

YorkshireBear

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Of course the prices keeps going up they keep adding things! Like a potential south yorkshire parkway, like NPR junctions and pandering to people's requests for more tunnelling, it should hardly come as a shock to anyone!
 

Ianno87

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Of course the prices keeps going up they keep adding things! Like a potential south yorkshire parkway, like NPR junctions and pandering to people's requests for more tunnelling, it should hardly come as a shock to anyone!

Quite interesting when people simultaneously point out the HS2 is too expensive, yet in the same breath complain its not also being built to <insert place name>
 

yorkie

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This thread is to discuss HS2 in the House of Commons over the last week and is not a "master thread" to discuss alternative provisions to HS2 or reasons why people are against it.

To discuss reasons why people may be against HS2, please use this thread: https://www.railforums.co.uk/threads/why-are-people-opposed-to-hs2-and-other-hs2-discussion.177112/

To discuss ideas for alternative provision instead of HS2, please create a thread (or use an existing thread, if there is one) in the Speculative Ideas section.


 

deltic

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The costing of HS2 is a classic example of a failure to be open and honest in large infrastructure projects. The budget for HS2 was not set by a detailed analysis of works required etc but by an international benchmarking exercise that produced a cost per kilometre to build a high speed rail network. The Treasury then used that number as the budget. HS2 then have parrotted the line that the line will get built for that amount despite everyone in the project knowing that it is not feasible. The line that seems to be taken on these type of projects is lets get approval and start building and then hope its to late for anyone to stop it once the size of cost increases get noticed. The result is that HS2 might get as far as Crewe and the rest of the scheme gets kicked into the long grass along with northern powerhouse rail or whatever its called this week.

The chances of phase 1 opening in 2026 are zero. AFAIK the only detailed construction timetable published was that in the environmental statement and works seem to be running around 2 years behind that. Eg Old Common station has been held up by a dispute over procurement - it was timetabled to start in 2017Q4, Curzon St station construction was due to start 2018Q1, contract has had to be retendered due to lack of bidders.

We need far more honesty and transparency about the deliverability of these mega projects and their costing. Detailed assessment of groundwork conditions could only start once the scheme got approval and as appears usual in these cases assumptions on conditions were far to optimistic. We need to develop costings on the basis of worst possible outcomes not the most optimistic.
 

WatcherZero

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Indeed but that's the whole issue with benefit cost ratios, they inform and allow the ranking of the best financial decisions, where spending public money brings the best financial reward, but sometimes with public works the benefit isn't financial and artificial 'emotional' benefits have to be shoehorned in to tray and reflect that.

A Government just has to be brave enough to say we are doing something not because there is a profit to do so but because there is a need to do so. They are strong enough to do this in some instances, for example disability access, building a ramp or lift in an awkward location may never recoup its costs from extra revenue due to the small number of people it directly benefits.
 

Ianno87

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Indeed but that's the whole issue with benefit cost ratios, they inform and allow the ranking of the best financial decisions, where spending public money brings the best financial reward, but sometimes with public works the benefit isn't financial and artificial 'emotional' benefits have to be shoehorned in to tray and reflect that.

A Government just has to be brave enough to say we are doing something not because there is a profit to do so but because there is a need to do so. They are strong enough to do this in some instances, for example disability access, building a ramp or lift in an awkward location may never recoup its costs from extra revenue due to the small number of people it directly benefits.

Precisely. Business cases/BCRs are only one part of the overall story. In the early 90s, the Jubilee Line Extension had a BCR of less than one. It was built anyway as a strategically good toing to do to regenerate the docklands...and, well, look at it now!
 

Ianno87

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The costing of HS2 is a classic example of a failure to be open and honest in large infrastructure projects. The budget for HS2 was not set by a detailed analysis of works required etc but by an international benchmarking exercise that produced a cost per kilometre to build a high speed rail network. The Treasury then used that number as the budget. HS2 then have parrotted the line that the line will get built for that amount despite everyone in the project knowing that it is not feasible. The line that seems to be taken on these type of projects is lets get approval and start building and then hope its to late for anyone to stop it once the size of cost increases get noticed. The result is that HS2 might get as far as Crewe and the rest of the scheme gets kicked into the long grass along with northern powerhouse rail or whatever its called this week.

The chances of phase 1 opening in 2026 are zero. AFAIK the only detailed construction timetable published was that in the environmental statement and works seem to be running around 2 years behind that. Eg Old Common station has been held up by a dispute over procurement - it was timetabled to start in 2017Q4, Curzon St station construction was due to start 2018Q1, contract has had to be retendered due to lack of bidders.

