Ministers to oversee HS2 and contractors face review as costs allowed to ‘spiral out of control’

Ministers will oversee the HS2 project as the cost of delivering the high-speed train line has been allowed to “spiral out of control”, the transport secretary has said.

Louise Haigh announced on Sunday she has launched an independent review into how costs have been allowed to balloon “without sufficient explanation”.

The transport secretary and her ministers will now have oversight of the project “to ensure greater accountability”, while former Crossrail (now the Elizabeth Line) CEO Mark Wild will take over HS2 Ltd, which runs the project, as chief executive “to get a grip on costs”.

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HS2’s main contractors will also be reviewed, which could lead to some contracts being renegotiated or amended, the Department for Transport (DfT) warned.

Ms Haigh ruled out resurrecting Phase Two of the project, from Birmingham to Manchester and Leeds, which was cancelled by Rishi Sunak in October last year, following rumours Labour was going to reinstate it.

However, she has hinted previously her government could extend the line from Old Oak Common station in west London’s suburbs to Euston in the capital’s centre.

The projected cost of the Phase One line from London to the West Midlands, which is still under construction, increased from £30bn to as much as £59.7bn using 2019 prices, according to a leaked document dated 2022/23 seen by The Sunday Times this week.

However, HS2 Ltd, which oversees the project, gave an upper projection to the government in September 2023 amounting to £74bn using the headline rate.

The government said costs had soared due to “poor management, inflation and poor performance from the supply chain, without sufficient explanation of what is to be done to deliver to budget”.

The Department for Transport said the review will “bring the project back on track”.

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Ms Haigh said: “It has long been clear that the costs of HS2 have been allowed to spiral out of control, but since becoming transport secretary I have seen up close the scale of failure in project delivery – and it’s dire.

“Taxpayers have a right to expect HS2 is delivered efficiently and I won’t stand for anything less.

“I have promised to work fast and fix things and that’s exactly why I have announced urgent measures to get a grip on HS2’s costs and ensure taxpayers’ money is put to good use. 

“It’s high time we make sure lessons are learnt and the mistakes of HS2 are never repeated again.”

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James Stewart will lead the review and report back this winter, then the government has said it will publish six-monthly reports on HS2’s progress.

Mr Stewart is the former chief executive of Crossrail and former infrastructure chairman at consultancy firm KPMG, and has overseen infrastructure projects on the M25, London Underground and the London Olympics.

As part of bringing HS2 under ministerial oversight, there will be regular meetings with Ms Haigh, rail minister Lord Hendy and Darren Jones, chief secretary to the Treasury.

They will “challenge delivery and remove obstacles to securing the full benefits of the railway more effectively”, the DfT said.

A spokeswoman for HS2 Ltd said: “We welcome the secretary of state’s priorities for HS2 Ltd and are committed to working with the new government to improve delivery. We also fully support James Stewart’s governance review and look forward to his recommendations.

“HS2 Ltd recognises that there are many lessons to be learned from delivery to date and, under new leadership, are actively implementing the changes within our control to stabilise costs.

“HS2 is a complex project of strategic importance to the UK’s rail network, which will not only provide better journeys, more services and fewer delays for rail passengers, but will unlock economic growth and tackle regional inequality.”