In the two years to March 2014 HS2 Ltd has spent £384,000,000 of grant aid from taxpayers. What is remarkable is that after such a high spend the balance sheet of the company doing all that spending shows zero net assets. The best part of £400 million has gone and the company has nothing to show for it of more permanent value that gives us some net assets on its balance sheet.
Some will leap to its defence and say that is conservative accounting for you. In practice surely it has some intellectual property and goodwill? Others will say of course the costs of planning and designing such a big scheme are a large up front cost which you just have to work through.
The company itself helpfully explains that it cannot credit its balance sheet with any assets as “the cost of an item of property, plant and equipment shall be recognised as an asset if, and only if it is probable that future economic benefits associated with the item will fl0w to the entity”. Exactly. That is not yet clear. In addition, most of the money has gone on wages and salaries, not on physical assets. All land and building purchases ahead of works are in addition to these figures and are made by the government, not HS2 Ltd.
Those of us who are critical of the business case for this railway are nonetheless entitled to ask where has all the money gone? What have we got for the £384 million so far? How much will it cost before any construction work commences and we start to see track and signals? The company already has 395 staff (whole time equivalents) and has already spent £35,000 on the pay off of a former staff member along with a £48,000 contractual payment, outside the normal Treasury scheme for such things.
I look forward to better cost control in future, as the Chairman promises.