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HS2: Cost

Volume 799: debated on Wednesday 24 July 2019


Asked by

To ask Her Majesty’s Government, further to reports that the cost of the High Speed 2 rail project will not be delivered within its current budget, what steps they are taking to ensure that the costs of that project remain within its budget.

My Lords, we do not comment on speculation. However, we will publish an updated business case by the end of 2019 based on the latest assessment of costs and schedule. We are clear that the project has a funding envelope set in 2015, and HS2 Ltd is in ongoing discussions with its suppliers.

I am grateful to the Minister. It is hardly speculation: in a letter, the new chair of HS2 says that the capital cost is likely to exceed £86 billion, not the £54 billion that the Minister spoke of. This has been confirmed by up to a dozen senior HS2 staff, who are tweeting—some of them have been sacked for their sins—that this figure is correct. This has been going on for three years. It is inconceivable that Ministers did not know about it, even before the HS2 phase 1 Bill received Royal Assent. I suggest that the Ministers have misled Parliament by not giving this new, higher figure that they have known about for three or four years.

My Lords, the new chairman of HS2 has been in place for just over six months. He is undertaking a review of the costs and providing ongoing advice to government. This advice is not news; it is ongoing. We are working with him as he looks at all his supply chains to encourage him to ensure that the costs are appropriate. Various cost control actions are being undertaken at the moment regarding value engineering and challenging standards, and it is only right that they be given the opportunity to succeed. They also involve optimising commercial models with partnerships and challenging the requirements of the system.

Given the general awareness now of the scandalous nature of this £100 billion vanity project, may I urge the Minister to, in turn, urge the new Prime Minister and the Secretary of State—whoever that may be—to scrap this scheme and spend the money saved on sensible railway projects, particularly in the north of England?

My Lords, HS2 has benefits of £92 billion overall; it would be a mistake to scrap it. Also, if that money were suddenly to become available, it would not necessarily be immediately transferrable to the north. My noble friend may be referring to northern powerhouse rail, which is a very important railway project, but it is not an either/or situation. We can have HS2 and we can have northern powerhouse rail; indeed, for both of them to work, they both need to be built.

My Lords, the Minister is very firm in her assurances, and I would like to think that we can be convinced that HS2 will be built. However, the new Prime Minister has cast serious doubt on it and the Minister has referred to HS2 being subject to review. I therefore ask her to explain why £9 million has been given as compensation to Heathrow Airport in preparation for HS2, despite this ongoing review. Can she confirm the press reports that the £9 million will be paid even if HS2 does not go ahead?

Work continues on HS2 and that £9 million was part of that work. To date, HS2 has spent £7.4 billion. The review I referred to was done by the current chairman of HS2; it may be that there is a separate, second external review. I welcome the new Prime Minister’s reported focus on infrastructure. Infrastructure is critically important to our country and very complex, and sometimes it represents a large and slow-moving target for criticism. It is essential that we get infrastructure right and that it is fit for purpose.

My Lords, does the Minister agree that the disillusionment of most of the public with politicians is only bolstered by this nonsense of putting up billions of pounds for projects when some of their families have to sell their homes for care? Can she please suggest that when people make these cost proposals, they stick to them or lose their job?

The noble Lord makes a very important point—many of our infrastructure projects have suffered from this in recent years, under not just this Government but previous Governments. Recently, the Infrastructure and Projects Authority did a report on lessons from transport for the sponsorship of major projects. When we try to cost and schedule projects that may take 15 years to build, we have to schedule into them some sort of flexibility to ensure that people do not misunderstand exactly how much they are going to cost.

My Lords, given that the previous chairman of HS2 said in his evidence to the Economic Affairs Committee inquiry that no one knew what the costs of HS2 would be, and that his successor has now said that there will be a considerable increase in the cost, can my noble friend guarantee that, should the section from London to Birmingham overrun its costs, the proposals for the north of England will remain ring-fenced and that the additional routes in the north will not be cancelled because of the overrun on stage 1?

As I have already tried to explain, the costs are still under review and being finalised. I am certainly not able to give the assurance that my noble friend is after as to the routes in the north because complex rail developments such as these are interrelated and the true benefits—the true value for money for the taxpayer—is achieved only when they are built as one system.

My Lords, is there not a problem with the way we keep the cost of these projects under review? We had the same difficulty with Crossrail and, as I understand it, people have been raising questions from within the HS2 project since as far back as 2015, complaining about how it has been managed financially. Many of them have left and been required to sign nondisclosure agreements. Why are they being required to sign those agreements, and why can we not find a way for people who raise legitimate complaints about the direction in which projects are going to have their say, so that we can hear it?

The noble Lord is correct that a number of people who have left have signed settlements with HS2; these are settlements in the normal course of business, on people taking voluntary redundancy or otherwise. However, we do listen to people when they have concerns, financial or otherwise, about any of our infrastructure projects. I go back to what I said at the outset: that is why we need to give the new chairman of HS2 the time and space to do the work we have asked him to do. We will report later on this year.