Ministers have taken decisive action to manage the ongoing challenges of the HS2 project.
- Transport Secretary has announced greater oversight by ministers to tackle HS2’s ‘dire’ delivery.
- Costs for HS2 have drastically increased, prompting government intervention.
- Regular meetings are planned with key ministers to ensure accountability and cost-effectiveness.
- An independent review will assess major transport project delivery to improve future outcomes.
Ministers are stepping up their oversight of the HS2 project in an effort to address its ‘dire’ delivery issues, as announced by the Transport Secretary. The government has identified significant challenges, with costs spiralling uncontrollably, triggering urgent measures to improve project management and fiscal accountability.
Transport Secretary Louis Haigh emphasised the drastic rise in the costs of the HS2 rail project, which she described as having ‘spiralled out of control.’ Ministerial meetings involving key figures such as the Rail Minister and the Chief Secretary to the Treasury are part of a strategic approach to inject accountability and enhance cost-effectiveness in delivering the railway project.
In January, Jon Thompson, Chair of HS2 Ltd, highlighted concerns over the estimated cost of delivering the London-Birmingham section, which might swell to £67 billion in 2023/24 prices—considerably up from the original £37.5 billion estimate in 2009 prices. In light of this, Haigh has initiated an independent review focusing on major transport projects, drawing largely from the HS2 experience to ascertain better forecasting and financial management practices.
The independent assessment, known as the Major Transport Projects Governance and Assurance Review, will be spearheaded by infrastructure consultant James Stewart. It is expected to provide recommendations to the government in winter, exploring how to make cost estimations and reporting more efficient—not only for HS2 but also for similar future projects.
Despite the initial plans, the Department for Transport has confirmed it will not revisit the decision to cancel the HS2 leg from Birmingham to Manchester. Meanwhile, efforts continue to renegotiate terms with principal contractors, a move previously disclosed by Thompson to the Public Accounts Committee. He disclosed the possibility of offering contractors improved profit margins in exchange for lower total costs.
During a recent select committee hearing, Thompson underscored the difficulty of reducing costs amid ongoing contract negotiations, citing limitations despite active attempts by HS2 Ltd. Emphasising the importance of reducing risks in the wake of Carillion’s collapse in 2018, an HS2 Ltd spokesperson highlighted ongoing collaborations with the supply chain to optimise contractual incentives and deliver increased value for money.
The new CEO of HS2 Ltd, Mark Wild, who is poised to assume his role, is tasked by Haigh with assessing the project’s current financial position and formulating an action plan to control costs effectively. This decisive step also includes a directive for immediate measures to rein in expenses.
HS2 Ltd has reiterated its commitment to collaborate closely with the government to refine project delivery and anticipates the strategic insights from Stewart’s upcoming review. The company is already implementing changes where possible to stabilise costs and improve efficiencies under new leadership.
The government’s strategic intervention aims to stabilise HS2’s execution and prevent recurrence of past mishaps.
