HS2 Summer 2021

This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.

Seventeenth Report of Session 2021–22

Author: Committee of Public Accounts

Related inquiry: High Speed 2: Progress at Summer 2021

Date Published: 22 September 2021

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Contents

Introduction

The High Speed 2 programme aims to build a new high-speed, high-capacity railway between London, the West Midlands and the north of England. The programme is split into several phases: Phase One (London to the West Midlands); Phase 2a (West Midlands to Crewe); and Phase 2b (Crewe to Manchester and the West Midlands to Leeds). The programme had an original budget of £55.7 billion (2015 prices). Following cost increases and schedule delays, the Government announced an independent review of the programme in August 2019, which was published in February 2020. The programme’s funding was reset in 2020 and is now expected to cost a total of between £72 billion and £98 billion (2019 prices). The Phase One budget is £44.6 billion including almost £10 billion of contingency (2019 prices). HS2 Ltd plans for civil construction of Phase One to finish in 2025, with initial Phase One services (Old Oak Common to Birmingham Curzon Street) starting between 2029 and 2033.

The Department for Transport (the Department) funds and sponsors the programme and HS2 Ltd, an arm’s-length body of the Department, is responsible for developing, building and maintaining the railway. The programme is at an important stage of its development: Phase One has entered a stage of substantial construction; Phase 2a has received approval for construction by Parliament; and the Department is assessing how to best integrate Phase 2b with wider transport plans in the region.

We have previously examined the High Speed 2 programme on three occasions. In our most recent report in May 2020, we found that the programme was estimated to cost substantially more than the original budget. We were concerned public confidence in the programme had been undermined and stipulated greater levels of transparency would be required in the future. We were unconvinced that the Department and HS2 Ltd had the right skills and capability in place and were concerned about the uncertainties of Euston station. This report considers what progress has been made to address these concerns.

Conclusions and recommendations

1. While it is encouraging that the civil construction elements of Phase One seem to be on a firmer footing, the scale of the work that still needs to be done means future costs remain uncertain. We have previously criticised the Department and HS2 Ltd’s lack of transparency over the programme’s delivery timeline and budget, and Government subsequently committed to six-monthly reporting to Parliament on the programme. HS2 Ltd is now able to provide us with a clearer explanation of costs than we have previously seen in its reporting to Parliament. HS2 Ltd reports that it has spent £11 billion to date and used £0.4 billion of its contingency, out of a total budget of £44.6 billion (2019 prices). The contracting of Phase One civil construction, worth £15.5 billion, is complete, of which £2.5 billion has been spent. HS2 Ltd considers the budget for Phase One to be realistic and estimates it has completed approximately 20% of the work, having spent 5% of its contingency. While Phase One appears to be in a better place than when we reported in 2020, the risk of cost increases remains. A substantial amount of the Phase One programme is still to be procured and HS2 Ltd is already reporting cost pressures of £0.8 billion from activities such as delayed enabling works and Euston station. HS2 Ltd is yet to fully quantify the final cost of the impacts from the COVID-19 pandemic but estimates the cost to be between £300 million and £400 million at the end of 2020. If these costs are validated, they will be covered by the government-retained contingency of £4.3 billion.

Recommendation: The Department and HS2 Ltd should set out as part of its future 6-monthly reporting to Parliament, a more comprehensive view on risk to the Phase One cost estimate and the use of contingency. The reporting of costs should be consistent over time and include, preferably in tabular format, areas such as:

  • how much Phase One contingency has been used/remaining (£) and the proportion of contingency used/remaining (%). This should be included for: HS2 Ltd contingency (A); government-retained contingency (B); and, the total Phase One contingency (A+B);
  • details of the cost pressures, including the value (£) of those that HS2 Ltd has confirmed and accepted, and those that HS2 Ltd is assessing as potential and not yet confirmed;
  • a clear indication of whether cost pressures have increased, decreased or remained stable since the preceding 6-monthly report; and,
  • progress being made on the cost efficiencies programme, with a supporting narrative.

