HS2 ministers 'have not been held to account for hugely underestimating costs to taxpayers', say MPs

Ministers who signed off low estimates for the costs of HS2 “have not been held to account for their miscalculations at the taxpayers’ expense”, MPs have warned.

Work on HS2 is under way but new questions have been raised about the costs of the project.
Work on HS2 is under way but new questions have been raised about the costs of the project.

The Transport Select Committee highlighted how the estimated costs for different phases of the project have spiralled in the past decade while the scheme is running years behind its original schedule.

The committee’s report into major transport infrastructure projects cited HS2 as an example of the problem of Government departments competing with each other to gain approval for projects by presenting business cases based on the lowest possible costs and the most favourable benefit-cost ratios.

Their investigation heard from former Chancellor Philip Hammond, who told them “keeping costs down to get a project into the programme is an essential part of the game-playing in Whitehall”.

On HS2, the report said: “The first estimates for the cost of HS2 were published in the February 2011 HS2 economic case.

“Phase 1 costs were estimated to be £19.6bn, with the full network estimated at £37.5 billion. Phase 1 from London to Birmingham is now estimated to cost between £31 billion and £40 billion, an increase of between 14 per cent and 47 per cent from the £27.1 billion funding allocated in 2013. A target cost for Phase 1 has been set at £36 billion, or £40 billion in 2019 prices.

“Originally due to open in 2026, the full opening of Phase 1 into Euston station is now expected between 2031 and 2036, although services from Old Oak Common are due to commence between 2029 and 2033.

“The estimated cost of Phase 2a (West Midlands to Crewe) has also increased from £3.5bn in 2013 at 2015 prices, to between £4.5bn and £6.5bn, an increase of between 29 per cent and 87 per cent. Phase 2a is now due to open between 2030 and 2031, three to four years later than expected.

“The cost of Phase 2b (Crewe to Manchester, West Midlands to Leeds) is now estimated to be between £29bn and £41bn, an increase of between 15 per cent and 63 per cent on the £25bn previously allocated in 2013, and three to seven years behind schedule. The current estimate is for services to open between 2036 and 2040, compared with the original target date of 2033.

The report added: “Those statistics suggest that initial costs and timescales were not properly assessed. The Ministers with responsibility for HS2 who signed off those estimates have not been held to account for their miscalculations at taxpayers’ expense.”

The select committee has recommended that new upper and lower time and costs estimates should be given for potential infrastructure projects, with breaches of cost and time deadlines leading to “intense Parliamentary scrutiny”.

“To facilitate transparent, honest and constructive public and political engagement with the economic and engineering realities of delivering major infrastructure projects, the Government should establish floors and ceilings for project costs and timescales defining the range within which projects are scheduled for delivery rather than setting single specific targets, which are invariably unhelpful and inaccurate.

“Any breach of a project’s cost and/or time ceilings should be communicated to the appropriate Select Committee by a formal mechanism, which should trigger intense parliamentary scrutiny to protect the public purse and to support effective project delivery.”

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