Public Accounts Committee report on HS2, Feb 2024

[jfollows]

The Public Accounts Committee reports that it's more concerned about HS2 than ever, following the recent significant cancellations, and will "achieve poor value for money for the taxpayer" with which I concur - I was a supporter until the Manchester part was cancelled and that's not really been for personal interest reasons because I was increasingly unlikely to see it finished in my lifetime anyway (I exaggerate only a little). The Euston station plan is a mess, and government doesn't understand how the revised HS2 will operate.

https://committees.parliament.uk/publications/43184/documents/214904/default/

This Committee has been reporting its concerns on how High Speed 2 (HS2) has been managed for over a decade, but recent events have left us more concerned about the HS2 programme than ever before. The cancellation of the latter stages of the HS2 programme and operating just Phase 1, from London to the West Midlands will achieve poor value for money for the taxpayer, as the Department for Transport (the Department) acknowledged to us. The Department told us it was still better to complete Phase 1, given the approximately £11 billion of remediation costs (in 2019 prices) that would be incurred if they cancelled the whole programme.


Even before the cancellation of Phases 2a, 2b and East, the costs of HS2 continued to escalate, with HS2 Ltd’s estimated costs for Phase 1 now as high as £57 billion against a budget of £44.6 billion (in 2019 prices). HS2 Ltd estimates that inflation since 2019 will add a further £8 billion to £10 billion to the cost, making a total in current prices of up to £67 billion. Poor cost management indicates a failure of governance and oversight across both HS2 Ltd and the Department. This is of great concern given the scale of the challenge they face in resetting the programme to complete Phase 1 and manage the closedown of the other phases, for example in disposing of land and property no longer needed. We are also highly sceptical that the Department will be able to attract private investment on the scale and speed required to make the London terminus station a success.


Alongside managing changes to the HS2 programme, including the impact on Northern Powerhouse Rail, the Department also has work to do to confirm exactly how the £36 billion redirected from HS2 will be used over the next two decades, and how it will manage this long-term portfolio of projects.


Crucially, the Department does not yet understand how HS2 will operate as a functioning railway following recent changes. It is vital the Department now gets to grips with the programme to complete Phase 1 within the estimated range of 2029 to 2033, with HS2 Ltd aiming for 2030, and maximises what value it can for the taxpayer.

 

[snowball]

Summary
This Committee has been reporting its concerns on how High Speed 2 (HS2) has been
managed for over a decade, but recent events have left us more concerned about the HS2
programme than ever before. The cancellation of the latter stages of the HS2 programme
and operating just Phase 1, from London to the West Midlands will achieve poor
value for money for the taxpayer, as the Department for Transport (the Department)
acknowledged to us. The Department told us it was still better to complete Phase 1,
given the approximately £11 billion of remediation costs (in 2019 prices) that would be
incurred if they cancelled the whole programme.

Even before the cancellation of Phases 2a, 2b and East, the costs of HS2 continued to
escalate, with HS2 Ltd’s estimated costs for Phase 1 now as high as £57 billion against a
budget of £44.6 billion (in 2019 prices). HS2 Ltd estimates that inflation since 2019 will
add a further £8 billion to £10 billion to the cost, making a total in current prices of up
to £67 billion. Poor cost management indicates a failure of governance and oversight
across both HS2 Ltd and the Department. This is of great concern given the scale of the
challenge they face in resetting the programme to complete Phase 1 and manage the
closedown of the other phases, for example in disposing of land and property no longer
needed. We are also highly sceptical that the Department will be able to attract private
investment on the scale and speed required to make the London terminus station a
success.

Alongside managing changes to the HS2 programme, including the impact on Northern
Powerhouse Rail, the Department also has work to do to confirm exactly how the £36
billion redirected from HS2 will be used over the next two decades, and how it will
manage this long-term portfolio of projects.

Crucially, the Department does not yet understand how HS2 will operate as a functioning
railway following recent changes. It is vital the Department now gets to grips with the
programme to complete Phase 1 within the estimated range of 2029 to 2033, with HS2
Ltd aiming for 2030, and maximises what value it can for the taxpayer.

Full report text:

https://committees.parliament.uk/committee/127/public-accounts-committee/publications/

The Guardian's report on this:

Government ‘does not understand how HS2 will function as railway’

Parliament’s spending watchdog says cancellation of high-speed line’s northern leg raises ‘urgent questions’

www.theguardian.com

The cancellation of the northern leg of HS2 has raised “urgent unanswered questions” and the government does not yet understand how the £67bn high-speed railway will now function, according to a scathing report from parliament’s spending watchdog.

The remaining London-Birmingham line will be “very poor value for money”, the public accounts committee of MPs said, with costs now forecast to significantly outweigh the benefits.

Edit: I see this has been mentioned in another thread:

HS2 Manchester leg scrapped: what should happen now?

