HS2 and airport expansion: Chair writes to Transport Secretary

16 September 2016

Rt Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, has written to Rt. Hon Chris Grayling MP, Secretary of State for Transport, about the economic case for HS2 and airport expansion.

Chair's comments

Commenting on the correspondence, Mr Tyrie said:

On HS2

"The economic justification for High Speed 2 is not supported by the evidence so far presented by the Government.
In the last Parliament, the Treasury Committee examined the proposals for HS2 and exposed the lack of rigour in the economic case. In particular, the Committee took evidence from KPMG and identified shortcomings in the statistical analysis.
The question as to whether it is possible to improve capacity at lower speed and, consequently, at a lower cost, has yet to be comprehensively answered.
The case for providing sufficient detail, therefore, to enable other ways of improving rail capacity to be fully assessed remains very strong."

On airport expansion

"The economic case to support the conclusions of the Davies report lacks crucial information.
This is the fifth time that I have written to require it to be provided.
In November 2015, I tabled parliamentary questions to secure it. These have yet to be answered, over 10 months later.
Without this information, the evidence in support of any decision that the Government takes on airport capacity will be incomplete."

Background

HS2

Drawing on evidence taken as part of a short inquiry into the economics of HS2 in November 2013, the Treasury Select Committee concluded in its Spending Round 2013 report that 'the Treasury should not allow HS2 to proceed until it is sure the cost-benefit analysis for HS2 has been updated to address fully the concerns raised by the National Audit Office'.

Commenting at the time, Mr Tyrie said:

"There appear to be serious shortcomings in the current cost-benefit analysis for HS2. The economic case must be looked at again.
The Bill should not proceed until this work has been done and the project has been formally reassessed by the Government.
At £42.6bn, including a large contingency reserve, the construction cost of the project has increased by 17 percent even before it has started. It is a huge infrastructure project.
A more convincing economic case for the project is needed. We need reassurance that it can deliver the benefits intended and that these benefits are greater than those of other transport schemes – whether in the department's project pipeline or not – which may be foregone."

The House of Lords Economic Affairs Committee published its report on the 'Economics of HS2' (PDF 2.12 MB) on 25 March 2015.

Airport expansion

On 27 November 2015, Rt Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, tabled a number of Parliamentary Questions, requesting more detailed information on the economic case that supports the conclusions of the Airport Commission's final report. These questions are included in an annex in the letter.

The Parliamentary Questions focus, in particular, on Table 7.1 in the Airport Commission's Final Report (PDF 6.08 MB), published in July 2015.

Over the period 25 January 2015 to 13 June 2016, the Chairman had three exchanges of letters with Rt Hon. George Osborne MP, then Chancellor of the Exchequer, in an effort to get him to back up the government's economic case for an expansion of the UK's airport capacity. Each time, Mr Osborne responded with a request for Mr Tyrie to speak to the Transport Secretary before the questions would be answered.

On 21 July 2016, Mr Tyrie wrote to Rt Hon. Philip Hammond MP, Chancellor of the Exchequer, to urge him to respond to the same request put to his predecessor.

Mr Tyrie spoke to Rt Hon. Chris Grayling MP, Secretary of State for Transport, on 15 August 2016.

Further information

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