Secret State 23: leaked Cabinet Office report, HS2 “highly likely” to go 60% over budget. HS2: no comment
Andrew Gilligan reports today in The Times that the HS2 high-speed rail project is “highly likely” to go as much as 60% over budget and cost “more than £80bn”, according to a Cabinet Office report by the government’s Infrastructure and Projects Authority (IPA), which describes the scheme as “fundamentally flawed” and in a “precarious position”.
The report, classified as “official-sensitive” and “not for publication”, dated December 2016, was written by Paul Mansell, an IPA adviser embedded in HS2. ‘Leaked’ to The Sunday Times, it warns that chaos in the project — officially costed at £56bn — threatens wider public spending, with a “very high opportunity-cost impact across other government departments”.
A group of Conservative MPs, led by Jeremy Lefroy the MP for Stafford, is mounting a new bid to cancel HS2. Last week they met Chris Grayling, the transport secretary.
An earlier June article by Andrew Gilligan referred to documents seen by The Sunday Times. Doug Thornton, HS2’s former head of property, said the HS2 high-speed rail project put him under “tremendous pressure to accede to an enormous deceit” that the official budget for buying land and buildings was accurate. He alleged that it was wrong by billions of pounds; the budget was based on “rudimentary map-based analysis by interns” and contains errors in the tens of millions even on single properties. HS2 did not dispute the figures.
Thornton and Bruce are understood to have given extensive oral and written evidence to the National Audit Office (NAO), which confirmed that it is investigating HS2’s land and property budget.
Thornton was paid more than £200,000 a year and ranked two rungs below HS2’s chief executive. In the documents, he said he was sacked after refusing to “at worst, severely mislead” HS2’s own board about the state of the programme. The head of planning and performance, Andrew Bruce, was also placed on leave of absence 30 minutes before he was due to “present major budget, programme and capability issues” to the board, according to Thornton. The two men left in 2016 as the bill to allow HS2’s phase one, from London to the West Midlands, reached a critical stage in parliament. HS2 told MPs and peers that buying the 11,000 properties and plots of land needed to build this section of the route would cost £2.8bn, a figure it maintains to this day. However, Bruce had produced detailed calculations that the true cost of property in this phase alone would be £4.7bn. Thornton said HS2 may have “knowingly misled parliament”.
Thornton’s documents were passed to Lord Berkeley, a Labour peer and chairman of the Rail Freight Group. He said: “HS2 has been covering up and Chris Grayling knows that the budget is not deliverable. HS2 could not be reached for comment.
Rail News reports that after a request by the Department for Transport, consultant quantity surveyor Michael Byng, who created the method now used by Network Rail to cost its projects in the wake of major overruns, has prepared a 4000-page document analysing the costs of HS2. He concluded that the true cost of Phase One between London and Birmingham is likely to be at least £50 billion, compared with the official figure of £24.3 billion. This includes a one-third contingency allowance but not the cost of new high speed trains.
The cost of the whole scheme, including the extensions to Manchester and Leeds, is now said to be over £100 billion.