We need far more honesty and transparency about the deliverability of these mega projects and their costing. Detailed assessment of groundwork conditions could only start once the scheme got approval and as appears usual in these cases assumptions on conditions were far to optimistic. We need to develop costings on the basis of worst possible outcomes not the most optimistic.

On the flip side, being *towards* the optimistic side with estimating costs at an early stage does help put focus on delivering to cost in a way that a more generous estimate may not (where a "doesn't matter" atfitude to cost inflation becomes ingrained)
 

WatcherZero

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We do however seem to have factored that in to a rather alarming degree though. We produce initial estimates with a 40% or even 60% 'Optimism Bias' so that they get approved and then just spend all the contingency anyway. When was the last time a project didn't end up using its full optimism bias contingency? Cost inflation does indeed seem to have been ingrained because the initial estimates need to be low enough to pass the initial financial decision gating.
 

WatcherZero

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The advice in this letter is that due to unexpectedly poor ground conditions and higher spec than comparable foreign projects used for benchmarking the project will require between £14 and £29bn more than the £56bn budget set.
 

Camden

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Indeed but that's the whole issue with benefit cost ratios, they inform and allow the ranking of the best financial decisions, where spending public money brings the best financial reward, but sometimes with public works the benefit isn't financial and artificial 'emotional' benefits have to be shoehorned in to tray and reflect that.

A Government just has to be brave enough to say we are doing something not because there is a profit to do so but because there is a need to do so. They are strong enough to do this in some instances, for example disability access, building a ramp or lift in an awkward location may never recoup its costs from extra revenue due to the small number of people it directly benefits.
Well they've certainly been "brave" enough to repeatedly say that they're not doing something, regardless of it outpacing on benefit cost ratio, and while not offering up any coherent explanation. So, yes, we wait for our dedicated civil service and politicians to deliver their "brave" decisions to proceed with what they want, regardless of a low one, with baited breath.

I think the main theme, whenever whistleblowers are involved, tends to be a desire that those in charge don't just do whatever their whims desire, but instead do the right thing for the right reasons on the basis of the right data.
 

Clip

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The internal review by Allan Cook, HS2 Ltd's new chairman, has identified an additional £30bn of costs to construct the railway. The cost now is expected to rise from £56bn to £70bn-£85bn. The FT was the first to break this:


Once again 'Could' not will

Mr Cook’s preliminary findings predict the final cost of building the line could now rise to between £70bn and £85bn, according to two people close to the HS2 project.
 

deltic

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Indeed but that's the whole issue with benefit cost ratios, they inform and allow the ranking of the best financial decisions, where spending public money brings the best financial reward, but sometimes with public works the benefit isn't financial and artificial 'emotional' benefits have to be shoehorned in to tray and reflect that.

A Government just has to be brave enough to say we are doing something not because there is a profit to do so but because there is a need to do so. They are strong enough to do this in some instances, for example disability access, building a ramp or lift in an awkward location may never recoup its costs from extra revenue due to the small number of people it directly benefits.

BCRs have little to do with financial rewards. Economic and financial benefits are different. Even with an increase in capital costs of £30bn the full Y of HS2 has a BCR of over 1. Given that some £5bn has already been spent the original BCR should be improving over time as sunk costs are excluded.
 

PR1Berske

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This thread is to discuss HS2 in the House of Commons over the last week and is not a "master thread" to discuss alternative provisions to HS2 or reasons why people are against it.

To discuss reasons why people may be against HS2, please use this thread: https://www.railforums.co.uk/threads/why-are-people-opposed-to-hs2-and-other-hs2-discussion.177112/

To discuss ideas for alternative provision instead of HS2, please create a thread (or use an existing thread, if there is one) in the Speculative Ideas section.


"What if HS2 is scrapped?" – https://www.railforums.co.uk/threads/what-if-hs2-is-scrapped.176184/
"Revisiting HS2 alternatives" –
https://www.railforums.co.uk/threads/revisiting-hs2-alternatives.181537/
 

hooverboy

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"I stand here to state confidently that the budget is £55.7 billion and that the timetable is 2026 and 2033.”

The budget may well be that, its how much it will ACTUALLY cost that is the issue.
tee hee!!

the budget is probably £55.7 Bn as of today. now factor in 15 years worth of inflation,a few inquiries about inquiries and some hardware cluster****s
 

WatcherZero

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BCRs have little to do with financial rewards. Economic and financial benefits are different. Even with an increase in capital costs of £30bn the full Y of HS2 has a BCR of over 1. Given that some £5bn has already been spent the original BCR should be improving over time as sunk costs are excluded.

