Archive for: August 2013

HS2 Project May Cost Double The Original Calculated Budget

A free-market think tank has said that the high-speed rail project, named HS2, could easily cost over £80bn, almost double the original planned budget for the project. The Institute for Economic Affairs (IEA) will expect advance requests by local councils for the building of extra infrastructure and design changes that will inevitably increase the cost of the project. The institute has expressed its view that it wanted HS2 to be scrapped and the same money spent on other transport schemes.


The firm that is contracted to carry out the production of HS2 said the scheme would create an “economic asset” and provided “significant value” to the UK economy. HS2 is intended to allow trains to run at approximately 250mph (400km/h) from London to Birmingham from 2026, with branches to Manchester and Leeds via Sheffield planned by the year 2032. Opponents of the scheme say the production will cause an unacceptable level of environmental damage, loss of homes and disruption to many communities across the country.

The IEA said in their report that’ll be released on Monday, that the cost of new trains could be almost £7.5bn. The report shows that the government will make changes to the route “to keep voters on side” and these were likely to add another £30bn to the current estimated cost of £42.6bn, which includes “contingency” money. The report said that the £30bn would be spent on new road links and upgrades, extra tunnels and other regeneration schemes among other things that they will pay for “to buy off the opposition”. It also added that the HS2 “and the add-on transport schemes will be heavily loss-making in commercial terms – hence the requirement for massive taxpayer support”.

Dr Richard Wellings, the author of the report in question, said it was now “time the government abandoned its plans to proceed with HS2. The evidence is now overwhelming that this will be unbelievably costly to the taxpayer while delivering incredibly poor value for money,” he said. It’s shameful that at a time of such financial difficulty for many families, the government is caving in to lobbying from businesses, local councils and self-interested politicians more concerned with winning votes than governing in the national interest.”

The IEA explained its opinion on why they believed the project may be pushed through, saying that the policy may have been partly followed to win votes in “response to poor electoral performance in the north of England in recent elections”.

Court Strikes Down Appeal in PPI Claims Case

The High Court recently denied an appeal to two claimants in a PPI claims case. The two plaintiffs tried to file their case in a local court so that their legal fees would be covered. The new ruling implies that future claimants will need to file their claims through the financial providers or the Financial Ombudsman Service (FOS) unless they have reasonable grounds to take the case to court.

Background of the Case

Christopher and Claire Binns tried filing a PPI claim against Firstplus Financial Group earlier this year. The   couple knew that they could file a claim to Firstplus or the FOS. However, the couple knew that they would be responsible for any legal costs that they incurred.


They decided to file their claim through the County Court instead. They argued that the Financial Services Authority clearly stated that they had the right to file a claim through the court instead if they could present cause.

Plaintiffs Failed to Meet Burden of Proof

The lower court ruled against the couple. They said that the FSA Scheme didn’t allow them to seek litigation unless no other recourse was available. Millions of other complainants have filed claims through the FOS and the court said that the couple could have done so as well. They could also have hired a PPI claims company to assist them instead of hiring a solicitor. PPI companies typically charge a percentage of successful claims rather than charging customers up front.

The couple wasn’t happy with this decision. They tried taking the case to the High Court, but the presiding justices agreed with the lower court’s opinion.

Implications for Future Claimants

Nearly half a million customers are filing PPI claims every year. Every customer who intends to file a claim wants to know what options are available to them. They pay close attention to other PPI cases, because they often set important precedents that may affect them when they choose to file a claim themselves.

Many customers don’t want to pay for legal representation if they file a claim. Many of them were hoping that the Appeals Court would allow them to pursue a case in a local court and avoid the cost of hiring an attorney. However, the new ruling indicates that they will need to choose to either hire an attorney or pay a share of their settlement to file a PPI claim.