Written evidence from Antony and Carol
Chapman (HSR 51)
BUSINESS CASE
May I urge your Committee to look into the actual
cost of the proposed HS2 scheme.
HS2 Ltd says that the cost of the first phase from
London to Birmingham would be £17 billion. They describe
this as being at 2009 values. They also say that this is the present
value, but they refuse to say what the future value would be,
that is the actual cash cost to be paid to contractors. It is
impossible to have a present value without a future value from
which it is derived.
Alison Munro, Chief Executive of HS2 Ltd, justifies
refusing to give the future value/actual cash cost on the grounds
that the Treasury does not forecast inflation for more than two
years ahead, and that they have to rely on Treasury figures. It
would be easy for them to carry out their own calculations, but
they refuse to do so, or if they do, to make them public. However,
for other aspects of the Business Case they forecast many years
ahead, often forty years or more.
The important figure for the general public to know
is the actual cash cost which would be paid to the contractors.
A simple calculation shows that, assuming inflation of 3% per
annum, this would be at least £23 billion for phase one,
a significant increase on £17 billion.
HS2 Ltd says that the cost of phase 2, from Birmingham
to Manchester and Leeds would be another £17 billion. On
the same basis as above, and taking into account the much longer
timescale, the actual cash cost paid to contractors would be in
the region of £27 billion.
The total for both phases would therefore be £50
billion, not the £34 billion stated by HS2 Ltd. Thus the
actual cash cost would be half as much again as the HS2 Ltd figures.
These are highly misleading, and a serious misrepresentation,
which I hope your Committee will rectify.
15 May 2011
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