Public Accounts Committee
HS2: government must act now to clarify schedule, costs and impact
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HS2: government must act now to clarify schedule, costs and impact
type Press release
The Government must move quickly to set out a realistic timetable for delivering HS2 and clarify important details about its second phase and plans for the wider rail network, the Committee of Public Accounts says today.
The Committee recommends that a Department for Transport announcement on the route of phase 2b, due to be made this autumn, should also confirm whether phase 1 – between London Euston and the West Midlands – will open in 2026 or 2027.
In a new Report, the Committee finds costs estimates for phase 2 – extending the network between the West Midlands and Crewe (2a), and to Manchester and Leeds (2b) – are still volatile and must be firmed up urgently.
It highlights HS2 Ltd’s recommendation to the Department that the planned HS2 station in South Yorkshire be moved from Meadowhall to Sheffield Midland station as “one example of the significant uncertainty” that remains about phase 2.
The impact of these proposed route changes on passengers, local communities, growth and regeneration is not clear, says the Committee, and urges the Department to explain the basis for its final decision as part of the phase 2b announcement.
The Committee acknowledges “considerable progress” has been made with preparations for HS2 since it reported on the project in 2013 and welcomes the Department’s commitment to setting out how UK railways will operate as an integrated network.
However, uncertainty remains over how HS2 will work with the rest of the transport system, for example how it will interact with proposed transport investment in the North of England.
The Report states “a great deal of work is still required” to integrate plans for HS2 with other rail investment proposals and the existing network.
It adds: “Furthermore, greater assurance about sources of funding and finance for regeneration and growth is required to ensure that the promised regional benefits from High Speed 2 materialise.”
Meg Hillier MP, Chair of the PAC, said today: “The Government has promised significant benefits to taxpayers in return for their investment in HS2, expected to run to more than £55 billion.
“Despite this, Parliament and the public are still in the dark about crucial details – not least when the railway will open, how much it is expected to cost and precisely where it will go.
“The announcement at the weekend that HS2 Ltd chief executive Simon Kirby is leaving the company adds to the uncertainty enveloping a project on which strong and stable leadership is vital.
“Lack of clarity over plans for HS2 in South Yorkshire highlights what is at stake for communities and local economies, and why government must explain its intentions and the basis for its decisions in a transparent manner.
“The public must be confident the grand vision for HS2 does not blind the Government to the finer points which have implications for many people’s lives now and in the decades to come.
“Local authorities must know central government’s intentions to ensure they can plan effectively for regeneration and maximise the potential for growth near HS2 stations.
“The Government is due to announce its decision on the 2b route this autumn and we urge it to seize this opportunity to address the concerns set out in our Report.”
PAC REPORT SUMMARY
The Department for Transport and HS2 Ltd have made considerable progress with preparations for High Speed 2 since the previous Committee last reported on the project in 2013. They have issued tender documents for major civil engineering contracts on phase 1 and plan to announce the preferred route for phase 2b later in 2016.
However, we are concerned that the Department’s timetable for High Speed 2 is overly ambitious, which is exemplified by the fact that the Department and HS2 Ltd are now looking at delaying the planned opening date for phase 1 by up to 12 months from December 2026 to December 2027.
The cost estimates for phase 2 are still volatile and currently exceed available funding by £7 billion. We remain to be convinced that proposed savings of £9 billion can be made without adversely affecting the benefits of the programme.
HS2 Ltd’s recent recommendation to the Department that the planned High Speed 2 station in South Yorkshire be moved from Meadowhall to Sheffield Midland station is one example of the significant uncertainty that remains about plans for phase 2.
We welcome the Department’s commitment to set out how the UK railways will operate as a single, integrated network, but a great deal of work is still required to integrate plans for High Speed 2 with other rail investment proposals, and with the existing network.
Furthermore, greater assurance about sources of funding and finance for regeneration and growth is required to ensure that the promised regional benefits from High Speed 2 materialise.
CONCLUSIONS AND RECOMMENDATIONS
We are not convinced that the timetable for delivering High Speed 2 is realistic. The Department for Transport (the Department) considers the programme to be on schedule, citing the fact that it recently issued the invitations to tender for major civil engineering contracts for phase 1 on time. However, HS2 Ltd is only 60% confident that phase 1 will open in December 2026. The Department and HS2 Ltd consider this to be too low. HS2 Ltd has been asked to increase confidence to 80%. As a result HS2 Ltd is assessing the impact of extending the phase 1 opening date by up to 12 months from December 2026 to December 2027. The Department maintains that delays to phase 1 will not have an impact on the phase 2 timetable. Nevertheless, there remains considerable uncertainty about the phase 2 route, with an announcement due in the autumn.
Recommendation: The announcement of the route of phase 2b this autumn should include a realistic timetable against which we will hold the Department and HS2 Ltd to account. At the same time the Department should confirm whether it intends to open phase 1 in 2026, or 2027.
