£43billion HS2 'will not help regions', warns Public Accounts Committee report

The controversial High Speed Two (HS2) rail project has received one of its most damning assessments yet – just days after the Prime Minister called for a fightback in favour of the project – with the Department of Transport accused of basing projections on “fragile numbers, out of date data and assumptions that do not reflect real life”.

The Public Accounts Committee (PAC), chaired by Margaret Hodge, criticised the cost of the project, now standing at £42.6bn, and insisted there was no evidence suggesting it would aid regional economies. Instead, it warned, its effects could be the reverse: “sucking” activity into London.

The scathing conclusions follow David Cameron’s decision to use the G20 summit to effectively relaunch the case for HS2 in wake of growing scepticism, urging doubters to “think big” about its economic and transport benefits.

But the committee warned of “unrealistic” plans to secure the necessary legislation for HS2 by 2015 and said management risked a repeat of costly errors such as last year’s flawed procurement of the West Coast mainline franchise award.

It said evidence used to show the benefits to commuters was so out of date that it failed to recognise business travellers were able to work on trains using laptops and other mobile devices. And it demanded an urgent explanation of how quickly the Department would plug significant gaps in project expertise. “In my committee’s experience, not allowing enough time for preparation undermines project from the start,” Ms Hodge warned.

The committee also said that the scale of the contingency built into the budget –at £14.4bn, the equivalent of a third of the total – appeared to be “compensating for weak cost information”.

The former Chancellor Alistair Darling, recently withdrew his support for a venture that he was instrumental in starting, calling it a potential “nightmare”. The Institute of Directors has branded it a “grand folly”. But the PAC criticism is the latest and perhaps most withering criticism of the proposed 351-mile service from London to Birmingham and beyond.

Advocates say it will reduce journey times and expand passenger capacity at a time when more people are using the railways than at any time since the 1920s. The chairman of HS2, Douglas Oakervee, told The Independent on Sunday that it would be “catastrophic” if the project was scrapped.

The Transport Secretary Patrick McLoughlin, who is expected to argue the economic case for HS2 in a major speech on Wednesday, rejected the findings, insisting the case was “absolutely clear” that without HS2, key rail routes would be “overwhelmed” by rising passenger numbers. “The project will free up vital space on our railways, generate hundreds of thousands of jobs and deliver better connections,” he said. “HS2 is a vital part of our plan to give Britain the transport infrastructure it needs to compete.”

The first phase of the scheme between London and Birmingham is due to open in 2026 with an extension to Leeds and Manchester scheduled to operate from 2033. Calling for more detailed evidence to back the case, the MPs concluded: “The Department has yet to demonstrate that this is the best way to spend £50bn on rail investment in these constrained times.”

A Whitehall-led review is being carried out for an update next month. It will set out broader benefits for the national economy than those covered by this formal cost-benefit analysis.