2. The Department has made little progress on the design and delivery at Euston since we last reported, and we remain concerned that time is running out. Euston station is a key element of the programme both as the London terminus for High Speed 2 and a link to existing railway network and London Underground. We raised concerns over the lack of clarity of the design and delivery of Euston station in our May 2020 report, but the Department has made no final decisions since then. The redevelopment of Euston station is currently estimated to cost £2.6 billion. Despite HS2 Ltd telling us last year that the design of the station was ready for planning consent, the Department has spent the past 15 months looking for cost saving options and efficiency opportunities, including the potential for a smaller station. HS2 Ltd asserts that it is getting close to the point where the programme will literally run out of time if a decision is not made soon, and that Old Oak Common is being set as the London terminus when the railway first opens to decouple it from the risks at Euston. The Department recognises that Euston is a very urgent and immediate challenge and expects to report on progress in autumn 2021. We recognise the benefits Euston provides, such as redevelopment opportunities around the station, as well as its complexity in being built at a busy operational railway in a city centre location, but the uncertainty of this part of the programme is substantial. This impacts businesses, passengers, residents and other industry stakeholders. This uncertainty needs to be resolved urgently, and the Department needs to ensure appropriate assurance has been completed on the decisions taken on the design and delivery arrangements.

Recommendation: The Department should set out in its next 6-monthly report to Parliament:

  • the decisions that it has made about Euston;
  • details of the assurances it has undertaken;
  • its timeline on when remaining decision points will be met; and,
  • any impact on the Euston opening range of 2031 to 2036.

3. HS2 Ltd has started planning how it will integrate its systems for Phase One to ensure the railway works, but this is an inherently risky part of the programme. We previously raised concerns that, given the scale of the programme and its future impact on the rail network, if the Department does not give enough attention to managing the interdependencies within HS2 and other rail programmes, passengers and services would suffer. In addition to the stations and infrastructure, HS2 needs to ensure that railway systems can work together in order for services to run. HS2 Ltd is attempting to avoid the Crossrail experience of failing to integrate the various systems required to operate the railway. HS2 Ltd is starting to plan its approach to integration of systems early and has proposed a delivery approach which would incentivise alliances between contractors. HS2 Ltd recognises that this approach is bold and complex and has not been undertaken in the railways before, although there are examples in the oil and gas sector. The systems required to operate the railway in Phase One will not be installed and tested until the late 2020’s. However, procurements on the parts of the programme that are integral to the successful integration and operation of the railway are underway. Smaller contracts, such as tunnel safety doors, have already been procured, and larger contracts, such as track, electrification and signalling, are expected to be procured over the next two years.

Recommendation: HS2 Ltd must continue to monitor and report on both progress and the time allocated to systems integration as part of the regular 6-monthly updates to Parliament, and inform the Committee promptly if the time allocated to these latter stages is at risk of being squeezed.

When it has announced the winner of its competition for the rolling stock contract, HS2 Ltd should write to the Committee to explain how the design and delivery of the train will support the integration of the systems required to operate the railway.

4. We are increasingly concerned that the Department and HS2 Ltd do not yet know how they will turn the benefits promised from High Speed 2 into a reality, including what additional investments will be needed or how these will be funded. The Department claims that High Speed 2 is a catalyst for investment, jobs and growth but also acknowledges that it needs to focus on making sure that the programme achieves what is intended. The Department needs to turn those intentions into a plan that brings together local authorities, the private sector and other Departments. There are some examples of the Department encouraging private sector investment, such as £50 million announced in the Budget for development around the Birmingham Interchange station, and the programme’s promise of regional job creation. However, despite hearing that pockets of activity to realise benefits is happening, we are concerned the Department does not yet have an integrated programme to delivering these benefits. We are disappointed to hear that local jobs are not being created in the numbers expected. Realising the benefits for the Midlands and the North is dependent on removing the uncertainty around the outcome of the integrated rail plan.

