All parties involved in HS2 “underestimated the task” of building the high-speed railway, leading to an unrealistic budget being set from the beginning, according to the government spending watchdog.
The National Audit Office (NAO) has released its fourth report on the controversial HS2 programme, saying it examines whether the Department for Transport (DfT) and HS2 Ltd “have protected value for money in their stewardship” of the project.
It has concluded that building the railway “is an ambitious national programme” and that the DfT, HS2 Ltd and the government more widely “underestimated the task, leading to optimistic estimates being used to set budgets and delivery dates”.
HS2 was initially projected to cost £56 billion, but HS2 Ltd chairman Allan Cook told transport secretary Grant Shapps in September 2019 that the project will likely need up to £88 billion to be completed.
However, a leaked government-commissioned report suggested the cost could rise to as much as £106 billion.
That is the alleged conclusion of a review led by former HS2 Ltd chairman Doug Oakervee, though the official report has not yet been published. The government will use the report to make a decision on whether to go ahead with the project in February.
The NAO added: “In not fully and openly recognising the programme's risks from the outset, the department and HS2 Ltd have not adequately managed the risks to value for money. If these risks had been recognised and managed earlier, then the significant activity in a pressured environment over the past year trying to understand and contain cost increases may not have been necessary.”
HS2 is also running up to five years behind schedule, with Phase One connecting London and Birmingham predicted to open in 2028 at the earliest, but possibly not until 2031. Phase 2 linking the railway to Manchester and Leeds would then not open until some time between 2035 and 2040.
While the NAO is not out to make a judgement on whether the programme is likely to provide value for money at this early stage, it said the challenge of monitoring and managing the project as construction on Phase One begins “is considerable”.
Gareth Davies, head of the NAO, said there are “lessons to be learned” from HS2 for future infrastructure projects, adding: “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.”
If the project goes ahead, HS2 will effectively reduce journey times between London and Scotland by an hour to three-and-a-half hours.