You can split in any number of places, so I'm not sure that's any particular argument for building many many kilometres of extra track to Crewe. We could put a 400m platform in somewhere convenient for a tiny fraction of the cost of HS2 Phase 2A. Indeed, there is no particular reason that a...

www.railforums.co.uk

 

[JonathanH]

The Public Accounts Committee reports that it's more concerned about HS2 than ever, following the recent significant cancellations, and will "achieve poor value for money for the taxpayer" with which I concur

The problem would appear to be that the government would no doubt have liked to cancel Phase 1 as well, but couldn't as it was too far advanced so get left with a rump that they have to pay to complete, but which has an uncertain use case.

 

[Arkeeos]

The Public Accounts Committee reports that it's more concerned about HS2 than ever, following the recent significant cancellations, and will "achieve poor value for money for the taxpayer" with which I concur - I was a supporter until the Manchester part was cancelled and that's not really been for personal interest reasons because I was increasingly unlikely to see it finished in my lifetime anyway (I exaggerate only a little). The Euston station plan is a mess, and government doesn't understand how the revised HS2 will operate.

https://committees.parliament.uk/publications/43184/documents/214904/default/

The best idea is to draft up some alternative plans to connect routes into the HS2 trunk route to attempt to justify the infrastructure, even if you don't intend to build it. Or stop the sell off of land and just say that you will *eventually* build the full network.

Maybe this will be a lesson for the government that transport decisions should be made by the dft, not a few treasury officials.

 

[JonathanH]

Maybe this will be a lesson for the government that transport decisions should be made by the dft, not a few treasury officials.

I suspect they will think the lesson learnt is not to start major infrastructure projects, or at best to phase them in much more manageable chunks.

 

[LNW-GW Joint]

Parliamentary committees can embarrass the government, but it's rare that policy is changed.
The government is evidently still working through the consequences of its rash decision last October, but there's no sign of anything being reversed.
Bit by bit the "savings" from HS2 Phase 2 are being eaten up elsewhere, and I doubt Sunak and Harper will change tack before the election.
One day the penny will click, that Phase 1 needs rounding out to become a more effective scheme, but it will have a different name and purpose.
Then there's the Euston problem, currently with no solution.
And now we see the flight of talent and investment interest in UK high speed rail migrating overseas.

 

[Nottingham59]

The best idea is to draft up some alternative plans to connect routes into the HS2 trunk route to attempt to justify the infrastructure, even if you don't intend to build it. Or stop the sell off of land and just say that you will *eventually* build the full network.

Maybe this will be a lesson for the government that transport decisions should be made by the dft, not a few treasury officials.

It was the DfT officials that got HS2 into the mess in the first place. I am shocked to learn that the main construction contracts we let on a "cost plus" basis. That's certain to cause cost overruns.

 

[Energy]

It was the DfT officials that got HS2 into the mess in the first place. I am shocked to learn that the main construction contracts we let on a "cost plus" basis. That's certain to cause cost overruns.

Costs plus was to get construction companies to bid for them. IIRC there were concerns that fixed price would struggle to get bids.

 

[Nottingham59]

Costs plus was to get construction companies to bid for them. IIRC there were concerns that fixed price would struggle to get bids.

Well, that's because the whole project was badly conceived and specified from the start. And that's down to the DfT.

 

[snowball]

Bit by bit the "savings" from HS2 Phase 2 are being eaten up elsewhere, and I doubt Sunak and Harper will change tack before the election.

Personally I don't think Labour will change much either. They have in the past provided some good chairs of the transport select committee but I'm not aware that they currently have a knowledgeable transport team.

 

[stephen rp]

I suspect they will think the lesson learnt is not to start major infrastructure projects, or at best to phase them in much more manageable chunks.

By definition, if they can be done in manageable chunks, they're unlikely to be "major". Do the Crossrail tunnels as one chunk, then the stations, and then connect to other lines? Then procure the rolling stock?

It was the DfT officials that got HS2 into the mess in the first place. I am shocked to learn that the main construction contracts we let on a "cost plus" basis. That's certain to cause cost overruns.

It's the DfT that's now pretending the current plan makes any sort of business sense *, let alone any sense in terms of improving capacity to the North. (When I say the DfT I'm assuming this is what the politicians are instructing officers to say.)

* Business sense as in: for what they now propose, there would never have been a business case.

 

[LNW-GW Joint]

Having read the whole thing, there's a mistake at one point where they assumed that HS2 trains would join HS2 "north of Manchester".
But of course Phase 1 would only have reached Handsacre anyway initially, and then Crewe after Phase 2a was completed.
Manchester was only reached after Phase 2b (2041-ish?), and "north of Manchester" might have referred to the already-deleted Golborne connection in Phase 2b.

Otherwise, the report is understandably finance-led, without a lot of railway content.
Another raft of senior bean-counters is being appointed to wrestle the costs, but the railway issues are still opaque.

 

[nwales58]

By conicidence, we have a yardstick for the cost of new Euston and new Manchester. Adif (Spain's NR equivalent) have just awarded construction contracts for the new through long distance station underneath the existing Atocha station. Eur 450m apparently buys a 4 platform 400m underground station. No commercial property development needed. At that price we could afford 4x400m at Manchester and 8x400m at Euston with change to spare out of 2bn.

