 |
answer text |
<p>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.</p><p> </p><p>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.</p>
|
 |
