The machinery of government operates with checks and balances, intended to ensure proper expenditure of public money, put in place by none other than politicians.
The Permanent Secretary of each government department, in his role of principle accounting officer, is obliged to give an annual report on expenditure to Parliament.
If you really believe that HMT and DfT will, or indeed legally can, permit your "smaller projects under localised control" to evade all of that..... the NAO would be all over it. Let's just say that it isn't going to happen.
I would suggest the central problem in this entire HS2 mess arose thus:
1. Politicians looked for a huge new shiny project to make their name/win votes/etc. However they were aware their bright idea would never be approved if it sounded hugely expensive;
2. Therefore at the scoping stage there was huge pressure on everyone to maximise apparent economic benefits and make the project world-class, state of the art, etc; while also minimising the estimated budget; avoiding any realistic discussion of likely opposition (either NIMBYism or really valid); and thus minimising the estimated costs of mitigation of objector concerns (more tunnelling, prettified engineering, etc);
3. This resulted in highly unrealistic and over-optimistic estimates of the overall cost;
4. Hence when work was approved and construction got underway, costs soared away from the estimated ones;
5. Ministers then got more and more worried and started trying to modify and rescope the project .. meaning yet further costs and for a worse and worse outcome.
On that analysis, the underlying problem was not the technical expertise behind the project, but is inherent in the short-termism and unrealities of the political process in the UK. How could that be put right?
It would be worth making a detailed study of how HS1 was scoped and managed in comparison with the HS2 fiasco. It may well be that by the time HS1 was designed, it was obvious that constructing it was unavoidable (to gain full benefit from the Channel Tunnel - and to avoid the UK looking stupid in comparison with France ..!); and the type of line required, and the train services to use it were in no doubt. This then enabled the project being realistically designed and costed, neither under nor over-specified; thus enabling its construction to come in on time and on budget.