 

[Nicholas Lewis]

Having read the whole thing, there's a mistake at one point where they assumed that HS2 trains would join HS2 "north of Manchester".
But of course Phase 1 would only have reached Handsacre anyway initially, and then Crewe after Phase 2a was completed.
Manchester was only reached after Phase 2b (2041-ish?), and "north of Manchester" might have referred to the already-deleted Golborne connection in Phase 2b.

Otherwise, the report is understandably finance-led, without a lot of railway content.
Another raft of senior bean-counters is being appointed to wrestle the costs, but the railway issues are still opaque.

Whats interesting is this committee is dominated by Torys albeit chaired by Labours Meg Hillier so its a pretty damming report. This isn't the first time PAC have drawn attention to the mismanagement of the project by both HS2 and DafT and made recommendations that have blatantly been ignored. Also PAC have a roster of reports of mismanaged projects across all Whitehall departments and what Sunak should have done is castigate those that have bought HS2 to this situation and acknowledge the wider issue in how govt conducts large projects and put in place remedies.

Anyhow as we know nothing is going to change until the govt changes and then we may at least get a strategy that makes best use of what is left of this calamitous project.

 

[ainsworth74]

Anyone who wishes to discuss what they think should happen next for HS2, particularly in regards to Manchester, please use the existing thread here.

 

[HSTEd]

Well that's not a complementary report, given the language normally seen in such things.

 

[GRALISTAIR]

Well that's not a complementary report, given the language normally seen in such things.

No. Very damning indeed.

 

[snowball]

An item right now on PM on BBC Radio 4. Currently talking about the mayors' plan.

 

[stephen rp]

Having read the whole thing, there's a mistake at one point where they assumed that HS2 trains would join HS2 "north of Manchester".
But of course Phase 1 would only have reached Handsacre anyway initially, and then Crewe after Phase 2a was completed.
Manchester was only reached after Phase 2b (2041-ish?), and "north of Manchester" might have referred to the already-deleted Golborne connection in Phase 2b.

Otherwise, the report is understandably finance-led, without a lot of railway content.
Another raft of senior bean-counters is being appointed to wrestle the costs, but the railway issues are still opaque.

Obviously a drafting error that should read "north of Birmingham"

 

[jfollows]

An item right now on PM on BBC Radio 4. Currently talking about the mayors' plan.

Liverpool and Manchester mayors, presumably?

 

[class26]

An item right now on PM on BBC Radio 4. Currently talking about the mayors' plan.

Seems as the favourite is to build on the planned route of phase 2 but to a lower spec

Liverpool and Manchester mayors, presumably?

NO, Manchester and Brum mayors

 

[snowball]

NO, Manchester and Brum mayors

As discussed in other threads, for example this one:

"HS2 Back on Track" - front page of Sunday Express - private sector plan to build Birmingham to Manchester

Axed HS2 could be brought back to life as secret talks take place to revive rail link Rival mayors Andy Street and Andy Burnham team up to breathe new life into scrapped project between Birmingham and Manchester https://www.express.co.uk/news/uk/1858019/HS2-revived-private-finance Interesting...

www.railforums.co.uk

 

[jfollows]

Seems as the favourite is to build on the planned route of phase 2 but to a lower spec


NO, Manchester and Brum mayors

You're right, makes more sense, thank you.

 

[brad465]

"Consultancy, if you're not part of the solution, there's a lot of money to be made in prolonging the problem."

 

[NotATrainspott]

It does seem odd that policy has been drafted up without any real plan for how services would run.

If Euston is to be built with private money, then the government needs to have a plan in case that money doesn't appear. It needs to write up a document that would explain how HS2 terminating at Old Oak Common would actually work in practice. Do you continue to run ICWC services into Euston - yes or no? How popular would they expect these OOC terminating services to be? It's one thing to soft launch some Birmingham captive services to allow the infrastructure and operator to bed in a little, but quite another to have no plan for what comes next.

What it definitely seems like is that the technocratic way that previous governments have handled this issue has gone out of the window. It is very much as if the current government believes that it will not be in charge next year, and so it doesn't matter what decisions they make.

 

[ainsworth74]

It does seem odd that policy has been drafted up without any real plan for how services would run.

Does it? It was clearly just a political stunt to try and reverse the Tory parties electoral fortunes and HS2 was chosen as being something totemic and which Rishi, doubtlessly, was already suspicious of. There was no policy thought behind the decision at all.

 

[Nicholas Lewis]

It does seem odd that policy has been drafted up without any real plan for how services would run.

If Euston is to be built with private money, then the government needs to have a plan in case that money doesn't appear. It needs to write up a document that would explain how HS2 terminating at Old Oak Common would actually work in practice. Do you continue to run ICWC services into Euston - yes or no? How popular would they expect these OOC terminating services to be? It's one thing to soft launch some Birmingham captive services to allow the infrastructure and operator to bed in a little, but quite another to have no plan for what comes next.

What it definitely seems like is that the technocratic way that previous governments have handled this issue has gone out of the window. It is very much as if the current government believes that it will not be in charge next year, and so it doesn't matter what decisions they make.

Not sure they would like the answer so i wouldn't hold our much hope anything will materialise

 

[AlbertBeale]

Well that's not a complementary report, given the language normally seen in such things.

And it's not very complimentary either...