Recommendation: The Department and HS2 Ltd should write to the Committee within three months, describing their strategy to identify, monitor and evaluate the benefits of the programme. The Committee will monitor what progress has been made against this when we next revisit High Speed 2.

5. The Department and HS2 Ltd are not adequately engaging with the Department for Education to secure the skills required for the future of the programme and training the next generation of skilled workers. We have repeatedly raised concerns that the Department and HS2 Ltd did not have the skills or capability they needed now or in the future to successfully deliver the programme. The Department and HS2 Ltd have repeatedly failed to convince us that their plans to secure the future skills and capability needed are enough. In 2016, HS2 Ltd and the Department told the previous Committee that the National College for High Speed Rail would be crucial in training people in the skills required for High Speed 2 and other infrastructure projects. The college has since become the National College for Advanced Transport & Infrastructure and, most recently, merged with the University of Birmingham. The Department admits that the performance of the college has been disappointing and hopes that its latest merger, new leadership and new curriculum from September 2021 will be an opportunity to get the best out of the arrangement. Yet the Department’s involvement with the college has been limited as it falls under the Department for Education’s accountability remit. We are disappointed in this lack of engagement, as it is in the Department’s strategic interests to have a strong relationship with the college and ensure it provides the skills and curriculum High Speed 2 and other infrastructure projects need.

Recommendation: The Department must proactively engage with the Department for Education and other relevant education providers to ensure there are plans in place for further education colleges to get the through-flow required for the programme. The Department should write to us to explain how it is engaging with these stakeholders within three months.

6. We are already concerned about the volume of complaints on disruption from the programme which does not bode well for the future as more communities will be impacted as construction progresses. HS2 Ltd estimates it has handled 124,000 queries over the past three years and interacted with over 76,000 people along the route. It is engaging with the supply chain, its contractors and local MPs to help inform communities about its work. However, the number of complaints from the public about High Speed 2 has increased as main construction on Phase One has started. Complaints to the Independent Construction Commissioner HS2 rose to 86 in the first quarter of 2021 from 74 in the previous quarter. The majority of complaints are about the impact of construction on roads and traffic, vegetation clearance and about noise and vibration. Due to the scale of the programme and the time until the railway is complete, complaints are likely to increase as the programme progresses. It will be critical for HS2 Ltd to develop a way of embedding the lessons it has learned into its day-to-day processes, so that mistakes from Phase One are not repeated in Phase Two, and that community engagement and environmental concerns are more proactively addressed by the company.

Recommendation: The Department and HS2 Ltd should write to the Committee within three months setting out how they intend to resolve the issues around community engagement and the environment observed by the Committee in this report.

1 Progress with Phase One delivery

1. On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Transport (the Department) and High Speed Two Limited (HS2 Ltd) on the High Speed 2 programme.1 We also took evidence from the West Midlands Combined Authority, the National Infrastructure Commission and the Independent Construction Commissioner HS2 (the Commissioner).

2. The High Speed 2 programme aims to build a new high-speed, high-capacity railway between London, the West Midlands and the north of England. The programme has an estimated total cost of between £72 billion and £98 billion (2019 prices), although validation of the Phase 2b cost range is ongoing according to the Department. The Department funds and sponsors the programme and HS2 Ltd, an arm’s-length body of the Department, is responsible for developing, building and maintaining the railway.2

3. The programme is at an important stage of its development: Phase One (London to the West Midlands) has entered a stage of substantial construction; Phase 2a (West Midlands to Crewe) has received approval for construction by Parliament; and the Department is assessing how to best integrate Phase 2b (Crewe to Manchester and the West Midlands to Leeds) with wider transport plans in the region.3

