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HS2 has become “very poor value for money” after last year’s cancellation of the northern leg, MPs on the Public Accounts Committee (PAC) have said.
After weeks of speculation, Prime Minister Rishi Sunak confirmed in October that the government planned to scrap the proposed rail connection between Birmingham and Manchester.
In its place, he pledged to invest “every single penny” saved – an estimated £36bn – in “hundreds of new transport projects in the North and the Midlands”.
But the PAC, which has frequently scrutinised the management of HS2 over the last decade, said its total costs now “significantly” outweigh the benefits.
The Department for Transport (DfT) told the PAC it was still better to complete phase 1 – a calculation made by excluding the £23bn spent to date, and including as a benefit of the project avoiding approximately £11bn of remediation costs from the cancelled sections.
But the PAC said it had been left “with little assurance over the calculations” and called for a clear summation of phase 1’s benefits.
The report also raises questions about the ramifications of the cancellation of the northern leg. These range from how land and property now no longer needed will be disposed of, taking into account the needs of the taxpayer, local interests and fairness to those who have had their properties compulsorily purchased.
It also wants an assessment of its impact on other rail projects that were dependent on the cancelled phases and exactly what will be delivered with the redirected £36bn. Questions were raised about how the high-speed trains that will be delivered will run on the old lines now they are not being upgraded as per the original plan.
“Poor cost management indicates a failure of governance and oversight at both HS2 Ltd and DfT, and the report calls for answers within six months as to how these issues will now be brought under acceptable and properly accountable control,” the PAC said.
The report warns there are also urgent decisions to be made on funding the development of HS2 Euston, which is dependent on attracting private finance to pay for it. It said the government had no plan on how to make this happen, and the PAC was sceptical that investment can be attracted of the scale and speed required to make Euston a success.
Dame Meg Hillier, the committee’s chair, said: “The decision to cancel HS2’s northern leg was a watershed moment that raises urgent and unanswered questions, laid out in our report.
“What happens now to the phase 2 land, some of which has been compulsorily purchased? Can we seriously be actively working towards a situation where our high-speed trains are forced to run slower than existing ones when they hit older track? Most importantly, how can the government now ensure that HS2 deliver the best possible value for the taxpayer?
“HS2 is the biggest ticket item by value on the government’s books for infrastructure projects. As such, it was crying out for a steady hand at the tiller from the start. But, here we are after over a decade of our warnings on HS2’s management and spiralling costs – locked into the costly completion of a curtailed rump of a project and many unanswered questions and risks still attached to delivery of even this curtailed project.”
A DfT spokesperson said: “We disagree with the Committee’s assessment. Their estimated cost figure for Phase One also does not reflect our decision to secure private funding for Euston, or the direction not to proceed beyond the Midlands.
“Our plans for Euston have already received extensive support from the private sector to invest and will offer a world class regeneration opportunity, mirroring the successful Kings Cross and Battersea and Nine Elms development programmes.
“The permanent secretary has already written to the Committee chair setting out her assessment on value for money, and we have repeatedly made clear we will continue to deliver HS2 at the lowest reasonable cost, in a way that provides value for taxpayers.”
