Out-Law News 2 min. read

"No blank cheque for HS2", top civil servant tells Treasury Committee

A senior civil servant has told the Treasury Select Committee that the Government has not "signed a blank cheque" for the controversial national high speed rail link, High Speed 2 (HS2).

Commenting shortly after the Chancellor reaffirmed the Coalition Government's commitment to the project during a television interview, Sir Nicolas Macpherson said that there would be "plenty of time to reassess" HS2 if the project appeared to be heading over budget. Macpherson, the Treasury's permanent secretary, was giving evidence to the committee of MPs on the Treasury's annual budget and accounts.

Infrastructure law expert Patrick Twist of Pinsent Masons, the law firm behind Out-Law.com, said that Macpherson's "seemingly anodyne" comments suggested that there had been "some interesting discussions in Whitehall" about the cost of the project. The Government has budgeted £42.6bn for construction on the line, with an additional £7.5bn for rolling stock. Its budget also includes a £14bn "contingency", according to the Chancellor.

"These comments represent a foray into the political arena which is surprising in a top civil servant," Twist said. "Echoing precisely the widely-quoted words of Labour shadow chancellor Ed Balls it's a pretty clear indication that unlike his boss, George Osborne, Sir Nicholas is very definitely not 'passionate about this project'."

"His evidence to the Select Committee, following on the leaking to the press by a 'top Treasury official' of an analysis that, when inflation is included, the cost of the project could be £73bn, will have made for some interesting discussions in Whitehall," he said.

According to the Financial Times, Macpherson told the committee that a future government could "reassess" the project entirely rather than "tinker around the edges" if costs grew beyond the figure budgeted.

"The expenditure, most of it happens way into the future," Macpherson said. "The big financial risks are also quite a long time into the future. There will be opportunities to reassess it. We have not signed a blank cheque."

The paper had previously reported that unnamed Treasury officials were using the higher figure of £73bn, which includes the effects of inflation, to refer to the costs of the project in order to emphasis their hostility to it. Chancellor of the Exchequer George Osborne appeared on the BBC's Andrew Marr Show on Sunday to defend HS2, but would not be drawn on whether the Government would increase its investment in the project if the costs were to exceed those budgeted.

The initial London to Birmingham phase of HS2 is scheduled for completion in 2026. It will cut journey times between the two cities to 45 minutes, with trains running at up to 250 miles per hour, according to the Government. A proposed second phase of the project envisages the construction of an onward 'y network' connecting the line to Manchester and Leeds, as well as a spur to Heathrow Airport, by 2033.

New legislation is due to be introduced to Parliament later this year which will allow development and construction work to begin in 2017. If approved, the proposed High Speed Rail (Preparation) Bill will allow for quicker construction and design expenditure, and give Parliamentary authority for ecological surveys and other preparatory work to take place. The Bill would also allow for compensation payments to property owners living along the route.

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