One piece of political spin about HS2’s spiralling costs is nonsense: the idea that ministers have a right to be shocked by the numbers. HS2 Ltd, the body building the railway and new stations, may be “arm’s length” for shorthand purposes, but it is not some faraway entity operating beyond government scrutiny. Rather, it is tightly meshed to the Department for Transport (DfT), which is involved in all big planning and spending decisions.
So when the chancellor, Jeremy Hunt, says costs are “getting totally out of control” – a reasonable analysis as the bill heads towards a grotesque £100bn – he should explain why the government is seemingly surprised. Whitehall insiders talk about HS2’s bosses behaving “like kids with the golden credit card” but that ignores the fact that there is an “open books” relationship with the DfT. The government sees the monthly credit card statements, as it were. And No 10, incidentally, signs off on the megabucks salaries (departing chief executive Mark Thurston got £676,000 last year) on appointment.
Allan Cook, who was chair of HS2 Ltd between 2018 and 2021, characterises the relationship between the DfT and the delivery body as “strong and close”. He adds that in his time “budget and expenditure was approved in all cases by the DfT and, in some cases, by the Treasury too at regular monthly meetings”.
That is as one would expect given the governance setup. The DfT owns HS2 Ltd and has a representative on the board in the person of the experienced Ian King, who was chief executive of BAE Systems for a decade until 2017. King is also lead non-executive director at the DfT.
When King and two other non-executives were appointed to HS2 in 2020, the transport secretary at the time, Grant Shapps, pitched the move as part of closer and stricter involvement by the government. “When we gave HS2 the go-ahead, we made a clear commitment to draw a line under past problems and to move forward with a strong grip of the project and a laser-like focus on cost control and transparency,” he said.
On the transparency front, the DfT’s project representatives (plus officials from the National Audit Office) attend meetings of HS2’s audit and risk assurance committee, says the annual report. Spending above £10m is understood to go through the Cabinet Office for formal approval. Financial communication with the outside world has still been dreadful, but that’s a different type of transparency. In terms of governance structure, HS2 does not lack political oversight.
To see how things can go spectacularly wrong in practice, though, read the report by the Public Accounts Committee from July on the shambles that has been the planning process for Euston, the proposed London site of the HS2 station. The first plan was rejected as unaffordable, the second one arrived as even more expensive (£4.8bn versus a budget of £2.2bn), so work has started on a third with on-the-ground activity “paused” in March for two years.
The committee aimed most of its jabs at the DfT. “Despite being eight years into planning the High Speed 2 station at Euston, the DfT still does not know what it is trying to achieve with the station and what sort of regeneration it will support,” said the opening sentence. And the last conclusion: “The department has not yet learned lessons from managing major rail programmes.”
Euston, remember, is a critical piece of the HS2 jigsaw. If high-speed trains are ever to run north of Birmingham, a new station has to be built because Old Oak Common’s six HS2 platforms are too few to service a fuller fast-speed network. If there is no HS2 at Euston, with 10 or 11 dedicated platforms, there can be no line to Manchester. It is astonishing that the DfT has still to reconcile the competing demands of Transport of London, the Greater London Authority and Camden council.
None of which is to say that HS2’s management hasn’t contributed to the overall mismanagement over the years. The whole project has been biased towards overoptimism on costs – and part of that bias was surely generated from inside. But HS2’s defenders are right that the operation builds what it is told to build and that ministers could see the numbers in as much detail as they wished once work began in earnest in 2020. That was also the year Rishi Sunak became chancellor. He cannot claim to have been kept in the dark about risks.
