Independent review
Completed
Oakervee Review
Index summary
Independent review advising government on whether and how to proceed with the HS2 high-speed rail project, assessing cost, schedule, governance, and alternative options for Phases 1 and 2. The report made 63 numbered conclusions rather than formal recommendations.
Original evidence
Government Response
The Government responded on publication day via the Prime Minister's oral statement to the House of Commons on 11 February 2020, in which Boris Johnson confirmed HS2 would proceed, stating 'the Cabinet has given high speed rail the green signal'. The statement accepted the review's conclusion to continue with HS2 and announced governance changes including a dedicated HS2 Minister and a ministerial oversight group. No separate command-paper response to the 63 recommendations was published. (HS2 Phase 2 was subsequently cancelled in October 2023.)
Recommendations
Recommendation 1
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Conclusion 1: Notwithstanding changes that have occurred since the 2009 Network Rail study, its principal conclusion – and original rationale for HS2 – still holds: there is a need for greater capacity (both more trains on tracks and more seats on trains) and reliability on the GB rail network. The primary need is for capacity; speed although an important factor in economic benefits should not be in and of itself the primary driver of decision making. HS2 should be thought about as a new railway that enables fast inter-city services to be on segregated lines to free up capacity for commuter and freight services – and should be designed, built and operated with this in mind. It is essential that all future analysis for the business case for HS2 captures the latest evidence and projections for crowding on the conventional network, with the projections accounting
Recommendation 2
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Conclusion 2: Inter-city connectivity is important, but so too is regional and commuter connectivity. HS2 clearly delivers inter-city improvements, but also frees capacity for regional and commuter services to be improved. There is no overarching strategy and analysis to optimise the allocation of released capacity on the basis of the project’s objectives. Given that this is a core rationale for the HS2 scheme, much more work needs to be done jointly between HS2 Ltd, the DfT, Network Rail and the Shadow Operator in an integrated GB rail plan to maximise these benefits and articulate them clearly. HS2 should be planned as part of the National rail network. This includes links to existing railways but also to new investment proposals from Midlands Connect and Transport for the North and Network Rail’s Enhancements Programme. HS2 has the potential to stimulate economic growth
Recommendation 3
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Conclusion 3: Given that supporting regional economic growth and a more balanced UK economy is a core objective of HS2, further work should be done by HS2 Ltd, the DfT and wider government to understand these impacts. It has been hard for this Review to assess the likely size of impacts on regional economic growth that will result from HS2 or other transport improvements.
Recommendation 4
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Conclusion 4: HS2 can be part of transformational economic change, but only if properly integrated with other transport strategies, especially those seeking to improve inter-city and intra-regional transport, and also with National, regional and local growth strategies. Transport investment alone will not ‘rebalance’ the UK economy. Wider environmental considerations
Recommendation 5
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Conclusion 5: The government’s 2050 target has placed a new emphasis on the design, build and operation of the HS2 network. The ability to reduce carbon emissions in the construction of Phase One may be limited so focus should be placed on improving plans for Phase Two in this regard in particular. HS2 Ltd should look to drive innovation in construction and delivery of the project to reduce its forecast greenhouse gas emissions. Over the longer term HS2 should form part of an integrated government strategy to encourage people to shif to greener transport
Recommendation 6
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Conclusion 6: On balance the Review considered that reducing the specifications of HS2 Phase One should be looked at, but only within the limits of the Phase One Act powers. This is due to the significant costs of making changes to these powers, both in terms of time and monetary costs, and the benefits of future-proofing the scheme for future service enhancements.
Recommendation 7
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Conclusion 7: The specification for HS2 is ambitious compared to current international experience. A more prudent assumption of 14tph should be used as a central planning assumption for train service planning, future- proofing for 16tph, and future business cases should be updated accordingly. Localised environmental impacts
Recommendation 8
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Conclusion 8: The Review recognised the impact of HS2 on woodland, landscape, biodiversity and more broadly on built and natural environments. Given the duration of the HS2 project, such impacts, along with any accompanying mitigation and compensatory measures, need to be kept under review.
