The UK’s largest civil project is going belly up at taxpayers’ expense – it’s time to put HS2 Ltd into administration
May 2025 Rail minister Lord Hendy attends the finish of an HS2 tunnel excavation
3 min read
In a flurry of hype 15 years ago, the then transport secretary, Lord Adonis, announced the go-ahead for building High Speed 2 (HS2), a new rail line linking London with the Midlands, the North West and Scotland.
While welcoming the idea, I challenged him as to why it was to start in London rather than the North, and he replied that the business case was much better at the London end. This was probably the last time that the words “business case” were used in justifying the next 15 years of development and construction. In 2011, HS2 was costed at £32bn for the whole project and now, according to estimates quoted earlier in June, is likely to exceed £100bn for a smaller part of the project.
During the intervening years we have had numerous secretaries of state and governments, with some of the state-controlled HS2 Ltd and Department for Transport (DfT) officials seeking to protect ministers from bad news of cost overruns, alleged fraud or delays, so that politicians would continue to support the creation of this mega project at unspecified mega costs.
Our political structure is at present incapable of building major projects
Most parliamentarians were clearly dazzled by the thought of such an exciting project, without expressing concern about the costs and, most importantly, who was going to monitor them independently of the ministers and their officials, who were naturally keen on achieving a successful project outcome.
But then, in response to an increasing wave of concerns about the damage to the environment and rising costs, the then prime minister Boris Johnson set up the Oakervee review panel and asked me to be deputy chair. Our task was to investigate the state of the HS2 project and advise on whether it should continue or be cancelled. When it came to my asking for the latest cost estimates, I insisted on an independent view from both quantity surveyor Michael Byng and KPMG, but HS2 Ltd and DfT still refused to provide enough information to enable a proper investigation into whether there was a good business case to proceed. Despite the absence of evidence, Sir Douglas Oakervee’s draft report recommended continuing with the project. I pointed out that there was no evidence to support this recommendation and therefore resigned.
In her statement to Parliament last week, Transport Secretary Heidi Alexander cited reasons for this sorry state as including a “lack of ministerial oversight”, the need for stricter cost control and alleged fraud. She is correct – construction contracts on a cost-plus basis are generally licences to print money for the contractors and, for juicy projects such as HS2, fraud is always a risk.
But along with the churn of ministers and HS2 CEOs and chairs, a large army of HS2 employees and DfT officials have been on this for years. Why did they not speak up? Answer: because many of those involved feared losing their jobs and pensions.
Do we really believe that this is the end of the story, or will the secretary of state come back to Parliament in two years’ time and apologise for another two years’ delay just to get to Birmingham – and another two years on the programme?
I conclude that our political and parliamentary structure is at present incapable of building major projects, largely because we do not accept that a project must have a sponsor with teeth, capable and ready to take decisions even against the wishes of Parliament. In the meantime, if ministers really wish the project to continue at all, they should split the contracts into smaller bite-size elements, re-let them and put HS2 Ltd into administration!
Lord Berkeley, Labour peer
