23rd Feb, 2020

HS2 over budget and behind schedule says National Audit Office report

Laura Kearns 24th Jan, 2020 Updated: 24th Jan, 2020

HS2 is over budget and behind schedule because its complexity and risk has been underestimated, says the government’s spending watchdog.

The National Audit Office (NAO) has published a report into the controversial high speed line – 55 kilometres of which will cut through Warwickshire – which states the underestimation by the Department for Transport (DfT), HS2 Ltd and the wider government had resulted in significant challenges to completing the project, and that delivering value for taxpayers and passengers remained.

The Department for Transport (DfT) said in 2015 HS2 would cost up to £88billion, and although it is currently not known what the final cost will be, the NAO reports comes just days after the Financial Times revealed the cost could spiral to £106billion, having seen a leaked copy of the Oakervee report, the government’s own official review of HS2.

Trains are not set to start running until between 2036 and 2040, up to seven years later than originally planned.

The NAO report says the target opening for phase one, linking London to Birmingham, was ambitious and set in comparison with other infrastructure developments did not sufficiently consider HS2 was a much larger and more challenging project.

The costs of the line have also increased in all areas except the cost of trains, with the estimate for the first phase now standing at up to £40billion – up to £12billion more than the available funding.

The NAO report claims despite it twice warning the DfT and HS2 they would struggle to complete the work in the set time frame it was not reset.

But since last April HS2 has been planning a new schedule for the line.

The report also says the DfT and HS2 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 date.

The report makes a number of recommendations to government, DfT and HS2 around the cost and schedule estimates and how to manage the programme.

NAO head Gareth Davies said: “There are important lessons to be learned from HS2, not only for the DfT and HS2, but for other major infrastructure programmes.

“To ensure public trust, they 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.”

But in response West Midlands CBI Regional Director Richard Butler feared the cost of not delivering HS2.

He said: “HS2 is an ambitious project and the National Audit Offices’ report usefully highlights the challenges of delivering large-scale infrastructure. But what is clear to the CBI and business generally, is the colossal cost of not delivering HS2.

“If the government truly believes in levelling up the regions, especially the West Midlands, it should deliver HS2 in full. Doing so will allow us to unlock the Northern Powerhouse and Midlands Engine, deliver better east-west transport improvements and add rocket boosters under our economy. It is exactly the post-Brexit project the government should be championing.

“HS2 is the only shovel ready project that can deliver massive benefits for the Midlands and the North and all of the UK. The CBI’s message is clear – back it, build it and benefit from it.”

A HS2 Ltd spokesman 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 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.”

The government is set to consider the findings of the Oakervee report shortly having been delivered a draft copy shortly before Christmas.

 

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