Recommendation 9
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Conclusion 9: The Review recognised the impact on communities of construction of HS2, and HS2 Ltd should continue to mitigate these. There are opportunities in the design of Phase 2b to avoid, reduce or mitigate negative impacts.
Recommendation 10
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Conclusion 10: The government should recommit to the full Y-shaped network, linking Phase One to Manchester, the East Midlands, Yorkshire, and beyond. It only makes sense to do Phase One if continuing with northern phases to deliver transformational benefits to the North of England and Midlands.
Recommendation 11
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Conclusion 11: Transport for the North and Midlands Connect, together with Network Rail, HS2 Ltd and the DfT, should develop a plan to maximise the benefits of Phase 2b and ensure an optimised delivery model. This could be the first step in an integrated rail plan for the GB rail network. This Review recommends a further study of circa 6 months of Phase 2b scope in the context of Midlands Engine Rail and NPR proposals. The study should consider the appropriate mix of new high speed line and upgrades of conventional network to improve reliability and service frequency, and the sequencing of these to deliver service improvements as soon as possible – before HS2 Ltd’s view of opening Phase 2b as currently designed in 2035-2040. The budget allocated towards Phase 2b, along with other relevant funding allocations, should be used in developing an integrated railway plan alongside an integrated railway investment programme for the Midlands and the
Recommendation 12
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Conclusion 12: Preparation of materials for the Phase 2b Bill as currently designed should be paused and await the outcome of this study. Given experience on Phase One, having smaller Bills/phases may be beter to allow easier scrutiny of proposals in Parliament and faster construction.
Recommendation 13
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Conclusion 13: The Review recommends removing the Handsacre connection from HS2. At the same time, Network Rail and the DfT should maintain or improve services on the WCML to Stoke-on-Trent, Staford and Macclesfield. The Review considers that the Handsacre connection would only be needed if it was decided not to proceed with Phase 2a to Crewe.
Recommendation 14
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Conclusion 14: The DfT should consider making passive provision for a future HS2 station near to Calvert. There could be merit in developing a HS2 station near Calvert if local plans support a significant residential and commercial development in this region, and if there is passenger 7.
Recommendation 15
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Conclusion 15: Phase One: The Review has examined HS2 Ltd cost estimates. There is considerable risk that the prices for Phase One will not remain at the levels set out in the Chairman’s Stocktake unless rigorous cost controls are put in place. Cost controls will be key to ensuring that costs remain at or below the levels set out in the Chairman’s Stocktake.
Recommendation 16
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Conclusion 16: Phase Two: There is far less certainty on the costs and schedule for Phase Two. It would be unwise to commit a specific cost number for Phase Two given the choices on Phase 2b route that are still to be made, the design maturity and the level of ground investigations. Accordingly, costs and schedule for Phase Two should continue to be expressed as a range. For Phase Two cost estimates, higher contingency levels are appropriate including in order to avoid the issues that Phase One has faced. As described in section 6 above, preparations of materials for the Phase 2b Bill as currently designed should be paused.
Recommendation 17
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Conclusion 17: While the Review has not been able to develop its own botom-up estimate of costs on the HS2 project, it considers that costs on the HS2 project could be around 15 to 20 per cent higher than those set out in the Chairman’s Stocktake. Critically, this assumes, amongst other things, that Phase 2b proceeds as currently planned – as indicated at conclusion 23 in section 8 below, there are real opportunities to reduce costs on Phase 2b by removing gold-plating including through alignment redesign.
Recommendation 18
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Conclusion 18: Given the revised schedule forecast for Phase One and Phase 2a set out in the Chairman’s Stocktake, the government should consider merging the construction of Phase 2a with that of Phase One.
Recommendation 19
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Conclusion 19: HS2 Ltd and the DfT need to deploy benchmarking more consistently and more uniformly. The DfT, with the support of the IPA, should build on the useful multi-project benchmark which the DfT has developed. Any benchmarking should be UK-specific where relevant, but look to include and learn from international examples as well. As part of this benchmarking work, there is a need to monitor prices on the market to check that cost estimates align with current market prices.
