UK: The House of Commons Public Accounts Committee makes six recommendations in its latest report on High Speed 2, which calls on the government to answer questions raised by its decision to cancel Phase 2.
The recommendations are:
- The Department for Transport should set out clearly how it has sought to maximise benefits from Phase 1, what benefits it will now plan to deliver and how it will measure success; it should also set out when it will produce its benefits realisation plan and how it will work across government and local authorities to deliver the outcomes it seeks.
- DfT and HS2 Ltd should set out progress with recruitment to board roles at HS2 Ltd; how they are going to ensure that cost controls, oversight, transparency, design and contracting are put in place so that cost overruns and delays will be brought under control; and progress in reviewing existing contracts so contractors are incentivised to minimise costs.
- DfT and HS2 Ltd should set out progress in establishing what needs to be done to amend Phase 1 and manage the closedown of the other phases; and the work HS2 Ltd has done in re-establishing the organisation to deliver the revised programme, including identifying the skills and capability it requires.
- DfT should develop plans for a range of private investment scenarios, including different levels of public finance, as part of its consideration of how to progress with London Euston station; and decide soon how to proceed with the tunnelling from Old Oak Common to Euston to best protect value for the taxpayer.
- DfT and HS2 Ltd should report their plan for land and property disposal, including how they will factor in the need for value for money for the taxpayer and the needs of those who have been affected, and how they will learn the lessons from property sales occurring as part of Phase 1 and from other government disposal programmes.
- DfT should say how it intends to report and update the list of projects that will be funded through money redirected to Network North, over what timescale projects would be delivered, and how it will ensure value for money.
Watershed moment
‘The decision to cancel HS2’s northern leg was a watershed moment that raises urgent and unanswered questions’, said Committee Chair Dame Meg Hillier MP.
‘HS2 is the biggest ticket item by value on the government’s books for infrastructure projects. As such, it was crying out for a steady hand at the tiller from the start. But, here we are, after over a decade of our warnings on HS2’s management and spiralling costs — locked into the costly completion of a curtailed rump of a project and many unanswered questions and risks still attached to delivery of even this curtailed project.’
The Committee says HS2 Ltd’s estimated costs for Phase 1 are now up to £57bn, against a budget of £44·6bn in 2019 prices. HS2 Ltd estimates that inflation since 2019 will add a further £8bn to £10bn, making a total in current prices of up to £67bn.
DfT disagrees
Responding to the report, a spokesperson for HS2 Ltd said ‘we’ve been clear about our cost challenges, which have been compounded by significant levels of inflation. HS2 Ltd is now under new leadership and implementing changes across the programme aimed at controlling costs and learning the lessons of the past.’
HS2 Ltd said ‘collective optimism’ meant that pre-construction cost estimates turned out to be too low, while reasons for rising costs since construction began included major scope changes, increased design and consenting costs, lower than expected productivity across the supply chain, weak contractual models and inflationary pressures.
A Department for Transport spokesperson said ’we disagree with the Committee’s assessment. Their estimated cost figure for Phase 1 also does not reflect our decision to secure private funding for Euston, or the direction not to proceed beyond the Midlands.
’Our plans for Euston have already received extensive support from the private sector to invest and will offer a world class regeneration opportunity, mirroring the successful King’s Cross and Battersea and Nine Elms development programmes.
‘The Permanent Secretary has already written to the Committee chair setting out her assessment on value for money, and we have repeatedly made clear we will continue to deliver HS2 at the lowest reasonable cost, in a way that provides value for taxpayers.’
Transport for the North Chair Lord McLoughlin said ’the decision to stop HS2 at Birmingham is a missed opportunity for the North, and the country as whole. It wasn’t just the improved north-south connectivity it would have enabled, but the extra capacity it provided’.
He added that ’capacity and connectivity needs haven’t changed, and we need still need that transformational investment in pan-regional transport to support levelling up’.