Cost and schedule

4. Following cost increases and schedule delays, the Government announced an independent review of the programme in August 2019, which was published in February 2020. Following this review, the Department revised its estimates for the cost of the programme. The Department and HS2 Ltd now expects the full programme to cost between £72 billion and £98 billion (2019 prices), compared to the previous funding package of £55.7 billion (2015 prices).4 We have examined the High Speed 2 programme as part of three previous inquiries. In our most recent report, in May 2020, we found that the High Speed 2 programme had gone badly off-course and we were unconvinced there would be no further costs increases.5 The Department and HS2 Ltd then reset the cost estimates and schedule for the programme during 2020. We also found the Department had failed to provide us with clear warning that value for money was at risk and concluded that the Department and HS2 Ltd’s lack of transparency and failure to tell previous committees that the programme was facing difficulties had undermined public confidence in the programme. We recommended that the Department should set out the form of its regular reporting on High Speed 2 to Parliament. We said that this should include, for example, a realistic appraisal of the likelihood of delivering the programme to budget and schedule and how it will report on the significant risks to delivery. In its response to our recommendations, the Department recognised the issue of transparency and committed to producing six-monthly reports on the programme in line.6 The Department told us that there was now greater transparency on the programme following its publication of these reports and also committed to making further improvements to the presentation of the information contained in the reports.7

5. The Department told us that, since the programme was reset in 2020, it had made “great strides” in its oversight and governance increasing its confidence in the programme’s delivery. HS2 Ltd provided us with updated details about the estimated cost and schedule of Phase One. On schedule, HS2 Ltd told us it had a 10-year programme of work for Phase One before services started between 2029 and 2033. It further explained that it planned to complete civil construction between 2020 and 2025; railway systems between 2025 and 2028; and, commissioning, integration, driver training and entering into service between 2028 and 2030. It noted that work on station design and construction will run alongside this, and would take approximately six to seven years to complete.8

6. With regard to cost, in a written statement prior to our evidence session, HS2 Ltd and the Department reported to Parliament that by January 2021, HS2 Ltd had spent £11 billion on Phase One (actual prices), contracted a further £12.6 billion and used £0.4 billion of its £5.6 billion contingency, leaving £20.6 billion left in its budget of £44.6 billion (2019 prices).9 We asked the Department whether it thought that its overall budget for Phase One was still realistic. HS2 Ltd confirmed the total Phase One budget was realistic and stated it was “very confident” that Phase One would be delivered within the available funding. It recognised that there was still a lot of work to do, but noted that it had completed 20% of the work on Phase One, while spending 5% of its contingency.10

7. Following our evidence session, HS2 Ltd wrote to us and set out the high-level schedule and associated budgets (including contingency) for Phase 1 activities discussed at the session. These are set out in the table below:

Phase 1 activity

Budget (including contingency) (£ billion)

Estimated duration of activity

Civil engineering

15.5

2020–2026

Stations (excluding Euston)

2.7

2021–2028

Euston station

2.6

TBC

Systems

3.6

2025 – 2028

Commissioning11

2028 – 2030

The remaining Phase 1 budget is allocated to, or has been spent on, for example the purchase of land and property, enabling works and the purchase of rolling stock.

8. The Government’s latest range of estimated costs for Phase 1 is £35–45 billion (2019 prices).12 For Phase 2a the range is £5.2–7.2 billion (2019 prices). The latest updated forecast range for opening Phase 2a for services is 2030–2034.13 The Department told us that it expected the cost range and the schedule range for Phase 2a to be set in 2023.14 The current cost range for Phase 2b is £32–46 billion (2019 prices), meaning that the full railway could cost as much as £98 billion.15

