Question for Short Debate
To ask Her Majesty’s Government what steps they take to provide Parliament with up to date cost and cost/benefit information for major infrastructure projects to which public money has been committed.
My Lords, it gives me great pleasure to introduce this debate concerning the information that Parliament and the public need about major projects. There is a lot of information around. According to the Treasury-owned Infrastructure and Projects Authority, more than £300 billion-worth of projects are on the go in the MoD and the Department for Transport alone. They are projects with government funding, but there are quite a lot of other projects which some argue should be included in this category, such as Hinkley Point. We should then ask: are they good value for money? Do they fulfil the function for which they were planned? Would there be a cheaper and better way of doing it? Are Ministers keeping an eye on their projects to make sure that they do not go badly wrong?
The IPA is supposed to give Ministers this information, but do they take any notice? The IPA has a successful role in project delivery. It does a great work in collecting and analysing data, looking at the structures of management and risks. As many noble Lords know, it publishes a score-card in its annual report—many noble Lords probably have a copy. It uses a traffic-light system: green means that a project is going well; amber denotes some concern; amber/red signifies:
“Successful delivery of the project is in doubt … Urgent action is needed to address these problems”.
“Successful delivery of the project appears to be unachievable”.
There are hundreds of examples. I shall select two successful projects. DCMS’s broadband delivery programme has been green for four years, and the Department for Transport’s management of a search and rescue helicopter contract has been green for five years. Who are the culprits? The MoD earned five reds last year and many amber/reds—I shall not list them. The Department for Transport’s Crossrail programme had five years of green and then it went amber/red. Where is it going to go next? We do not have the latest information, but I expect that it will get rather worse.
What happens to the information that the IPA provides? My worry is that the answer is nothing much. Who challenges Ministers on whether what they want to build is the most suitable solution to a problem? It should be Parliament. One has a fear that many projects become vanity projects. Should the new Astute-class submarines be called the Penny Mordaunt class, or should HS2 be called the Grayling line? We could give all of them names, but it is not a good idea.
I fear that the policy of successive Governments on big projects is to set up a structure which defies scrutiny until so much money has been spent that they argue that it is too expensive to cancel or alter. Then the blame game starts, with those who fear for their future careers trying to jump ship before they are found out. I am afraid that this applies equally to Ministers and officials—who knows what and when?
I shall give two examples. Crossrail 1, a joint TfL/Department for Transport project, was going swimmingly until last summer. It was going to open in the autumn and now it will probably be two years late. We can debate why this has happened. Let us not go into blame game now, but how did the news of the delay and cost overrun not get to the promoters much sooner? We will know eventually, but it is pretty embarrassing for everybody concerned.
HS2 is 10 times worse, not only because its costs are very much higher than that of Crossrail but because the evidence of cost overruns, cover-ups and, I must say, fraud and worse are rampant even before the permanent construction work has started. I will not discuss the House of Lords Economic Affairs Committee report, which is excellent, because Ministers have promised us a debate on it before the Summer Recess. Many people on HS2 believe that the specification was ridiculously high. It started as a vanity project to get to the northern cities faster. It eventually became a project to create extra capacity on the network, but they did not change the spec.
On costs, the House of Commons Library briefing on 20 June noted:
“A comprehensive breakdown of costs for the full Y”—
of the scheme—
“has not been published since 2013”.
That is six years ago. This was confirmed by the IPA giving HS2 an amber/red category for six years running on a project estimated to cost more than £50 billion on the Department for Transport’s figures. The department argues with me and the cost engineer Michael Byng, who has suggested that it is more like £156 billion, but no one has ever challenged his estimate. The Government just say that they do not recognise it. They have not come up with any alternative, even in front of the Select Committee a few years ago.
I fear that there is a concerted effort by officials and successive Ministers to prevent scrutiny of the costs and programme, to refuse to discuss ways to reduce costs and generally to batten down the hatches over a six-year period for what I think is the single most expensive project on the IPA list. My worry, therefore, concerns, first, the project’s scope. There were many estimates. There are rumours that the estimate signed before the Select Committee was inaccurate. The property requirements for both permanent and temporary works have not been properly estimated. On parts of the engineering, the approaches to Euston, alternative proposals for Wendover, track design and, of course, the engineering and cost implications of very high speeds, came up against officials who would not consider any option offering to reduce the cost. There seems to me to be a strong element of putting your head in the sand, hoping it will all go away. Contractors have signed up to design-and-construct contracts but they cannot make the figures work. That is why we are getting delayed at the moment.