Recommendation 20
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Conclusion 20: HS2 Ltd and Network Rail to engage with each other to ensure that cost estimating methodologies are used in a consistent fashion including on an ongoing basis for future projects. There is an opportunity to learn from each other.
Recommendation 21
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Conclusion 21: Given the cost position outlined in this section, HS2 as currently scoped is not afordable within its present funding envelope which was set in 2013 and revised in 2015. As previously indicated at conclusion 10 in section 6 above, the Review considers that the government should commit to the full Y-shaped network. If the government commits to the full Y-shaped network, it will need to commit significant additional funding to make the scheme afordable including providing a realistic funding envelope for Phase Two. Before issuing NtP, a revised funding envelope should be set for Phase One – the funding envelope should have appropriate levels of contingency, to be held by the DfT/HM Treasury, and should be realistic.
Recommendation 22
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Conclusion 22: There would be serious consequences for the supply chain, the fragile UK construction industry and confidence in UK infrastructure planning if HS2 were cancelled at this late stage. Cancellation of HS2 could also hinder atempts to create an economic
Recommendation 23
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Conclusion 23: On balance the Review considered that reducing the specifications of HS2 Phase One should continue to be looked at, but only within the limits of the Phase One Act powers. This is due to the significant costs of making changes to these powers both in terms of time and monetary costs, and the benefits of future-proofing the scheme for future service enhancements. The next stage of design development for Phases One and 2a should look at efficient and economic design standards, and this should form part of the work to finalise detailed designs and prices. HS2 Ltd should thoroughly examine what gold-plating of standards can be removed on Phase 2b to reduce costs, including alignment redesign if considered appropriate.
Recommendation 24
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Conclusion 24: There needs to be a full review of the milestones within the Phase One Main Works Civils contracts with a view to keeping costs down Procurement and contracting approach
Recommendation 25
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Conclusion 25: ahead of issuing NtP for Phase One, the government should ensure that HS2 Ltd achieves a satisfactory position with each of the Main Works Civils contractors in order to obtain acceptable Stage 2 prices and a reasonable level of value engineering. If HS2 Ltd cannot achieve a satisfactory position with the Main Works Civils contractors, then HS2 Ltd, subject to further discussions with the DfT and HM Treasury, may have to consider re-procuring some or all of these Future HS2 procurements
Recommendation 26
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Conclusion 26: Lessons from the Phase One Main Works Civils contracts, and indeed from Crossrail and other major transport projects, need to be learnt and applied by HS2 Ltd. Revised procurement and contracting models should be considered, especially for any future HS2 construction contracts including on Phase 2a. In any future procurements, HS2 Ltd needs to consider how it can ensure: (i) an optimised approach to risk allocation is used; (ii) there is robust management of interfaces on the project; and (iii) efficient designs are developed. Proposed next steps on Phase 2a
Recommendation 27
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Conclusion 27: Within the constraints of the Phase 2a Bill, HS2 Ltd and the DfT should investigate the potential to optimise the design and reduce costs on Phase 2a. 9. HS2 stations
Recommendation 28
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Conclusion 28: Work needs to continue to ensure that commercial opportunities are maximised at HS2 Phase One stations.
Recommendation 29
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Conclusion 29: HS2 Ltd and the DfT should continue, where feasible and appropriate, to engage with the private sector, in association with local government, to develop HS2 stations. There may be opportunities for local authorities or combined authorities, in partnership with the private sector, to take on HS2 Ltd’s role in funding and developing stations. If the current arrangements for station development are lef in place, there is a significant risk that economic value from HS2 station developments will not be maximised. A bespoke, specific commercial model may need to be developed to deliver specific elements in and around stations.
Recommendation 30
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Conclusion 30: There needs to further consideration around whether and how value created in land close to HS2 stations could be captured.
Recommendation 31
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Conclusion 31: Governance arrangements for the development of the HS2 stations need to be streamlined with HS2 stations closely integrated with the existing transport network and the local area.
