UK: Secretary of State for Transport Heidi Alexander has told parliament that a ‘litany of failure’ led to spiralling costs, ineffective oversight and broken promises at the High Speed 2 programme, and she is drawing ‘a line in the sand’ to ‘get the job done’ between London and Birmingham at ‘the lowest reasonable cost, even if this takes longer’. She said the cancelled later phases of HS2 would not be reinstated as they cannot be afforded.
Speaking on June 18, Alexander set out plans to address all of the recommendations of the Stewart Review of the HS2 programme which was pubished on the same day .
The independent report which the government commissioned in October 2024 highlights a lack of ministerial oversight and scrutiny, inadequate control by HS2 Ltd and a lack of effective incentives with the supply chain.
| Findings of the Major Transport Projects Governance & Assurance Review: The HS2 Experience (Stewart Review) |
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| Politics and the pace of political decision-making has been a disruptor, and HS2 has no ‘buffer’ provided by external shareholders, regulators or joint sponsors. |
| Schedule has been prioritised over cost, for a range of reasons including pressure from politicians to maintain momentum, fear of HS2 being cancelled and the belief that costs will increase as a result of delay. |
| There is a need to change the culture on cost and affordability; Stewart says ‘it is impossible to escape the early decisions and the stated vision to build the best and fastest railway in the world’, and this vision ‘took the project away from the initial premise of increasing network capacity’. |
| A bespoke approach is required to deliver a programme of the size and complexity of HS2; governance has been over stretched, and the funding mechanisms have broken down due to the sums involved. |
| Trust between stakeholders needs to be restored. |
| The inability to arrive at reliable cost and schedule estimates has undermined the delivery of and the confidence in the programme. |
| The failure of the Main Works Civils Contracts to deliver reliable outcomes within the affordability framework has been a persistent problem. |
| HS2 Ltd and DfT as the sponsor have been consistently underpowered in performing their roles. |
| The governance structure needs to be changed. It is too complicated, multi-layered, blurs accountabilities and ‘perhaps most importantly’ does not recognise the role of government as holding the financial equity risk. |
| London Euston station as the planned HS2 terminus needs a delivery plan, agreed funding and a governance structure. |
| The balance between advocacy and criticism/challenge needs to be restored. Stewart says continued criticism is demoralising and a return to advocacy would help attract and retain talent into the programme and increase employee engagement. |
Alexander said the Department for Transport is already delivering on five key recommendations:
- Lack of effective ministerial oversight: a HS2 Task Force has been re-established with full senior official and ministerial attendance to provide oversight and eliminate ‘dark corners for failures to hide in’;
- Stricter cost control, fundamentally changing the approach to estimating costs and ensuring HS2 Ltd and its suppliers negotiate incentives that ensure cost savings. Alexander said ‘suppliers should make a better return the more taxpayer money they save’;
- Lack of capability, skills and trust between DfT and HS2: HS2 Ltd CEO Mark Wild is ‘instilling a new era of leadership the project desperately needs’, reforming the organisation with a focus on building the rest of the railway safely and at the lowest reasonable cost;
- Lack of clarity on London Euston station: the government has committed funding to start tunnelling from Old Oak Common to Euston, and further detail on delivery of the station will be set out ‘in due course’. Alexander said a Euston Taskforce announced by the previous government had never met;
- Lessons for the wider transport portfolio: the government is committing to delivering infrastructure differently, with more to be set out in the upcoming 10-Year Infrastructure Strategy. The Prime Minister has asked the Cabinet Secretary to consider the implications of the issues raised for the Civil Service and wider public sector.
Alexander confirmed that former London Transport Commissioner Mike Brown would become HS2 Ltd Chair in July, working alongside CEO Mark Wild to deliver a programme reset, including reviewing the costs and schedule, renegotiating large construction contracts and reviewing HS2 Ltd’s skills and structure.
Wild’s initial assessment of the programme has also been published, saying the overall cost and scope of HS2 is unsustainable and opening by 2033 is not possible. He has been asked to provide an update on revised costs and delivery timescales at the end of the year.
Alexander said ‘this government is delivering HS2 from Birmingham to London after years of mismanagement, flawed reporting and ineffective oversight’. Wild and Brown were part of the team ‘that turned Crossrail into the Elizabeth Line’, and ’we have done it before, we will do it again. Passengers and taxpayers deserve new railways the country can be proud of, and the work to get HS2 back on track is firmly underway’.
Alexander said billions of pounds had been wasted on constant scope changes, ineffective contracts and bad management. She told the House of Commons that allegations of fraud in part of the supply chain would be investigated, with any consequences to be felt by ‘all involved.’
She said ‘it is an appalling mess, but it is one we will sort out’.
Responses
Commenting on the government’s announcement, the High Speed Rail Group said ‘repeated chops and changes to scope have inflated costs and disrupted delivery. This reset begins the difficult but essential task of restoring confidence in one of the UK’s most vital infrastructure projects.’
Railway Industry Association Chief Executive Darren Caplan said ‘it is now essential that HS2 Ltd’s CEO Mark Wild is given the time and space he and his team needs to carry out a “reset” of the programme to deliver this project, so crucial to increasing UK rail capacity’. Caplan said it is important that the lessons are learnt, ‘avoiding the temptation to specify dates and costs prematurely on major infrastructure projects.’
The Building Cost Information Service’s head of data services Karl Horton said cost inflation is a significant risk across all major infrastructure projects, and ‘the longer schemes are delayed for, the more costs spiral’. He said HS2 ‘has become victim to the familiar foes of planning and approval delays, rampant post-Covid inflation and labour and supply chain disruptions’. Between January 2012 and July 2024 BCIS’s Rail Cost Index rose by 44% and is forecast to have increased another 2% in the last 12 months. Its General Civil Engineering Index rose 48% in the same period and is forecast to have risen by another 1% in the last year.
The Unite trade union had ‘raised numerous warnings about the conduct and management of contracts on HS2 for years’, said national officer for construction Jason Poulter. He said ‘Unite and other recognised unions were frozen out of some elements of the project, where access to the workforce was denied until recently. All workers on the project should be directly employed with access to active unions so that there can be no excuses. This would prevent further delays and cost uncertainty to a project beset by overruns.’
Institution of Civil Engineers Director of Policy & External Affairs Sam Gould said ‘projects of this scale need clear objectives from the start, they need to spend more time in development, and who makes decisions needs to be crystal clear. The UK has the engineering and design capability to create world-leading infrastructure – this is borne out by some of the incredible engineering HS2 has already delivered. What must change is how we approach planning and delivery.’
