Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Louise Haigh, the UK transport secretary, has acknowledged that the expenses related to constructing the High Speed 2 rail line are still increasing, as she disclosed plans to regain control of the project through a new independent review.
Despite the project’s controversial nature, the cost of building the new rail line from London to Birmingham continues to rise, even after its scope was halved last year in an attempt to manage costs. Former Tory Prime Minister Rishi Sunak eliminated the entire northern section of the rail line from Birmingham to Manchester.
“It has been evident for quite some time that the costs of HS2 have been escalating uncontrollably, but since assuming the role of transport secretary, I have witnessed firsthand the magnitude of the project delivery failure, and it is alarming,” Haigh stated. “I have introduced urgent measures to rein in HS2’s costs and ensure that taxpayers’ money is utilized effectively.”
While the Department for Transport estimated the remaining project cost to be between £45bn and £54bn in 2019 prices, HS2 management has proposed a higher range of £49bn to £57bn. In January, Sir Jon Thompson, HS2’s chair, informed MPs that factoring in inflation would raise this figure by an additional £10bn to £67bn.
Mark Wild, the incoming chief executive of the project and former head of the Elizabeth Line, is anticipated to provide an even higher estimate following a comprehensive review of the project. This figure is projected to increase further due to inflation, previous modifications to the scheme, and delays in certain project components.
Haigh confirmed that she had appointed James Stewart, an experienced figure in the infrastructure industry, to lead a new Major Transport Projects Governance and Assurance Review. Stewart is a former chair of global infrastructure at advisory firm KPMG.
The review, which was previously disclosed by the Financial Times, will scrutinize the oversight of major transport projects, including HS2. It will focus on “the effectiveness of forecasting and reporting of cost, schedule, and benefits, as well as measures to achieve cost efficiencies,” the government announced on Sunday.
This review will lead to increased ministerial involvement in HS2. “The government is reinstating ministerial oversight of the project to ensure greater accountability,” the Department of Transport stated.
Initially, this will involve more frequent meetings between ministers and HS2 management. In the long term, the Stewart review will evaluate whether the DfT’s “sponsorship and oversight model” requires a broader overhaul to enhance project delivery.
Haigh remarked, “It is imperative that we learn from past mistakes and ensure that the errors of HS2 are not repeated in the future.”
It is anticipated that HS2 will not commence operations between Birmingham and Old Oak Common, a station in west London, until sometime between 2029 and 2033, significantly later than the initial schedule.
Haigh is expected to confirm this month that the service will be extended an additional 4.5 miles to Euston in north London. Last week, LBC radio reported that the government intended to revive the northern section of HS2, at least from Birmingham to Crewe.
Nonetheless, government officials stated that their current plans involve conducting a preliminary feasibility study for a new line in the region, which would not be high-speed.
“The government has made it clear that it is not resurrecting phase 2 of HS2,” the DFT declared on Sunday. “The government acknowledges concerns about connectivity between Birmingham and Manchester, but its primary focus now is the safe delivery of HS2 between Birmingham and London at the most reasonable cost.”