- Successful delivery appears unachievable, says report’s author
- Project hit by series of controversies
- Scores of people yet to receive compensation
Racing through the countryside at 250mph, the planned new high-speed train line from London to the Midlands and northern England should be one of the fastest in the world. But it is also set to be one of the most expensive.
A leaked document prepared for the government’s Infrastructure and Projects Authority warned shortly before the High Speed 2 railway was approved by parliament in February 2017 that the scheme was “fundamentally flawed” and would overshoot its £56bn budget by as much as 60 per cent.
The December 2016 document, marked “sensitive” and “not for publication”, said Europe’s biggest infrastructure project was in a “precarious position” and would be “classified as ‘failed’ by any internationally recognised definition”.
It added that HS2 was “highly likely to significantly overspend, 20 to 60 per cent”, which would increase the cost to as much as £90bn.
The project management capabilities of HS2 Ltd, the taxpayer-funded company charged with building the railway, had fallen “well short of best practice”, and its executive team lacked “cohesion and common vision”, said the document.
It called for “greater transparency and frankness” about the timeline, costs and benefits of HS2, which will run from London to Birmingham in its initial phase, and later to Manchester and Leeds.
‘The government clearly misled parliament’
Tony Berkeley, a Labour peer and former engineer who worked on the High Speed 1 railway between London and the Channel tunnel, said: “The government clearly misled parliament by hiding this devastating report on HS2’s performance and cost overruns.
“If parliament voted for HS2 on false premises that calls into question the legitimacy of the project.”
The leaked HS2 report was written by Paul Mansell, an independent adviser who has worked at HS2 Ltd at the Infrastructure and Projects Authority’s request.
He has also been a project assessment review team leader at the authority, which advises the Cabinet Office and the Treasury on big infrastructure schemes.
According to the government’s so-called traffic light assessment system for big infrastructure projects, HS2 has received an “amber/red” rating by the authority for each of the past six years — meaning there is a “high risk” of it not delivering value for money.
But Mr Mansell’s report suggests the rating should have been red: the successful delivery of the project “appears to be unachievable . . . the project may need rescoping and/or its overall viability reassessed”.
Vanity project championed by the Tories
Nick Macpherson, Treasury permanent secretary from 2005 until March 2016, said HS2 was viewed as a political vanity project — it had been championed by former prime minister David Cameron’s government, including his chancellor George Osborne.
He added the Treasury generally preferred incremental improvements to the railways, saying it was not a priority “to make it easier to come from Birmingham to London”.
Mr Mansell’s report is just the latest controversy to hit the HS2 project, which went ahead in spite of 2,588 objections by a wide range of people and organisations, as well criticism by MPs and peers, and the National Audit Office, the public spending watchdog.
Simon Kirby resigned as HS2 Ltd chief executive in September 2016 following a report that, according to people close to the company, was critical of boardroom governance. HS2 Ltd said he resigned to take up a job at Rolls-Royce.
Mr Kirby, who while at HS2 Ltd was the UK’s highest paid civil servant on £750,000, was later accused by MPs of approving redundancy payments to employees worth almost £2m against the instructions of the Department for Transport. He denied any wrongdoing.
In March 2017, HS2 Ltd scrapped a £170m contract to design the second phase of the project with US engineering group CH2M after allegations of a conflict of interest.
Rival bidder Mace highlighted how Mark Thurston, HS2 Ltd’s then newly installed chief executive, was a former CH2M employee.
Evidence of cost overruns is growing
More recently, scores of people have complained about low property valuations and delays in compensation payments after their homes and offices were requisitioned by HS2 Ltd because of their location on the railway’s route.
HS2 Ltd is engaged in the UK’s largest set of land and property purchases since the second world war, and flaws in its valuation methodology were raised in two confidential reports for the company in 2015 by Deloitte and PwC.
Meanwhile, three former senior executives at HS2 Ltd have said they were dismissed in 2015 and 2016 for warning about significant inaccuracies in the project’s official budget for buying land and property.
Evidence of cost overruns is growing. HS2 Ltd has bought just 20 per cent of the properties along the first phase of the route, but already spent £1.6bn of the £2.8bn it has allocated to the exercise.
HS2 said it did “not recognise or agree with” the analysis in Mr Mansell’s report, “or the figures it contains”.
“The Infrastructure and Projects Authority recently described the HS2programme as ‘on target to be completed on time and on budget’,” it added.
HS2 said it had added “further strength” to its executive team with the appointment of a new finance director and chief operating officer.
Neither Philip Hammond, the chancellor, nor Chris Grayling, the transport secretary, saw Mr Mansell’s report, according to government officials. They said Mr Mansell was not tasked with assessing HS2’s costs and that ministers disagreed with what he concluded.
The transport department said: “This is an internal report representing an individual’s personal views. We are keeping a tough grip on costs and HS2 is on time and on budget at £55.7bn.”
PwC and Deloitte declined to comment. Mr Mansell was unavailable for comment.