In addition, there have been many staff changes. There is a churn of staff which is disastrous in such a project: get rid of people who know too much or who disagree with the policy and we will keep to the original budget over six years. The Permanent Secretary, Philip Rutnam, was promoted to the Home Office when the original cost estimates were challenged, and David Prout, who was responsible within the Department for Transport for HS2, retired to run an Oxford college. HS2 has had at least four chairmen in that period. The chief executive, Alison Munro, felt able to sign the estimates, knowing, I think, full well that the budget was shot to pieces. She left soon after, as did Beth West and Jim Crawford, who resigned last week. Two whistleblowers, Andrew Bruce and Doug Thornton, who are both highly skilled professionals on property issues, were sacked half an hour before they were due to present their findings on property costs to the Department for Transport’s client board. They were sacked because they refused to lie about property cost estimates.
The last matter here is that Simon Kirby, a former chief executive, was found a job at Rolls-Royce—very conveniently—because he was blamed for awarding £2.7 million of unauthorised redundancy policies to HS2 staff, which I have on good authority was actually used to pay off the whistleblowers. This is a very sad situation, coupled with a culture of secrecy. New Civil Engineer wrote a piece last week saying that HS2 has signed a total of 280 nondisclosure agreements,
“with ‘external parties’ between 2012 and March this year, with 40% of those signed in 2018 alone”.
The department found it more difficult to avoid internal scrutiny by the IPA. One of the senior advisers, Paul Mansell, was embedded in HS2 for a year and reported in a confidential report, which I think everyone now has, that,
“the status of the programme is between Amber-Red and Red”.
I will not go through all his conclusions but they basically say that the project will remain fundamentally flawed unless greater transparency and frankness are provided. Mansell’s report was leaked and the IPA confirmed his findings later.
There is a big problem here. I hope that the new “lessons learned” report from the Department for Transport will put some of these things right, but I believe that other government departments need to take note of what has gone really wrong with Crossrail and HS2 and come up with some solutions to make the new projects a better place.
My Lords, I congratulate the noble Lord, Lord Berkeley, on obtaining this debate today. I am grateful for his forensic dissection of the problems of HS2.
How many of us, when we are having work done on our own property or making a major purchase, fail to take steps to ensure that we are getting value for money and that our money is being sensibly spent? If we are doing that with our own money, how much more important is it when we are spending someone else’s—in this case, taxpayers’ money, with all the present demands on it for important and deserving causes?
HS2 is a totally misconceived project. It was supposed to cost £50 billion but will probably cost in excess of £100 billion and maybe more. Just imagine what could be done with that money if sensibly spent. Recently the TaxPayers’ Alliance did a splendid operation, working out just what it could do with it. That amount of money would seriously transform the rest of our communications network.
When I first came to take an interest in HS2, I could not believe what I discovered. The biggest infrastructure project in Europe had been put together in a totally shambolic way that was guaranteed to produce chaos and failure at the cost of misery to thousands of families and businesses whose lives would be disrupted, and of billions of wasted taxpayers’ money. On 31 January 2017 I asked the House of Lords to put a stop to HS2. It could have done so but sadly I did not receive sufficient support. On my side were two former Permanent Secretaries to the Treasury, the noble Lords, Lord Burns and Lord Macpherson, who surely know the true position better than anyone else.
Today I want to highlight and question the unbelievable bunker mentality of those responsible for HS2, both Ministers—I absolve our present Minister, who is absolutely blameless—and civil servants, who display intransigence, blocked ears and total unwillingness to listen to reason and common sense. Ever since April 2015 experienced transport planners and engineers have been seeking meetings with Ministers to explain their grave reservations about HS2. Inexplicably, all such meetings have been rebuffed. On 14 April 2017 Mr Jonathan Tyler, principal of Passenger Transport Networks in York, wrote to Andrea Leadsom, then Secretary of State for the Environment, Food and Rural Affairs, setting out all the attempts that had been made to meet Ministers to discuss HS2. I do not have time to give all the details but they include letters to everyone from the Prime Minister downwards.
