Government must learn from HS2 ‘disaster’, PAC chair warns

“The fact that DfT and HS2 Ltd disagree on the estimated total costs for completing the programme is illustrative of their failure to work together effectively and ensure adequate financial oversight of the programme.”

In the report, Clifton-Brown also raised concerns over the work on Euston station to accommodate the mainline underground and HS2 railway, describing the scheme as “extremely complex and uncertain”.

“Government expects the private sector to fund approximately £6 billion towards the work on Euston station, as well as the large regeneration of this area of London,” the report said.

“However, given that there is currently no clear plan for this, we are unconvinced that the private sector will provide this level of funding.”

The PAC report added that failing to define the Euston station scheme as a ‘mega’ project will leave it under an “ineffective approach to governance and decision-making”.

To be considered as a ‘mega’ project by the Office for Value for Money and the Treasury, the total cost must exceed £10 billion. 

In June, the Stewart Review of the HS2 project highlighted a lack of ministerial oversight and scrutiny, as well as inadequate control of the project by HS2 Ltd. 

Following the review, transport secretary Heidi Alexander announced that the project will be delayed by at least two years, with trains running no earlier than 2033.

Former Transport for London commissioner Mike Brown has been appointed as HS2 Ltd chair and will work alongside chief executive Mark Wild to deliver a programme reset, including reviewing the costs and schedule, renegotiating HS2’s large construction contracts and reviewing HS2 Ltd’s skills and structure. 

However, the PAC said it is “sceptical” the programme reset will address HS2’s cycle of cost escalation.

“Given the project underwent a reset five years ago, we remain sceptical that the department and HS2 Ltd will have any more capability to ensure costs are brought under control this time around," the PAC report continued. 

“We all await an agreed budget between DfT and HS2 Ltd as a result of this process.”