I am not sure there has ever been an angrier official report than the one published yesterday by parliament’s Public Accounts Committee on the 13-year train turmoil of HS2. “A casebook example of how not to run a major project” had, said the MPs, produced a “cycle of repeated failure” with construction contracts that were “unacceptable to the public purse.”
After more than a decade of work, and with £41bn (in 2025 prices) already spent, HS2 still does not know what the finished high-speed rail route is going to end up costing, or even how it is going to calculate that cost.
It does not know when it will be finished. It does not know how it is going to deliver its London terminus, what it is going to build there, and how it is going to pay for it. It cannot say whether it is £10bn over budget, or £20bn. The Department for Transport and HS2 Ltd, the state-owned company building the railway, are hoping to work the figure out between them, some time in the next year or so.
This was also, of course, the week when Britain largely dismantled its overseas aid programme in order to spend an extra £6bn a year on defence. That enormous and consequential sum is still almost a billion less than the amount spent each year on HS2 – £6.9bn, again in 2025 prices.
How can we fix this incredible mess? Perhaps even more telling than the MPs’ report is their oral evidence session with the DfT and HS2, when they repeatedly asked essentially this question and got no convincing answer.
Mark Wild, HS2 Ltd’s new chief executive, and Alan Foster, its chief financial officer, talked of their plans for a “fundamental reset” of the programme, involving the “renegotiation” of contracts which are, as Wild admitted, “effectively… cost reimbursable.” That is, the contractors building HS2 are paid whatever they spend (usually up to a certain limit), plus an allowance for profit – giving them little incentive to save money, indeed the reverse.
But as the committee’s chair, Sir Geoffrey Clifton-Brown, put it: “Given that you are locked into contracts at the moment, how feasible is it going to be to renegotiate?” Foster, the finance man, conceded: “We have to manage our expectations around these changes… we clearly have to reach a compromise there, but there are opportunities for improvement.” Not so fundamental a reset, then. For now, as the DfT official Alan Over admitted, construction is “continuing in the round on the previous basis.”
The DfT was keen to talk up the “major review” it has launched to streamline HS2’s oversight. But the man leading it, James Stewart, chaired KPMG’s infrastructure practice when the firm was hired by HS2 Ltd to justify the economic benefits of the scheme, on a basis that was criticised by economists as “essentially made up.”
Michael Byng, a chartered surveyor whose forecasts of HS2’s costs have consistently proved better than any of the official ones, has a more radical proposal. HS2 Ltd, he says, should be forced into administration, as was the much less calamitous Railtrack in 2001, and a new body created to run the project.
This is not a risk-free option – and it may be harder than with Railtrack, which was a genuine private-sector company. But administration could make it easier to break the scheme’s disastrous contracts, or to renegotiate them from a position of strength. Work would probably have to stop for a bit, but better contracts might mean the project finished sooner overall.
It would also allow a genuine “reset” of the culture of HS2, which despite its obvious failings pays among the highest salaries in the public sector: Wild’s predecessor as chief executive, Mark Thurston, was Britain’s most expensive civil servant, on almost £680,000 a year, including, a bonus.
But another reckoning is needed, too: in Whitehall and wider public life. The problem isn’t just that HS2 is so badly run. It is that it was the wrong project from the start. There is wide agreement on Britain’s infrastructure needs: more homes, decarbonised electricity, functioning local transport systems outside London. So how did an inter-city high-speed rail line become the top priority, when objectively it shouldn’t have made the top ten?
How did the institutions supposed to protect us from bad decision making fail? Why did political elites – particularly regional elites – embrace something against both the wishes, and the interests, of the people they represent? (HS2 was certain to strip funding, as indeed it has, from the local services which voters actually use.)
It was partly because supporting HS2 was, in fact, relatively easy politically. If you’re Andy Burnham, the mayor of Greater Manchester, it’s much easier to demand that someone else builds you a high-speed rail line than to improve public transport yourself (such as congestion charging, or taking roadspace for bus lanes) which would annoy some of your voters.
Polling has suggested that some 40 per cent of the British public were against building the new rail line, but they had no voice because the parties all supported it. And though it caused devastation, it was along a relatively narrow strip of land: it didn’t affect as many people directly as, say, widespread housebuilding or electricity pylons would. So politicians were happy to buy into vague claims about HS2’s green, economic and levelling-up benefits, without the close examination that would have shown them to be mostly false.
Another reason for the Public Accounts Committee’s fury now is that it believes it was misled at a time when the truth could have made a difference. On 15 May 2019, Bernadette Kelly, the DfT’s permanent secretary, was directly asked by the committee whether the cost of HS2 had increased from the low-ball published figure on which the decision to go ahead with the scheme was to be taken. She replied that she was “not expecting that [the figure] to change.” In fact, as the committee later discovered, her department had been formally notified by HS2 two months before that it would not meet the published figure.
As the MPs put it, Kelly “withheld from us that the programme was in significant difficulty… even in response to specific questions about the programme’s delivery timeline and budget…failure of an Accounting Officer to provide accurate information to Parliament is potentially a breach of the Civil Service Code and a breach of parliamentary privilege.” Kelly is still the permanent secretary of the DfT.
The DfT denied that Kelly had breached the code, and a spokesman previously said: “The Permanent Secretary acknowledged in May 2019 that there were cost pressures that the Department and HS2 Ltd were working to address in line with government policy at the time. Those discussions were active and commercially confidential.”
When the last government decided to cancel the scheme’s northern section in 2023, I and another Downing Street adviser argued to make it a “teachable moment” for Whitehall, with inquiries and sackings. It never happened. But now, perhaps, in the new, harsher world after the crumbling of the Western security alliance, a genuine reset of SW1 could happen. We can’t afford the waste, dishonesty and self-delusion any more, not to mention the money.
Even if HS2 can, at best, only be partly fixed, we might still be able to avoid anything like it happening again.
Andrew Gilligan is head of transport at Policy Exchange
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