Asked by: Lord Wolfson of Aspley Guise (Conservative - Life peer)
Question to the Department for Transport:
To ask His Majesty's Government, given current economic conditions, what assessment they have made of the likely additional costs of labour and materials on the overall cost of delivering the HS2 project; and what impact these additional costs will have on the benefit-cost ratio (BCR) of HS2.
Answered by Baroness Vere of Norbiton
The HS2 programme is experiencing high levels of inflation, consistent with the rest of the economy and construction industry. Whilst I am clear that HS2 Ltd and its supply chain must do all they can do mitigate inflationary pressures, the overall cost of the programme is not affected in real terms because the budgets are set in 2019 prices.
Inflation affects the value of the costs as well as the benefits and using a consistent price base removes the effects of general inflation from the benefit-cost ratio (BCR) calculation. If materials cost inflation and general inflation are significantly different, the BCR could change. Labour and materials costs are modelled as part of the BCR analysis and will be updated for the next iteration of the HS2 business case.
Asked by: Lord Wolfson of Aspley Guise (Conservative - Life peer)
Question to the Department for Transport:
To ask His Majesty's Government, further to the Written Statement by Baroness Vere of Norbiton on 16 March (HLWS670), whether HS2 costs continue to be within budget; and if not, what is the (1) current amount that the project is over-budget, (2) estimated total amount the project will be over-budget, and (3) cause of costs that will result in the project being over-budget.
Answered by Baroness Vere of Norbiton
For the latest update on the overall costs position of the HS2 programme I would refer my Right Honourable Friend to the publication of the six-monthly HS2 report to Parliament on Thursday 27 October 2022.
Asked by: Lord Wolfson of Aspley Guise (Conservative - Life peer)
Question to the Department for Transport:
To ask His Majesty's Government what assessment they have made of the impact of recent increases in long-term government borrowing on the (1) final cost of HS2, and (2) impact to the benefit-cost ratio; and what changes, if any, they plan to make to the discount method applied to previous calculations concerning the affordability and value for money of HS2.
Answered by Baroness Vere of Norbiton
The HS2 programme is experiencing high levels of inflation, consistent with the rest of the economy and construction industry. Whilst I am clear that HS2 Ltd and its supply chain must do all they can do mitigate inflationary pressures, the overall cost of the programme is not affected in real terms because the budgets are set in 2019 prices.
To ensure comparability with all other Transport and Government schemes, discounting rates are set in accordance with the HMT's Green Book and DfT's Transport Analysis Guidance.
Asked by: Lord Wolfson of Aspley Guise (Conservative - Life peer)
Question to the Department for Transport:
To ask His Majesty's Government, given the current economic environment, what plans they have further to review the overall benefits and costs of the proposed HS2 project.
Answered by Baroness Vere of Norbiton
For the latest update on the overall costs position of the HS2 programme I would refer my Right Honourable Friend to the publication of the six-monthly HS2 report to Parliament on Thursday 27 October 2022.