Complexity and risks of HS2 were ‘under-estimated’

HS2 is over budget and behind schedule because its complexity and risks were under-estimated, according to the Whitehall spending watchdog.

The National Audit Office (NAO) warned that it is impossible to “estimate with certainty what the final cost could be”.

It published a report urging the Government and HS2 Ltd to be “transparent and provide realistic assessments” in relation to the high-speed railway.

A Government-commissioned review led by former HS2 Ltd chairman Doug Oakervee leaked earlier this week stated that the project’s bill could reach £106 billion.

HS2 was allocated £56 billion in 2015.

Phase One between London and Birmingham was due to open in 2026, but full services are now forecast to start between 2031 and 2036.

The NAO noted that the Department for Transport (DfT) set the available funding for the first phase in 2013, when there was only a “basic” design for the project.

It also found that HS2 Ltd failed to add enough contingency to its cost estimates after using a calculation method that was inappropriate for the early stage of the programme.

The amount of contingency was not enough to cover “significant increases in cost” which emerged as the design became more detailed and issues such as poor ground conditions came to light, the report stated.

Head of the NAO 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.”

A DfT spokeswoman said the department “supported this review and is already acting on many of its recommendations”.

She went on: “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.”

An HS2 Ltd spokesman said: “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.”

He added that HS2 has a “highly-skilled team in place ready to build Britain’s new state-of-the-art, low-carbon railway”.

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Transport Secretary Grant Shapps said the Government will make a decision on whether to go ahead with HS2 in ‘weeks rather than months’ (Jonathan Brady/PA)

Transport Secretary Grant Shapps has said the Government will make a decision on whether to go ahead with the project in “weeks rather than months”.

Some £8 billion has already been spent on HS2.

Political leaders in northern England and business groups claim HS2 is vital to boosting transport links across the region and providing increased capacity on the overcrowded rail network.

Construction firms warn that scrapping it would cause major damage to the industry.

But opponents claim HS2 is too expensive and the money would be better spent elsewhere, while several environmental groups say it would cause huge damage to natural habitats and ancient woodland.

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