I quote from the letter:
“On 31 October 2016 a group of 54 people with extensive experience in transport planning, regional economics and railway management wrote to Mr Grayling requesting a meeting to express their concerns … On 2 December 2016 a civil servant in the High Speed Rail Group of the DfT replied saying, ‘I am sorry to have to tell you that the Secretary of State is not available to meet with you to discuss these issues’ … On 8 February 2017 the group wrote to the Cabinet Secretary, the Permanent Secretary of HM Treasury, the head of the Government Economic Service, the Comptroller of the NAO, the Chair of the Public Accounts Committee of the House of Commons and the Chair of the Treasury Select Committee, expressing our concern that the process of the Bill authorising the construction of HS2 had not allowed a number of significant issues that we and others had raised to be properly addressed. We summarised these issues, asked for them to be investigated and offered a meeting … In early February 2017 the diary manager of Andrew Jones, Parliamentary Under Secretary of State at the DfT, wrote to Jonathan Tyler saying that his letter to the Secretary of State had been passed to Mr Jones, who, because of the pressures on his time, would be unable to manage a meeting”.
This attitude is both rude and, more importantly, totally unbusinesslike. Not to avail yourself of second opinions from such eminently qualified people on such a massive project is unforgiveable. Meanwhile, HS2 heads for the buffers, with costs and building timescale totally out of control and the Department for Transport sending out what can only be called fairy-tale press releases and Answers to Written Questions.
The good news is that there is light at the end of the tunnel. Amid mounting demands from the Green Party, and the Brexit Party, to cancel HS2, at least one of the candidates for the Conservative Party leadership has promised a review, which will reveal the true position. Although some expenditure has already been incurred and preparatory work undertaken, a notice to proceed has not yet been signed, and will not be for some time. A timely and speedy review will result in a halt to the project, which will give time for the true position to be established; a thorough investigation to take place; sensible, non-governmental advice to be taken at long last; and, hopefully, lessons learnt about how to properly plan and cost major infrastructure projects.
My Lords, I thank the noble Lord, Lord Berkeley, for initiating this important debate. It pinpoints our national inability to build big projects successfully. They are almost always dogged by controversy, delay and cost overruns. Why has the “can-do” country of the 19th and early 20th centuries become the “Can we? Can’t we?” country of the 21st. We have a system which takes so long that the approach to the project—if not the project itself—is outdated before we start. The Heathrow third runway is an example of this. It has been kicking around for decades and, in that time, approaches to aviation have changed and we would not invent the project now. There is a very lengthy, cumbersome planning process, with delays to big projects. I am not arguing for public opinion to be ignored, but it should not be beyond us to streamline the system without sacrificing democracy. Above all, there is a system of tendering which incentivises both project sponsors to encourage funders with an artificially optimistic idea of the project and tenderers to minimise costs. This means minimising problems and failing to allow for a realistic level of difficulties encountered during construction.
We deal with these projects piecemeal and efforts to have a joined-up approach to skills have so far failed because we agonise and dither for so long and because government is structured to take the short-term approach. We do not have an integrated approach nor a long-term programme for government, so we cannot get skills co-ordination on a grand scale. I give the example of Great Western electrification. It has cost double what was anticipated, and some major errors have been made along the way. Yet another emerged this weekend: equipment installed in the Severn tunnel is rusting before it has even been used. We have known for more than a century that the Severn tunnel is very damp.
For the rest of my speech I shall concentrate on HS2. I take a rather different view from that of the noble Lord. I call myself a critical friend. I am 100% behind the purpose of the project. I support linking the Midlands and the north and eventually Scotland using a new line created according to the highest standards. The problem is that HS2 has not been good at PR, to say the least. There has been a lot of opposition to the project, some of it local, for obvious reasons, and some of it for entirely misguided reasons. HS2 has entirely failed to inspire us and to answer those criticisms. A country that still reveres Brunel does not feel the same about HS2. Important decisions on the progress of HS2 have coincided with the macho posturings of the two men vying to be leader of the Conservative Party. It has become a kind of virility test to denounce the project.