Recommendation 32
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Conclusion 32: Until the issues set out in conclusions 28 to 31 above are sufficiently progressed, procurements for the development of HS2 stations should be paused. Euston station: costs, options and governance
Recommendation 33
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Conclusion 33: The existing design for the HS2 station at Euston is not satisfactory. For the future Euston station, there should be a study led by the SRO, looking into the efficiency of the future station as a whole including considering options to simplify the HS2 approach to Euston station.
Recommendation 34
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Conclusion 34: There needs to be a single plan for the overall Euston project. In order to help deliver this single Euston plan, one organisation should bring together all the stakeholders and be responsible for the overall development and governance of the Euston project. Given the complexity of the Euston project, this organisation should not be HS2 10. Capability, governance and oversight
Recommendation 35
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Conclusion 35: Milestones to be set against which HS2 Ltd’s management should be held to account in respect of their period in Office. HS2 Ltd’s capability
Recommendation 36
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Conclusion 36: While HS2 Ltd’s board and corporate governance appear to be nearing substantial readiness for the next stage of the HS2 project, additional non-executive directors should be appointed. However, the board and the executive must not be complacent and will need to consider what further steps should be taken to improve the Company’s performance.
Recommendation 37
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Conclusion 37: HS2 Ltd’s governance arrangements need to evolve and strengthen to reflect the project’s complexity and scale as the project moves through its various phases in the coming decades. Company
Recommendation 38
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Conclusion 38: Systems integration in HS2 Ltd needs to be strengthened now and maintained throughout the life of the project and beyond into asset management. It also needs to be ensured there is a single point of accountability for systems integration. This is a vital lesson from Crossrail. Clear accountability for systems integration, along with an authority overseeing integration, will be key to ensuring HS2 services commence in a timely and smooth fashion.
Recommendation 39
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Conclusion 39: HS2 Ltd should work closely with the Shadow Operator and Network Rail to ensure its decisions consider and reflect the operational perspectives of both organisations. Cost estimation, management and control
Recommendation 40
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Conclusion 40: Going forward, HS2 Ltd needs to demonstrate improvements, to the satisfaction of HS2 Ltd’s board, the DfT and HM Treasury, in cost estimation, management and control. Commercial strategy, design management & construction management
Recommendation 41
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Conclusion 41: Going forward, HS2 Ltd needs to demonstrate improvements in capability, to the satisfaction of both HS2 Ltd’s board and the DfT, in a number of key areas including commercial strategy, design management and construction management. Stakeholder engagement
Recommendation 42
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Conclusion 42: Going forward, HS2 Ltd needs to demonstrate improvements, to the satisfaction of both HS2 Ltd’s board and the DfT in stakeholder engagement.
Recommendation 43
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Conclusion 43: The government should appoint non-executive directors to the HS2 Ltd board. The government needs to ensure it has clear oversight into what is happening on the project and proper control over costs.
Recommendation 44
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Conclusion 44: The DfT should draw on the expertise of a group of
Recommendation 45
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Conclusion 45: As part of the decision around Notice to Proceed, the DfT should set out its plan for improving how it functions as a sponsor, client, funder and shareholder including how it will improve its internal expertise in a number of key areas.
Recommendation 46
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Conclusion 46: The overall governance of the HS2 project, including the future planning of Phase Two along with the delivery and operation of HS2, should be reframed in light of the recommendations of the Williams Review, including any new body or bodies that are established by government following the Williams Review.
Recommendation 47
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Conclusion 47: On a regular basis, the Secretary of State for Transport should, upon receipt of a report from the HS2 Ltd Chair, advise Parliament on the progress of the HS2 project.
Recommendation 48
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Conclusion 48: The economic case does not currently fully align with the strategic case. Economic rebalancing, one of the primary drivers in the strategic case for HS2, is not currently reflected in the economic Wider economic impacts
Recommendation 49
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Conclusion 49: Further work is needed on understanding the potential impact of HS2 on the number and location of homes and jobs. Work is needed by the DfT and HS2 Ltd for future HS2 business cases to review and quantify the level 3 impacts in the benefit-cost ratio given the prominence of these impacts in the strategic case.
