First Special Report of Session 2017–2019 Contents

Costs

23.The Committee heard about the relative costs associated with this project and was keen to understand how the proposed costings had been reached. HS2 gave us an illustrated cost breakdown for the two schemes as follows:

i)Proposed Bill Scheme: £461 million

ii)Single Tunnel: £608 million.

[Difference: £176m]20

Following the Committee’s suggestion for a revision:

iii)Costs for a modified Proposed Bill Scheme, with the lowering of the viaduct and an extension of the southern portal: £448.2 million.

[Difference: £176m +£12.8m = £188.8m]

24.We understand that the costs are indicative and in line with HM Treasury guidelines but we welcomed the further note from HS2 clarifying the approach to optimism bias in line with these guidelines. This is published on the Committee’s website.21 We were unconvinced by the methodology used for the optimism bias.

25.Staffordshire County Council, Lichfield District Council and Newcastle-under-Lyme Borough Council highlighted that HS2 had been unable to identify the earthwork costs for the Madeley to Whitmore Heath section, using instead a pro-rata figure which had been arrived at using a financial model based upon the whole line.22 Using the pro-rata figure and the alternative method of tunnelling they argued that the differential between the Proposed Bill scheme and the Single Tunnel scheme was £60m and not £176m as HS2 claimed.23 Taking into account the Petitioners’ costings, the tunnel would still be the more costly option. The evidence from HS2 was that the difficulty of passing under the River Lea, and the danger of water ingress, rendered the alternative tunnelling method unsafe. Even with the much lower cost differential claimed by the petitioners, the Committee felt, on balance, that the single tunnel was not the best option.

26.We were disappointed not to have had greater granularity of information about costings and throughout the process we will be looking to HS2 for better and more detailed financial information in order to assist the Committee in its decision-making. We look forward to seeing HS2 firm up its costings and plans for both the proposed scheme and the proposed scheme with the lowering of the viaduct and extension of the southern portal. We wish this information to be made publicly available. It will inform our decisions and give assurance to the committee in the House of Lords in due course. Included in such costings should be a significant additional sum of money allocated to traffic improvements for the areas affected by both options. We found the proposals for traffic management and routes inadequate and believe further work is needed from HS2 on impact and mitigation including multi-junction analysis of the totality of traffic flows.


20 Figure taken from HS2 Whitmore Heath to Madeley Tunnel Report: 15th March 2018, page 93

22 HC 927, Minutes of Evidence, 24 April 2018 (afternoon) Q193

23 HC 927, Minutes of Evidence 24 April 2018 (afternoon) Q192




Published: 24 May 2018