Conveniently, that fits with the financial hole they are rapidly digging for themselves. All those tax cuts have to be paid for, and HS2 has a very big price tag. It would normally be unthinkable to cancel a project so late in the day, a project that is so well advanced with so much money already spent, but there is nothing normal about the times we live in. There is a very urgent need for HS2 to get its act together and bring its costs under control. The north is already suffering from a lack of trust in politicians. If the Government cancel HS2, they risk a massive backlash, and if they take fright at the cost of phase 1 and cancel the rest of it, all they will have done is to change Birmingham into a outer suburb of London, and the north will not forgive them for that.
If the Government cancel HS2, we will be an international laughing stock, but there are serious criticisms that must be addressed. The Economic Affairs Committee report published in May lists those serious concerns and the solutions to some of them. Speed costs money. The report questions the value for money of building to the highest speeds in the world, especially when a large part of the route will be in tunnels where it is not possible to do very high speeds. It points to the flaws in the cost-benefit analysis, which artificially relies on aggregating up very small time savings per journey. One must question the value of saving five minute on a journey of several hours. The committee also pointed to the elderly surveys on which the cost-benefit analysis relies. They must be updated. Finally, it also questioned the obsession with Euston. Old Oak Common would be an excellent terminus. It is a real regeneration project and is very well placed in a network of rail lines. That is where the terminus should be.
My Lords, I have not made any secret of my support for this great project. For me as a former railwayman and as a resident of the city of Birmingham, it is not just an ethereal paper concept; it is a great contribution to the regional and, eventually, the national economy. In and around Birmingham cranes can be seen all over the place. Values are rising and hundreds if not thousands of jobs have been created. It is not just in the city of Birmingham, of course; between Birmingham and London there are 250 sites where work has already commenced. Almost 10,000 jobs have been created and 2,000 businesses are already benefiting from this project before it has even properly commenced. Incidentally, 98% of those businesses are British.
I respectfully remind those who oppose this project, particularly the noble Lord, Lord Framlingham, that it is not just ex-railwaymen like me who are in favour; virtually the whole of British industry happens to be in favour of HS2 in its entirety. In June 2019 business leaders including the CBI, the Institute of Directors, the Federation of Small Businesses, the British Chambers of Commerce and London First published a joint open letter calling on the next Prime Minister to commit to delivering HS2 in full.
My noble friend Lord Berkeley and I have been friends for approaching 40 years now, and I hope we remain so after this debate. We first met when I was an officer —I think I was the chairman—of the All-Party Parliamentary Group on the Channel Tunnel. In a different capacity, he was an accurate and hard-working paid advocate of that concept. I remind him respectfully that, when completed, the Channel Tunnel cost £4.65 billion, around £12 billion in today’s funds, and was 80% over budget at the time. Although I have listened to him on many occasions, I do not think he pointed out at the time that that great project could and should have been cancelled because it was likely to be over budget.
Which great project?
I am referring to the Channel Tunnel.
I never said it should be cancelled.
No, I just said that my noble friend did not say it should be cancelled, despite the massive cost overrun—about which I do not remember him complaining at the time, although I might be wrong. Because of the nature of the way that we do business in this country, most of these projects overrun.
The noble Baroness, Lady Randerson, touched on that point during her refreshing and accurate contribution. The fact is that these projects overrun, not just in this country. We have a habit of flogging ourselves and thinking that only we can get things wrong but these great infrastructure projects overrun all over the world. Fly to Berlin and try to land at Brandenburg Airport; building commenced in 2006 and the latest opening date is 2020, although even that is not particularly certain, and it is eight times over budget, yet we are born and brought up on the myth of German efficiency. I do not know whether the German equivalent of the noble Lord, Lord Framlingham, is wandering around Berlin shaking his head sadly at the overrun of that project, although I am sure that there are similar gloomy outlooks.
I am not surprised at the noble Lord being a member of a committee set up by the Taxpayers’ Alliance to look into this project, but I am a bit surprised at my noble friend. I have to say to him that I have never been a fan of the Taxpayers’ Alliance. Right-wing self-appointed guardians of the public purse do not normally attract members of the Labour Party so I am a bit concerned and surprised that my noble friend should have agreed, particularly as the organisation produced a brochure about a better way to spend the billions. The picture on the front is of a motorway junction, so there is a bit of a clue to where the Taxpayers’ Alliance would like money to be spent.
