Stemming the Tide: Government Steps In as HS2 Costs Skyrocket, Independent Review Launched

Government officials and contractors involved with HS2 will undergo a review following unchecked cost escalations. Originally estimated at £30 billion, the project's costs may now reach up to £74 billion. The government has decided not to proceed with Phase 2 of the project.

Political journalist @alixculbertson

Sunday, October 20, 2024, 12:

Government officials will supervise the HS2 project because the expenses associated with constructing the high-speed railway have skyrocketed, according to the transport secretary.

On Sunday, Louise Haigh revealed that she has initiated an independent investigation to examine why costs have escalated without adequate justification.

The transport secretary, along with her team of ministers, will now supervise the project to enhance accountability. Meanwhile, Mark Wild, the former CEO of Crossrail (currently known as the Elizabeth Line), has been appointed as the new chief executive of HS2 Ltd, the organization managing the project, to better control expenses.

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The Department for Transport (DfT) has indicated that the primary contractors for HS2 will undergo a review, potentially resulting in changes or renegotiations to some of their contracts.

Ms. Haigh dismissed the possibility of reviving the second phase of the project, extending from Birmingham to Manchester and Leeds, which was scrapped by Rishi Sunak in October of the previous year, despite speculation that Labour might restore it.

Previously, she suggested that her administration might prolong the route from the Old Oak Common station in the western suburbs of London to Euston in the heart of the city.

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Following Sunak's decision to cancel the northern extension of HS2, Labour might need to dissuade train travel, according to a watchdog.

Over £232 million has been distributed in payouts for an HS2 route that will no longer be constructed.

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Subject Matter:

A leaked document reviewed by The Sunday Times recently reveals that the estimated expenses for the initial segment of the railway connecting London and the West Midlands have surged. Originally forecasted at £30 billion, the costs, adjusted to 2019 figures, have now escalated to potentially £59.7 billion, as per the 2022/23 document.

In September 2023, HS2 Ltd, the organization managing the project, provided the government with a maximum cost estimate of £74 billion, calculated at the standard rate.

The government stated that expenses have risen sharply due to "inefficient handling, inflation, and subpar results from the supply chain, with no adequate explanation on how to stay within the budget."

The Department for Transport announced that the review is aimed at "getting the project back on course."

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Ms. Haigh stated, "It's evident that the expenses for HS2 have continuously escalated unchecked. However, upon assuming the role of Transport Secretary, I've directly observed just how severe the shortcomings in project execution are—it's appalling."

"Taxpayers deserve assurance that HS2 will be executed effectively, and I will accept nothing short of that."

"I've committed to acting swiftly and resolving issues, which is precisely why I've declared immediate actions to control the spiraling expenses of HS2 and to guarantee that the funds from taxpayers are utilized effectively."

"We must ensure that the errors made with HS2 are not repeated and that we learn from them going forward."

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James Stewart has been tasked with overseeing the review and will provide feedback this winter. Subsequently, the government plans to release reports every six months detailing the advancements of HS2.

Mr. Stewart, previously the CEO of Crossrail and the infrastructure chair at consulting giant KPMG, has managed significant projects involving the M25, London Underground, and the London Olympics.

In the effort to place HS2 under governmental control, Ms. Haigh, rail minister Lord Hendy, and Darren Jones, the chief secretary to the Treasury, will convene for frequent discussions.

The Department for Transport stated that they aim to "enhance delivery and eliminate barriers that hinder the complete advantages of the railway."

A representative from HS2 Ltd commented, "We are pleased with the secretary of state's objectives for HS2 Ltd and are dedicated to collaborating with the new administration to enhance our execution. We also wholly endorse James Stewart's review of governance and eagerly anticipate his suggestions.

HS2 Ltd acknowledges the need to draw insights from its experiences so far in the project's execution. With a fresh leadership team in place, the company is proactively making adjustments that are within its power to manage expenses effectively.

"HS2 represents a significant and multifaceted initiative pivotal to enhancing the UK's railway system. This project promises to improve travel times, increase the frequency of services, and reduce disruptions for commuters, while also stimulating economic development and addressing disparities between regions."

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