The Conservatives wasted billions of pounds on HS2 through poor management, badly negotiated contracts and constant design changes, the transport secretary will say on Wednesday.
Heidi Alexander will tell MPs the last government overspent on the high-speed rail line in multiple ways, including signing contracts even when advised not to and drawing up expensive plans for redesigning Euston station in London before scrapping them.
She will announce the findings of two reviews into the troubled project, even as ministers brace to swallow another increase in the projected price tag to a reported £100bn.
“Billions of pounds of taxpayers’ money has been wasted by constant scope changes, ineffective contracts and bad management,” Alexander will tell the House of Commons. “It’s an appalling mess. But it’s one we will sort out.”
Referencing recently reported claims of fraud by contractors supplying workers, she will add: “There are allegations that parts of the supply chain have been defrauding taxpayers, and I have been clear that these need to be investigated rapidly and rigorously. If fraud is found, then the consequences will be felt by all involved.”
A Labour source said: “The cost inflated out of all control, billions were wasted due to political indecision. There was a failure of ministerial oversight from the then transport secretary and a delivery company not fit for purpose. It’s a comedy of errors, but no one’s laughing.”
The Conservatives were contacted for comment.
Alexander will lay out the results of two reviews into the scheme: one by James Stewart into what went wrong and what it can teach ministers about how to run future infrastructure projects, and an initial assessment by Mark Wild, the chief executive of HS2 Ltd, looking at how and when to construct the rest of the phase one line from London to Birmingham.
The problems identified in those reports go beyond the escalating costs of tunnelling and environmental mitigations such as the £100m bat tunnel, which has been singled out for criticism by the prime minister, Keir Starmer.
Phase one of the HS2 scheme was projected in 2012 to cost £20bn, but more recent estimates now put that figure at as much as £57bn. Wild’s review, according to sources quoted by the rail expert, Christian Wolmar, could lead to the full budget being restated at current prices at more than £100bn.
Alexander will tell MPs that among the mistakes made by the previous government was the decision to sign a series of construction contracts despite having been advised by a review in 2020 not to do so until the scope of the project had been fully decided.
The Oakervee review, which was commissioned by Boris Johnson as prime minister, recommended in 2020 that the government renegotiate key contracts to build the scheme and hold off signing further ones until making political decisions about its future.
The transport secretary will tell MPs on Wednesday that contracts continued to be signed even when those decisions had yet to be made.
Ministers were also commissioning two sets of designs for a new station at Euston at a total cost of over £250m, only to scrap both of them. They also spent £2bn on the northern leg from Birmingham to Manchester before it was cancelled by Rishi Sunak as prime minister in October 2023.
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Soon after the northern arm was axed, Sunak announced a Euston ministerial task force to oversee improvements to the station. That committee was due to include ministers from the Treasury, the transport department and the levelling up department, but government sources now say it never held a meeting.
More recently, HS2 Ltd has begun an investigation into claims that one of its labour suppliers on the project charged overinflated rates for staff.
A spokesperson for HS2 Ltd said at the time: “We treat all whistleblower allegations seriously and are continuing to conduct our own investigation. Furthermore, HS2 Ltd has formally reported the allegations to HMRC.”
One of the measures Alexander is taking to try to get the project back on track is to appoint Mike Brown, the former commissioner of Transport for London (TfL), as the new chair of HS2 Ltd. He will replace Jon Thompson, who stepped down in the spring after a series of colourful public interventions, including disclosing the bat tunnel saga.
Brown worked under and then succeeded the current rail minister, Lord Hendy, in running TfL.
Meanwhile, Wild has written to Alexander setting out the broad terms of a “reset” for the project to keep costs down and get construction back on track. He carried out a similar role with TfL on the Elizabeth line to eventually deliver it successfully within a revised timescale and budget.
However, in the short term it is likely to mean that HS2’s full opening, even on the reduced network, is pushed back further into the 2030s, while the budget is likely to soar in real terms.
