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HS2 ‘underestimated uncertainty and risk’ says spending watchdog

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The team behind High Speed 2 misjudged ’the level of uncertainty and risk’ on the first phase of the ambitious rail project, according to the government’s spending watchdog

The National Audit Office (NAO) has also warned that the controversial rail link faces major delays if the main construction work does not start on time in March.

In a report released today (24 January) the watchdog said that neither the Department for Transport nor HS2 Ltd had ’adequately managed risks to taxpayer money’. It is understood costs could, eventually, almost double from the £56 billion estimate made in 2015.

The NAO’s latest progress update on the project added that the team had also ’underestimated the impact on costs of changes made to the design and construction of the railway by the hybrid bill’ (see attached).

The legislation giving HS2 Ltd the power to build the project included amendments to tackle concerns of people living along the route, such as lowering the line beneath ground level to reduce its visual and environmental impact. This move in itself has added up to £1.2 billion to the cost, according to HS2’s own analysis.

In terms of timescale, the NAO feared that delaying the start of main construction work beyond 2020 would ‘will put the expected opening date of Phase One [London to Birmingham] at risk’.

The London to Birmingham tranche of line had been scheduled to open between 2029 and 2033. But political indecision surrounding the government-ordered Oakervee review – now due to be published in February – threatened to delay the construction timeline, said the watchdog.

The report adds that if construction wasn’t under way within the next two months, the opening of Phase One could be pushed back, as ‘some of the construction work can only be done at certain times of the year’.

The NAO also revealed that, as of March 2019, £7.4 billion had been spent on HS2. A large chunk of this – £2.94 billion – was spent on consultants, including engineering and design costs.

Most of the rest – £3,29 billion – had gone on land and property acquisitions. 

In response, a spokesperson for HS2 Ltd said: ’The vast majority of the NAO’s findings were revealed in HS2 Ltd’s 2019 stocktake – a year’s worth of deep-dive investigation into the underlying costs and timescale of the project.

’After being appointed HS2 Ltd chief executive in 2017, Mark Thurston identified the serious challenges of complexity and risk in the project, and he made several significant changes and improvements to the organisation, its governance and processes.

’As the NAO recognises, this work – along with a greater understanding of the ground conditions and build requirements – means ministers have robust cost estimates for Phase One of the HS2 project. If the Government decides to proceed, HS2 Ltd has a highly-skilled team in place ready to build Britain’s new state-of-the-art, low-carbon railway.’

A High Speed Rail Group spokesperson added: ’If the government want to fulfil their promise of an infrastructure revolution, HS2 must be completed in full, without further dither and delay. The alternatives spoken of are many years behind HS2 in terms of readiness to begin work and some, like Northern Powerhouse Rail, require HS2 to be delivered to realise their full benefits.’

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