I do not think that the doom and gloom that we are seeing about this project is sustainable long-term. In my view it is a great project that should continue and be implemented and opened as quickly as possible. One thing that I never hear from its critics is any alternative, although I hear ethereal stuff about spending the money on “something else”. Let us look at the west coast main line, the area of railway that will get most relief from the completion of HS2. I picked a random hour of arrivals and departures at Euston station. Excluding the Underground, there were 42 trains in and out of Euston station between 10 and 11 am this morning. Three of them went to Birmingham, one through to Scotland, one direct to Glasgow and three to Manchester.
Where will these trains go? These days, it is impossible to modernise a railway system and run trains at the same time. It did not used to be. In my younger days—I confess that I remember the first electrification of the west coast main line—much of the work was done between trains, although there were lots of alternative routes. The Manchester trains went over to Great Central. The brains that run this country decided to close that line, so the trains went on the Midland main line, now closed between Matlock and further north. There are no alternative routes. The Liverpool trains went on the Great Western from Paddington to Birkenhead. That does not exist any more; indeed, part of it is a tramway through my former constituency.
There is no alternative to HS2, and I hope that the gloom mongers, sincere though some of them may be, will have their arguments refuted and that this great project gets the go-ahead.
My Lords, I congratulate the noble Lord, Lord Berkeley, on securing this debate. I must say that I have learned more from him in debates on transport in the House of Lords than I could possibly have imagined before joining. I agree with his analysis to a certain extent. I very much agree with the general approach to HS2 of the noble Lord, Lord Snape. Within the limited time I have available, I hope to return to what he said.
As a Rail Minister, I looked at HS1 in great detail, and I tell the noble Lord, Lord Berkeley, that it was very difficult constantly to keep up with fresh problems discovered by the contractors. We had to change the route in some cases, particularly near the Channel Tunnel, to accommodate construction and, as far as possible, avoid excessive noise to some of the houses on the route. Changes are almost inevitable, and he is absolutely right to suggest that there should be regular updates by the Department for Transport as projects proceed.
I was deputy chairman of the HS2 Select Committee considering the route as far as Birmingham. We regularly asked for and received information about the cost of changing the route, both to avoid noise and inconvenience and to make the train route as fast and comfortable as possible. I think HS2 will be a tremendous advantage to those travelling north. Birmingham is already assigned as the first major stop, but if there is to be further development of routes across the Pennines, the extension of HS2 will only help that. Given the advance in identifying problems of pollution coming from certain motor vehicles, high-speed trains will do a great deal to provide clean and fast services.
I am bound to point out to your Lordships that, according to the newspapers, Boris is against HS2 and Jeremy Hunt is in favour. My colleagues will correct me afterwards on whether that is true, but it shows that there is still a great deal of debate.
Returning to the purpose of the debate, we owe the noble Lord, Lord Berkeley, thanks. It is very important that the department regularly monitors the costs of any major transport project so that Ministers can decide where to make adjustments or amendments to the project—or indeed extend it. That has been a gap in the past, certainly in my experience. A regular flow of information about the actual problems that inevitably occur when you are building a railway line enables Ministers to make decisions to save money or change the route.
I therefore very much welcome the prospect of a high-speed rail link to the north, I am absolutely certain that it will come, and the fact that Jeremy Hunt came out this morning publicly to support it, which I am delighted about, gives me a great deal of confidence. I congratulate the noble Lord, Lord Berkeley, on securing the debate, which I have enjoyed and learned a great deal from.
My Lords, I too thank my noble friend Lord Berkeley for creating this debate. This is a subject on which I have some form. Between 1988 and 2000—some 12 years—I was managing director and chairman of London Underground, and over that time I sponsored many projects, which probably all added up to about £6 billion-worth of expenditure. In London Underground, all decisions were subject to cost-benefit analysis. This took account of time for the customers, the environmental impact, the ambience of the railway, the money—both revenue and cost—and safety. The whole process worked well for us, and we refined it over time. In projects up to, say, £200 million, we tended to be able to deliver on time and within, say, 10% of the cost. It works well with incremental improvements—improving a station, buying a new fleet, and so on. However, big projects are different, and my big project was the Jubilee line extension. The noble Lord, Lord Freeman, approved it at £2.1 billion but it turned out to be £3.5 billion: some 70% over budget and 21 months late—thank God the benefits were massively greater in reality than in the original projection.
