Sat, 25 June 2022

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By Sam Lowe
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HS2 ‘over budget and behind schedule’, government watchdog finds

HS2 ‘over budget and behind schedule’, government watchdog finds
3 min read

A further blow has been dealt to the Government’s handling of HS2 as a damning report said the controversial rail project was “over budget and behind schedule”. 

The National Audit Office (NAO) condemned the Department for Transport (DfT), wider government and HS2 Limited for inadequately managing risks to taxpayers’ money.

And a shortfall in estimating the programme’s “complexity and risk” has led to the major setbacks.

The most recent estimate puts the overall costs at £88billion in 2015 prices - 58% higher than available funds for the programme -  which could continue to rise as the initiative remains in its early stages.

The NAO report also warned it was not possible to say with certainty what the final cost could be.

It comes as a government review, led by former HS2 chairman Doug Oakervee, was leaked by the Financial Times on Monday and revealed the total spend on the project could hit £106billion.

The full service of phases one and two - lines connecting London to the West Midlands and the north of England - are now expected to be open up to seven years later than planned, potentially as late as 2040.

And both parts of the second phase, from Birmingham to Crewe and Manchester, and from Birmingham Leeds, are expected to total £47.5billion - 87% and 63% higher than current funding bills respectively.

NAO boss Gareth Davies 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.”

The report added: “Significant challenges to completing the programme and delivering value for taxpayers and passengers remain...

“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.”

The warnings will come as another blow to the project already facing growing opposition from new Conservative MPs.

It is expected Boris Johnson will make a decision on the project’s future in due course.

According to the NAO, construction for Phase One of the rail link must start in March to avoid further delays to the service.

A total £7.4 billion had been spent on the first half of the programme by the end of March 2019. 

Labour’s Shadow Transport Secretary Andy McDonald said: “Tory management of our railways has been disastrous and incompetent. 
“Today’s NAO report is a reminder of the woeful lack of political leadership High Speed Two has had under the Conservatives and a lack of honesty about rising costs. The project urgently needs to get back on track and its delivery needs to be much more cost-effective and efficient. 
“High Speed Two must also be more closely aligned with rail upgrades across the Midlands and the North.”

A DfT spokesperson said it recognised the “significant underestimations” of HS2, and added: “The Department has supported this review and is already acting on many of its recommendations.

"To ensure transparency around the project, we have worked closely with the NAO to provide information on the latest cost and schedule estimates for HS2. ​

“We recognise that there have been significant underestimations of both the cost and schedule of HS2 in the past which is why we commissioned the Oakervee review to provide advice on whether and how to proceed with HS2.”

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