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The UK wastes billions in taxpayer funds due to poorly managed mega projects, such as HS2, and crumbling infrastructure, a public spending watchdog has said.
In a speech, Gareth Davies, head of the National Audit Office (NAO), said that improved oversight of public sector productivity could save tens of billions of pounds and deliver better public services despite the current fiscal challenges.
In particular, better management of major infrastructure projects and a focus on digital transformation in public bodies would massively improve value for money for the taxpayer.
“Parts of our national infrastructure are crumbling. Maintenance backlogs persist across the public estate, impeding service delivery and costing more over time,” he said.
“Out-of-date IT slows the modernisation of many public services, interferes with efficient government and increases the risks of successful cyber attacks.”
The NAO identified numerous failures in cost estimation and control for major projects.
HS2, for example, was estimated to cost £37.5bn in 2009 prices. This later rose to £55.7bn in 2015. Some reports now suggest this has surpassed £100bn after various budgetary overruns, rampant inflation and Covid-19-related disruption.
Similarly, Hinkley Point C – the UK’s first new nuclear plant in a generation – has also seen its budget swell from an estimated £18bn in 2015 to around £33bn in 2023. The increases have created tensions with China General Nuclear Power Corp (CGN), which owns a third of the project but has decided to stop funding the ballooning budget.
“Higher inflation has increased costs, particularly for large infrastructure projects,” Davies said in his speech.
“Added to the sharply increased cost of servicing government debt, this is a challenging fiscal picture.”
For the biggest projects, he said that Whitehall has a “governance problem”.
“HS2 and the New Hospital Programme are examples of mega projects too large for risks to be managed by the relevant departments and arms-length bodies, with overall budgets in the tens of billions and long project lifetimes. Both lacked sufficiently robust and realistic assessments of affordability at the outset,” he said.
“A new approach to the governance of genuine mega projects is needed, starting with the involvement of a cross-government oversight board from the outset. This would increase the chance of making better go/no-go decisions and more effectively holding the project to account for cost control and delivery.”
Other suggestions from the NAO include replacing antiquated IT systems and improving the quality and shareability of government data.