Why are big projects a problem? First, they have not been done before; when we built the Jubilee line extension it was 20 years since we had last done an underground railway line. The projects are so big that you have to have multiple contractors. That in itself is a tremendous overhead, because whatever you say in your contract, you have to integrate them and make sure that they work together. Big projects happen over a long time, and things change over time. One of the things that changes is that you discover problems in the environment you are working in, or perhaps the techniques are not there. The other thing about big projects is that their real value tends to be beyond the normal parameters, particularly as regards regeneration. Therefore anybody who tells you that they delivered a major project on time and on budget has cheated.
How can we do better and should Parliament have a role? Two things have happened since I was in that role. First, the Infrastructure and Projects Authority has been formed and produces its annual report; I believe the latest one was on 4 July last year. The second is that the DfT has produced an excellent report, developed with the Infrastructure and Projects Authority, called Lessons from Transport for the Sponsorship of Major Projects. This was developed by Bernadette Kelly, Permanent Secretary at the DfT, and Matthew Vickerstaff at the IPA.
Here I will pause to ask: what you are looking to do with the project? You are trying to get value for money, which means that you are trying to create a total contribution to the general good across the board that is better when compared with total cost. I propose a solution, which seems to have emerged in a couple of speeches, which is that departments, in this case particularly the DfT, should produce an annual response to the annual report of the Infrastructure and Projects Authority. This should cover: the total projected costs that have changed since its last report; the expected date of delivery; a review of the benefits, which will change over time as the world changes; and any changes in scope and any new initiatives—and this should be laid before Parliament.
Having worked in this environment, that will change how people manage and will create a situation where there could be an opportunity for structured scrutiny by, say, an appropriate Select Committee or debates in the House. It would create an internal discipline which would force rigour and better communications within the project. I put my solution to the Minister. I hope she will take it back to the department and perhaps tell us whether there is any warmth for it.
My Lords, I am delighted to respond to this important debate, and I echo other noble Lords in congratulating the noble Lord, Lord Berkeley, on having secured it. At the risk of stating the obvious, there are extreme views on HS2, and we have heard them today without falling out, which is a major concession.
With noble Lords’ permission, I shall set out the Government’s position on major infrastructure projects and the vital matter of transparency, which all noble Lords raised today, before turning to some of the specific points raised. This Government have demonstrated their clear commitment to transforming the nation’s infrastructure. More than 4,900 public and private infrastructure projects have been completed since 2010. We are increasing public investment to levels not consistently sustained in 40 years, including through our £37 billion national productivity investment fund. We established the National Infrastructure Commission in 2015 to provide impartial, expert advice to government. Alongside the spending review, we will publish a major national infrastructure strategy, responding in full to the commission’s landmark assessment of the UK’s infrastructure needs.
It is essential that this significant investment is properly monitored, and the Government take this extremely seriously. Transparency is crucial for accountability, but it is also essential so that the Government can learn lessons when things go wrong and seek to improve in the future. This is a key reason why the Infrastructure and Projects Authority was established in 2016. The IPA oversees the Government Major Projects Portfolio. This includes the Government’s most complex and strategically significant projects and programmes including, but not limited to, infra- structure. As of the 2018 annual report, the GMPP included 31 infrastructure projects with a total whole-life cost of £196 billion.
Large projects in government must undergo independent assurance and pass through a staged process of assurance and approval points before they are given the green light. Those projects on the GMPP also have to provide quarterly data returns, which include up-to-date information on project costs, benefits and timescales and assessments of delivery confidence. This intelligence informs the IPA’s work with government departments to support improvements in the delivery of major projects.
The Government have published clear transparency guidance which sets out how major project data is used and published. The National Audit Office has access to the full body of data, and its analysis supports the work of parliamentary committees in holding government to account. Additionally, committees often seek input from the IPA directly. The National Audit Office also holds the IPA itself to account and has consistently been positive about its efforts while acknowledging the need for continuous improvement and identifying areas for further action. A snapshot of GMPP data is published each year in an annual report. Of course, this is the tip of the iceberg, and the IPA supports departments in properly undertaking projects of all shapes and sizes. As noble Lords will know, Parliament is also able to probe spending through its routine scrutiny of departmental annual report and accounts documents and supply and supplementary estimates. Also, the IPA publishes an annual National Infrastructure and Construction Pipeline, which looks ahead to future public and private investment, and a summary of data on all PFI and PF2 projects. Over and above this, departments also publish relevant information directly, including progress updates, business cases and cost-benefit analysis information.
