Source · Select Committees · Public Accounts Committee
Recommendation 9
9
Accepted
HS2 programme costs have consistently escalated beyond original budget forecasts.
Conclusion
In our previous reports we have regularly raised concerns about escalating costs and cost forecasts for the HS2 programme. For example, in our May 2020 report we commented that “The High Speed Two programme has gone badly off-course and is now estimated to cost up to £88 billion, significantly more than the original budget of £55.7 billion (both figures are 2015 prices)”.20 In our September 2021 report we noted that “The programme’s funding was reset in 2020 and is now expected to cost a total of between £72 billion and £98 billion (2019 prices). The Phase One budget is £44.6 billion including almost £10 billion of contingency (2019 prices).”21
Government Response Summary
The government agrees with the implied concern regarding historical cost escalation for HS2, committing to bearing down on Phase 1 costs, strengthening HS2 Ltd's leadership through recruitment, and reinforcing governance, with updates to be provided in six-monthly reports.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring and autumn 2024 2.2 HS2 Ltd’s leadership and its collective capability are critical to the success of HS2. The department commenced a recruitment exercise to identify new Non-Executive Directors in January 2024. Additionally, HS2 Ltd commenced a recruitment exercise to identify a new Chief Executive Officer in February 2024 and is also recruiting to a number of senior executive roles. 2.3 As noted in the Network North command paper of 4 October 2023, HS2 Ltd and the department are committed to: • bearing down on the costs of Phase 1 and only delivering what is essential; • embedding a singular focus on cost control in HS2 Ltd and its supply chain and being prepared to take difficult decisions on contracts, scope and benefits to hold to budget; • reinforcing the leadership of HS2 Ltd, under Sir Jon Thompson, to change the culture on cost control with challenge from the department, HM Treasury and the Infrastructure and Projects Authority; and • providing strengthened governance and control from the government whilst this reset is developed and delivered, with increased oversight and reduced delegation. 2.4 A plan has been developed by the department, HM Treasury and HS2 Ltd to implement the above commitments. The department will provide an update in its forthcoming six-monthly reports to Parliament. 2.5 HS2 Ltd and the department are working together and with the principal suppliers to ensure focus on cost-effective delivery of the remainder of the civil works. The department will provide an update on that work in forthcoming reports to Parliament, subject to commercially sensitive details.