BCR's: Benefit Cost Ratio's are a financial equation of whether somethings benefits outweigh its costs, to do this a financial value has to be assigned to non-monetary benefits such as public health, the environment, community value, etc.... while also a cost has to be applied to the negative aspects such as loss of green space, pollution, increased congestion, etc...

For example the cost of raising ambient noise by one decibel from 46 to 45 decibels during daytime (in 2014 figures) is £11.28 for Road, £3.90 for rail and £15.61 for aircraft per household per year. While doing the same at night is worth £29.20 for Road, £13.59 for rail and £37.93 for aircraft. At higher volumes the cost increases are many times more.

The method of doing this is standardised and known as the Green Book by the Treasury.

https://assets.publishing.service.g...ttachment_data/file/685903/The_Green_Book.pdf
 
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Class 170101

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Precisely. Business cases/BCRs are only one part of the overall story. In the early 90s, the Jubilee Line Extension had a BCR of less than one. It was built anyway as a strategically good toing to do to regenerate the docklands...and, well, look at it now!

Or politically a good thing to do because another pet project was built at Greenwich that needed not to be a white elephant (it probably was but at least its current lease of life means its not been wasted).
 

Ianno87

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tee hee!!

the budget is probably £55.7 Bn as of today. now factor in 15 years worth of inflation,a few inquiries about inquiries and some hardware cluster****s

Cost estimates are always done in 'Year X' prices, due to the near-inevitability of inflation...

Or politically a good thing to do because another pet project was built at Greenwich that needed not to be a white elephant (it probably was but at least its current lease of life means its not been wasted).

It's new lease of life *certainly* wouldn't have been possible without the Jubilee Line.... A good strategic move (the Dome was only ever intended to be temporary anyway).
 

exile

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Or politically a good thing to do because another pet project was built at Greenwich that needed not to be a white elephant (it probably was but at least its current lease of life means its not been wasted).
Interesting conspiracy theory, but the Jubilee extension was approved in 1992, long before the dome was a twinkle in anyone's eye.
 

Metrailway

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Precisely. Business cases/BCRs are only one part of the overall story. In the early 90s, the Jubilee Line Extension had a BCR of less than one. It was built anyway as a strategically good toing to do to regenerate the docklands...and, well, look at it now!

You are right that the Jubilee Line Extension (JLE) had a BCR of less than 1 (0.95 to be precise) in 1991 but it would be wrong to compare this figure to HS2's BCR as the methodology differs between the two calculations. Unlike HS2's BCR's, the JLE's BCR was based on a 30 year appraisal and did not include Wider Economic Benefits.

If the JLE's BCR was updated to have a 60 year appraisal period and to include Wider Economic Benefits, then the JLE's BCR would be estimated to be 2.75*, which is higher than HS2's current BCR of 2.3. Obviously if HS2's costs do increase to £70-£85bn, then the BCR will fall even further (to around 1.5-1.85).

*From David Banister (2007) - Quantification of non transport benefits resulting from rail investment
 

Ianno87

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You are right that the Jubilee Line Extension (JLE) had a BCR of less than 1 (0.95 to be precise) in 1991 but it would be wrong to compare this figure to HS2's BCR as the methodology differs between the two calculations. Unlike HS2's BCR's, the JLE's BCR was based on a 30 year appraisal and did not include Wider Economic Benefits.

If the JLE's BCR was updated to have a 60 year appraisal period and to include Wider Economic Benefits, then the JLE's BCR would be estimated to be 2.75*, which is higher than HS2's current BCR of 2.3. Obviously if HS2's costs do increase to £70-£85bn, then the BCR will fall even further (to around 1.5-1.85).

*From David Banister (2007) - Quantification of non transport benefits resulting from rail investment

So, even including all the updated stuff, HS2's BCR is still robust for the magnitude of investment, i.e. the country will be net better off for having built it.
 

HSTEd

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There is something awfully rotten in the British construction industry.

Everything is far more expensive than elsewhere on the continent.
HS2 somehow manages to cost more per mile than an underground railway in some parts of the world!
 

Hadders

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There is something awfully rotten in the British construction industry.

Everything is far more expensive than elsewhere on the continent.
HS2 somehow manages to cost more per mile than an underground railway in some parts of the world!

Is that perception or reality. What about that new airport in Germany? Years late and I bet it’s massively over budget.

Olympic construction in Rio and what about when they were in Athens?
 

HSTEd

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Is that perception or reality. What about that new airport in Germany? Years late and I bet it’s massively over budget.

Olympic construction in Rio and what about when they were in Athens?

Even the target budget for HS2 was enormous considering projects elsewhere in the world.
 
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