Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Deferred
HS2 Ltd acknowledges suboptimal contract risk management contributed to a £6 billion cost increase.
Conclusion
HS2 Ltd acknowledged that it has not managed these contract risks in an optimal or coherent way.30 In September 2023, HS2 Ltd estimated that the forecast cost of main civil construction work alone had increased by £6 billion (2019 prices) since 2020.31 27 Q 35; Department for Transport, HS2 6-monthly report to Parliament: December 2024, 17 December 2024 28 C&AG’s Report, High Speed Two: A progress update, Session 2019–20, HC 40, 24 January 2020 29 Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020 30 Q 5 31 C&AG’s Report, para 4.6 14
Government Response Summary
The government disagrees with the committee's observation but agrees with its substance, explaining that HS2 Ltd is undergoing a complete programme reset, including commercial renegotiations, and will provide further updates as the commercially sensitive work concludes.
Government Response
Deferred
HM Government
Deferred
3.1 The government disagrees with the Committee’s recommendation. 3.2 The department agrees with the substance of the recommendation but will require more time before it can update the Committee. HS2 Ltd has concluded the first phase of commercial renegotiations, however further work is still needed to conclude this process. The negotiations are highly commercially sensitive, and it may not be possible to set out details including of levels of savings while they are still ongoing. 3.3 Following his appointment, the new CEO of HS2 Ltd committed to a complete programme reset over the coming year, which includes developing revised ranges for both cost and schedule, as well as a new baseline which will be contracted to HS2 Ltd’s supply chain. 3.4 To ensure a holistic overhaul of the programme, work to renegotiate contracts has been subsumed into the programme reset, and until this work concludes HS2 Ltd will be applying pressure through robust contract management of their existing contracts using all available levers. Further updates will be provided through the department’s future six-monthly reports to Parliament on HS2.