It is worth noting that the UK Government’s approach to managing, monitoring and providing transparency on major projects, and tracking costs and benefits, is regarded as world leading. Aspects of the Treasury Green Book have been used as best practice and adapted by the G20 and the New Zealand Treasury. We have been invited to share our experience with countries across the globe, from Indonesia and Hong Kong to Australia and Brazil. However, we are not complacent. The recent experience of a number of high-profile projects demonstrates clearly that we still have a great deal of work to do. As in the rest of the world, major infrastructure projects in the UK are prone to escalating costs and increasing timescales. Commercial, technical, political and behavioural factors all play a part in these challenges. The Government are committed to identifying and addressing the causes of these issues. For example, in recent years we have strengthened the way in which the benefits of projects are captured and tracked, to help avoid unrealistic claims—that might get a smile—or skewed decision-making. Having previously called for action in this area, the National Audit Office commended the IPA in a 2018 report for driving improvement in the reporting of monetised benefits for major projects, and for ensuring a clear,
“distinction between cash savings … and wider economic benefits”.
More recently, in response to challenges in the rail sector, the IPA and the Department for Transport have carried out and published an in-depth study to identify key lessons from transport for the sponsorship of major projects. These lessons are now being implemented in the DfT and elsewhere, with oversight from some of the most senior officials in government. The noble Baroness, Lady Randerson, questioned the time taken to get infrastructure projects through. There is clearly some optimism and short-termism, as she raised. Improving infrastructure delivery will be the focus of our forthcoming national infrastructure strategy, and the IPA is focused on optimism bias as a key risk to project deliverability, cost and timescales. This was a key theme in the recent IPA-DfT lessons-learnt exercise.
The spending review will see a renewed focus on delivery because too often in the past Governments have signed off too optimistic or unrealistic plans for complex major projects. The Chief Secretary to the Treasury is carrying out a zero-based review of major projects. As in the past three spending reviews, we will be running a zero-based review of capital spending to maximise the value of our investments. The Treasury will appraise the bids, with the guidance of a panel of independent economists and delivery experts, according to several criteria including strategic case and economic value. We are finalising membership of the expert panel and will communicate this in due course. I am able to tell noble Lords that HS2 is within the scope of the zero-based review.
The noble Lord, Lord Berkeley, asked why HS2 has been amber-red for the past six years. I apologise if I am stating the obvious: HS2 is one of the Government’s largest and most complex projects. The delivery confidence reflects the overall scale and complexity of the programme. A red or amber-red does not necessarily mean that the project will not be successfully delivered but that sufficient risks need to be investigated. By taking the right steps following the IPA reviews and managing challenge effectively, DCAs are often improved; they do change.
My noble friend Lord Framlingham is consistent and persistent in his position on HS2, and all credit to him for those characteristics. Parliament has approved phase 1 of HS2 following scrutiny by both Houses. HS2 still has strong support in this House and, as I understand it, in the Midlands and the north. I believe the noble Lord, Lord Snape, expressed his support for the project.
The noble Lord, Lord Berkeley, said that HS2 costs are out of control. I am advised that HS2 remains within the limits of the 2015 spending review.
I come to the point made by my noble friend Lord Framlingham about HS2 being scrapped. This debate is not about whether HS2 should be cancelled but about how all major infrastructure projects are monitored. HS2 will become the backbone of our national rail network. It will improve capacity, connectivity and growth, carrying over 300,000 people a day. It remains government policy, was a manifesto commitment and retains cross-party support.
I thank the noble Baroness, Lady Randerson, for her support for the project. It is good to know that local authorities, elected mayors and regional businesses in the Midlands and the north support HS2 and recognise that Northern Powerhouse Rail is dependent on HS2 infrastructure being delivered.
I am going to run out of time, which is common these days in such important debates. If I have not answered anyone’s question, we will review Hansard and I will write to them. I finish my contribution by recalling the words, “a country with a can-do culture rather than a can’t-do”. I hope that, with all the good will and all the commitment there is to make our country a great country to live in wherever you are, these projects will be successful. We will work very hard to make sure that they are.