Recommendation 50
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Conclusion 50: Further work is needed on understanding why reducing crowding doesn’t play a greater role in the quantified benefits.
Recommendation 51
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Conclusion 51: There are impacts that are currently not quantified that are important to consider alongside the monetised benefit-cost ratio. This includes the potential transformational benefits that HS2 could unlock through changing land-use as well as the adverse environmental impacts from construction and the permanent land required for the railway. 2017 economic assessment of the full network
Recommendation 52
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Conclusion 52: The net economic cost to the transport budget, as valued by DfT TAG, of HS2 has increased from £40bn to £62-69bn (present values, 2015 prices).
Recommendation 53
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Conclusion 53: The latest results indicate that the full Y-shaped HS2 network represents ’low-medium’ value for money, using DfT TAG, when capturing the cost estimates in the Chairman’s stocktake and benefits under fixed Economic appraisal of phases of HS2
Recommendation 54
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Conclusion 54: The evidence is clear that the full network is needed to realise the highest value for money economic return on the investment of HS2. Phase One as a standalone scheme does not represent value for money, nor does building Phase Two without building Phase One.
Recommendation 55
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Conclusion 55: If an integrated rail plan and investment programme for the Midlands and the North of England is developed (see conclusion 11 in section 6 above), the economic appraisal of this integrated rail plan and investment programme should be assessed in addition to individual projects and phases of schemes. Uncertainty in the economic appraisal
Recommendation 56
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Conclusion 56: The demand sensitivity analysis suggests that the full HS2 network has a benefit-cost ratio range of 1.0 to 2.1 and represents low high value for money. Extending the appraisal period from 60 to 100 years afer scheme opening has a material impact on improving the value for Economic impact of a reduced frequency
Recommendation 57
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Conclusion 57: The benefit-cost ratio could be improved by removing the Handsacre connection and reducing the proposed frequency of HS2 services from 17 to 16tph.
Recommendation 58
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Conclusion 58: Given the recommendation in section 6, a frequency of 14tph, with passive provision for 16tph, needs to be considered in future business case work. Initial analysis suggests that a move below 16tph would likely have a marginal negative impact on the benefit-cost ratio. However, the train service ofer in this lower-frequency analysis has not been optimised. Further work is needed by the DfT, HS2 Ltd and Network Rail to ascertain the most suitable 14tph HS2 train service specification.
Recommendation 59
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Conclusion 59: Before issuing NtP: (i) an updated business case for Phase One, approved by HMT, should be published; and (ii) the DfT should update and publish a revised business case for the project as a whole. This should include the latest cost and benefits for the project. 12. Alternative
Recommendation 60
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Conclusion 60: Euston station is an important part of realising the benefits of HS2, and the section from Old Oak Common to Euston should not be removed from the scope of the project. However, it is vital to get the Euston project right. Old Oak Common should act as the temporary London terminus for HS2 services until Euston station is complete, so time taken to get Euston right does not delay the start of HS2 services. ‘Start in the north’
Recommendation 61
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Conclusion 61: It is now hard to stop Phase One and start HS2 in the North of England without years of blight given that powers have been taken for Phase One, a significant amount of work has been carried out on Phase One, and given the relative immaturity of northern sections and regional schemes. The quickest way to deliver long-distance inter-city connectivity to the Midlands and the North of England is to continue with Phase One, and to fully commit to subsequent phases. Cancel HS2 in favour of alternative investment on the conventional network
Recommendation 62
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Conclusion 62: There are no-shovel ready alternative investments in the existing network that are available: if HS2 were to be cancelled, many years of planning work would be required to identify, design and develop new proposals. The upgrading of existing lines would also come at a high passenger cost with significant disruption.
Recommendation 63
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Conclusion 63: The Review strongly advises against cancelling the scheme.
No recommendations with this response.