The Department does not have a clear enough picture of the estimated costs for phase 2. The cost estimates for phase 2 are still volatile. At the time of the 2015 Spending Review, the Department submitted to the Treasury a cost estimate that was £7 billion over the agreed funding of £28.5 billion. Six months later, following a Cabinet Office-led review of the estimated costs of the programme, the Department and HS2 Ltd had identified up to £9 billion of potential savings. A large proportion of these potential savings result from HS2 Ltd having applied the more mature and detailed estimates for the unit cost of the viaducts, tunnels and cuttings from phase 1 to the phase 2 plans but it is not clear why these assumptions could not have been applied at an earlier stage. It remains to be seen whether these planned savings on phase 2 can be delivered without adversely affecting the expected benefits of the programme.
Recommendation: The Department should produce a firm cost estimate for phase 2, setting out the basis on which it was compiled by the time of the route announcement in autumn 2016.
The impact of proposed route changes in South Yorkshire on passengers, on local communities and on growth and regeneration is not clear. HS2 Ltd has recommended changing the location of the planned High Speed 2 station in South Yorkshire from Meadowhall to Sheffield Midland station. The Department and HS2 Ltd have identified around £768 million of savings in the new proposed route. However, the published report proposing this change contained no quantification of the benefits for each of the alternatives although it is clear that fewer trains will stop at Sheffield than under previous plans. Five high speed trains-per-hour were initially planned to stop at Meadowhall but only one or two high speed trains per hour are planned to stop at Sheffield Midland. The nature and scale of potential disruption to communities that were not expecting to be affected by High Speed 2 is not yet clear. The Department expects to announce its decision as part of the phase 2b route announcement.
Recommendation: The Department’s decision on the location of the South Yorkshire station should set out the basis on which the selected option was chosen, including quantification of the impact on passengers, local communities, and on forecast growth and regeneration.
We are concerned that the Department may find it difficult to secure the skills required for all of its major transport infrastructure plans. The extensive programme of infrastructure investment over the next few years is increasing the demand for engineering, project management and commercial skills across the industry. The Department and HS2 Ltd are competing with consulting and engineering firms, and other government projects for scarce skills, which represents a key challenge that will also impact on project costs. To address the skills shortage for High Speed 2, HS2 Ltd and the Department are engaging with the industry and developing a long term plan, which includes the establishment of a national college for high speed rail. Although the Department failed to mention it during our evidence session, it published a Transport Infrastructure Skills Strategy in January 2016.
Recommendation: The Department should report back to the Committee in 12 months’ time on progress in securing all the skills needed to deliver all its infrastructure programmes.
Sufficient funding will be required to secure the promised regeneration and growth benefits of High Speed 2. It is encouraging that the Departments for Transport and Communities and Local Government have learned lessons from High Speed 1 and have started planning for regeneration and growth benefits. However, on the whole, the £55.7 billion funding package for the project does not include provision for the regeneration around High Speed 2 stations. Instead, local authorities are required to identify sources of finance and funding. The main exception is Euston where the Department has long term funding to pay for works to enable future development about the High Speed 2 station estimated to cost £417 million.
Recommendation: The Department should seek assurances from the relevant local authorities that they have plans in place to identify sources of funding and financing, to secure the local regeneration and growth benefits of High Speed 2.
It is not clear how High Speed 2 will work with the rest of the transport system. The Department is developing a plan for how the UK’s railways will operate as a single, integrated network once High Speed 2 opens. However, significant uncertainties remain which need to be resolved. For example, it is unclear how High Speed 2 will interact with proposed transport investment in the North of England, and what the cost of future spending to integrate High Speed 2 with the wider network might amount to. Particularly pressing is a decision about the design of the High Speed 2 trains and how they will be compatible with the rest of the network.
Recommendation: The Department should publish its plan for how the entire rail network will operate once High Speed 2 has been built at the time of the phase 2 route announcement, in autumn 2016.
The full text of the Committee’s Conclusions and Recommendations is included in the Report attached to this email.
NOTES FOR EDITORS
Media enquiries and interview bids: contact Tim Bowden on 07917 488162 / firstname.lastname@example.org
The Report embargo lifts at 0001 on 14 September 2016. It can also be accessed in HTML and PDF formats via the following links, which will go live at time of publication:
Additional material relating to this Report can be found here.
Committee membership: Meg Hillier – Chair (Labour (Co-op), Hackney South and Shoreditch), Mr Richard Bacon (Conservative, South Norfolk), Harriett Baldwin (Conservative, West Worcestershire), Deidre Brock (Scottish National Party, Edinburgh North and Leith), Chris Evans (Labour (Co-op), Islwyn), Caroline Flint (Labour, Don Valley), Kevin Foster (Conservative, Torbay), Mr Stewart Jackson (Conservative, Peterborough), Nigel Mills (Conservative, Amber Valley), David Mowat (Conservative, Warrington South), Stephen Phillips QC (Conservative, Sleaford and North Hykeham), Bridget Phillipson (Labour, Houghton and Sunderland South), John Pugh (Liberal Democrat, Southport), Karin Smyth (Labour, Bristol South), Mrs Anne-Marie Trevelyan (Conservative, Berwick-upon-Tweed)
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Railhub Archive ::: 2016-09-14 PAC-001