MP: Report shows HS2 is 'out of control'

MP: Report shows HS2 is 'out of control'

Published by Dan Gooding at 7:45am 24th January 2020. (Updated at 10:59am 24th January 2020)

Aylesbury's MP says a new report out this morning confirms HS2 is 'out of control'.

Rob Butler has been reacting to the National Audit Office update on the high-speed rail project, which highlights again the rising costs of the scheme.

Today’s report from the National Audit Office (NAO) has found that the High Speed Two railway is over budget and behind schedule because the Department for Transport (DfT), HS2 Ltd and wider government have underestimated its complexity and risk.

They say significant challenges to completing the programme and delivering value for taxpayers and passengers remain.

DfT’s latest estimate of the cost of HS2 is between £65 billion and £88 billion (2015 prices), between 17% and 58% over available funding.

What's the story?

  • National Audit Office says it's hard to say what final cost of HS2 will be
  • Conservative MPs call for project to be scrapped by their government
  • NAO reckons Department for Transport & HS2 have not adequately managed risks to taxpayer money
  • HS2 argues costs for Phase 1 were known and it has a highly skilled team ready to build

Conservative MPs have put together a video, calling for the Prime Minister and Transport Secretary to scrap the project.

Aylesbury MP Rob Butler said:

"This report from the NAO confirms what we feared. HS2 is out of control, even before the first track has been laid.

"The country can't afford to risk more than £100bn on a single train line that brings barely any benefit. Instead, we need to invest in individual infrastructure projects around the country, that meet local needs.

"It could be more buses, bike routes or bypasses.

"Here in Aylesbury, we really need to get our roads right so people can get where they want, when they want - and help the environment by reducing the time cars sit idling in traffic jams and polluting the atmosphere. For the local villages, I want to see better broadband and more bus services.

"All this can be achieved for a fraction of the cost of HS2 - whatever that finally turns out to be".

The NAO's findings

HS2 Viaduct CGI (4)
How HS2 could look near Wendover

The programme is still at an early stage, and costs are uncertain and could change. Full services on the entire network are now forecast to start between 2036 and 2040, between three and seven years later than originally planned.1

The target opening date for Phase One (London to West Midlands) was ambitious and set by comparison with other infrastructure programmes. DfT did not sufficiently consider that HS2 is a much larger and more challenging programme to deliver.

In 2013, the NAO reported that it would be difficult for HS2 Ltd to complete all work in the time available and in 2016 warned that the 2026 opening date was at risk.2 Although it was clear from 2016 that the 2026 opening date was in doubt, DfT did not reset it. Since April 2019, HS2 Ltd has been planning on the basis of a more realistic schedule for the programme.

More HS2 stories from Mix96 News

DfT, which is responsible for funding and overseeing delivery of the railway, set the available funding for Phase One in 2015, based on a basic design produced in 2013. Since then, forecast costs have increased on all parts of Phase One except the purchase of new trains. DfT and HS2 Ltd now estimate Phase One to cost between £31 billion and £40 billion, £3.9 billion to £12.9 billion more than its available funding.

HS2 Ltd did not account for the level of uncertainty and risk in the programme when estimating the costs of Phase One in April 2017. It used a method for calculating contingency that was not appropriate for a programme at such an early stage of development. The £7 billion of contingency was not enough to address the significant cost increases that emerged.

DfT and HS2 Ltd committed to Parliament to meet certain requirements, such as increasing the length of tunnelling and erecting noise barriers.3 Some of these requirements have contributed to the increased cost of Phase One. Some may also restrict contractors’ ability to avoid costs in construction and increase the challenge of delivering the railway.

By not fully and openly recognising the programme’s risks from the outset, DfT and HS2 Ltd have not adequately managed risks to taxpayer money. They have tried to understand and contain costs but have been unable to bring them within the available funding, or enable passenger services to start by the planned opening date.

HS2 Ltd has undertaken a significant and unforeseen amount of work to agree a new cost and schedule for Phase One. It considers that the additional time taken has helped to protect the scheme’s overall value for money by giving it more time for scrutiny and applying lessons learned.

DfT and HS2 Ltd have made progress with their preparations to start construction on Phase One.4 HS2 Ltd also now has greater confidence in its cost estimate for Phase One but it will need to manage risks that could cause costs to further increase.

HS2 Steeple Claydon
Campaigners have been trying to stop preparatory works in Bucks

Main construction has not yet begun and approximately 50% of the costs in its estimate are less certain because they are not yet based on contracts agreed with industry. HS2 Ltd’s revised terms for the civil construction contracts are sensible, but will require strong management.

Phase Two of the programme is at a much earlier stage than Phase One but is already forecast to cost more than its available funding and take longer than expected.

HS2 Ltd’s current forecast for when passenger services would run on Phase 2a (West Midlands to Crewe) is between 2030 and 2031, and for Phase 2b (Crewe to Manchester and West Midlands to Leeds) is between 2036 and 2040, three to seven years later than planned. DfT estimates that costs for Phase 2a could be £6.5 billion (87% higher than the available funding) and Phase 2b £41 billion (63% higher than the available funding).

The NAO makes a series of recommendations to government, DfT and HS2 Ltd covering the robustness of cost and schedule estimates, the capabilities needed to manage a programme of this scale and the oversight arrangements required for the remaining phases.

A NAO spokesperson said:

“There are important lessons to be learned from HS2, not only for the Department for Transport and HS2 Ltd, but for other major infrastructure programmes.

"To ensure public trust, the Department and HS2 Ltd must be transparent and provide realistic assessments of costs and completion dates as the programme develops, recognising the many risks to the successful delivery of the railway that remain.”

Dame Cheryl Gillan, Chesham & Amersham's MP, said ‘there is no clear picture of the true cost of HS2. HS2 Phase Two is at an early stage and not all the land required for Phase One has yet been purchased.’

She added:

“The trouble with this project is that Ministers and HS2 directors move on and will not be held responsible for the high costs and risks of this project – they think that time will distance them from any failures, and it will be someone else’s problem in the future. But it is the tax payer that will pay the price and billions of pounds will be poured into this white elephant which will clearly be out of date by the time it is completed – now looking like 2040 at the earliest.”

What do HS2 have to say?

A spokesperson for HS2 Ltd said:

"The vast majority of the NAO's findings were revealed in HS2 Ltd's 2019 stocktake - a year's worth of deep dive investigation into the underlying costs and timescale of the project. As such, the revised costings and schedule are already widely known.

"After being appointed HS2 Ltd CEO in 2017, Mark Thurston identified the serious challenges of complexity and risk in the project, and he made several significant changes and improvements to the organisation, its governance and processes.

"As the NAO recognises, this work - along with a greater understanding of the ground conditions and build requirements - means Ministers have robust cost estimates for Phase One of the HS2 project. If the Government decides to proceed, HS2 Ltd has a highly-skilled team in place ready to build Britain's new state-of-the-art, low-carbon railway."

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