9. The construction of the main civil engineering components of the programme (such as tunnels and viaducts) is a major undertaking and was a major cause of delays and cost increases at the time of our last report.16 In a letter following our evidence session, HS2 Ltd informed us that it had now contracted all the civil construction work, worth £15.5 billion, of which it had paid approximately £2.5 billion. It told us that the estimated total cost of all four stations for Phase One would be just over £5 billion, and that it had agreed contracts for three of the four stations. As a result, it expected that the construction for Old Oak Common would be £1.67 billion, Birmingham Curzon Street would be £460 million and Euston would be £2.6 billion. It explained that it had not yet agreed a contract for construction at Birmingham Interchange but expected this to cost in total between £350 million and £500 million. HS2 Ltd told us that it estimated that railway systems will cost a total of £3.6 billion. Although some of the smaller systems contracts, such as the tunnel safety doors, had already been procured, HS2 Ltd told us that railway systems was the part of the programme where most procurement was outstanding. HS2 Ltd told us it planned to procure the larger systems contracts, such as track, electrification, signalling and controls, in the next two years. HS2 Ltd estimated the cost to purchase the trains (rolling stock) would be around £1.6 billion. The Department and HS2 Ltd told us that they hoped to award the contract to design and build the trains later in 2020.17

10. In our 2020 report we recommended that the Department publish regular reports on progress to Parliament, including a realistic appraisal of the programme’s likelihood of delivering to budget and schedule.18 HS2 Ltd and the Department reported £0.8 billion in cost pressures in their most recent update to Parliament in March 2021.19 We therefore asked what they were doing to finalise and manage cost pressures to ensure that the programme kept within its revised budgets. HS2 Ltd told us that these cost pressures were from three areas: Euston station; enabling works, including additional costs from the diversion of utilities; and, civil construction contractors. It told us it was looking for ways to mitigate and offset them. HS2 Ltd explained that it had an efficiencies programme and had found savings and opportunities totalling £200 million, mostly for civil construction such as bulk purchase of fencing and security.20 HS2 Ltd noted that it was rare that cost pressures were a surprise, as it identified and tracked potential cost risks early on, but that it was being vigilant about when contingency would be released to cover these cost pressures.21 We asked the Department and HS2 Ltd how much additional costs the programme had incurred as a result of the COVID-19 pandemic. HS2 Ltd explained that it would be difficult to “unstitch the true Covid-related costs” but that at the end of 2020 it had estimated that these costs would be between £300 million and £400 million. The Department told us that if these costs were validated, they will be covered within the Phase One budget by the government-retained contingency of £4.3 billion.22

The design and delivery of Euston station

11. Euston station is a key element of HS2 and will be an important transport hub and business area, with potential opportunities for economic regeneration at the wider site. It is intended to be the London terminus of the High Speed 2 programme, providing links to the existing railway, London Underground and other transport links.23 The build at Euston is complex, with the site positioned at a busy existing railway station in a dense city centre.24 It is currently expected to open between 2031 and 2036, a range which, the Department told us, was purposely wide to take account of the decisions the Department still needs to be made on its design and delivery.25

12. In our May 2020 report, we raised our concerns over the huge uncertainty remaining for Euston station, specifically the lack of clarity around the station build. The Department and HS2 Ltd told us at the time that although the design of Euston was ready for planning consent, they were looking into more cost-effective solutions for the station. We recommended that the Department should write to us within six months of our report to provide us more detail of its plans, including how it would be delivered.26 When the Department responded in November 2020, it stated work was ongoing to develop an optimised design and delivery strategy to address cost pressures, with any changes expected in spring 2021.27 In its update to Parliament in March 2021, the Department and HS2 Ltd flagged cost pressures of £0.4 billion relating to Euston station, and noted that work to consider opportunities, efficiencies and scope reductions was underway.28 We therefore asked the Department about what progress it had made on Euston. It told us that “some progress” had been made, such as consideration of designs for a smaller station and improved integration with the work of Network Rail, but that a final design had not been agreed. When we pressed the Department to commit to a timeframe for final decisions on the design and delivery, it informed us it hoped to report back on a design for the station by its next six-monthly update in autumn 2021.29

13. The Department detailed some of the work it has been undertaking since early 2020 to find cost savings at Euston. This included: a review of the proposed tracks and tunnelling at Euston, which confirmed the existing approach was justified; an assessment of the station design, which might lead to a smaller station being built in a single stage; and, opportunities for further integration with Network Rail, such as sharing entrances to the London Underground and combining construction programmes.30 The Department told us that it had also set up a Euston Partnership Board to bring together HS2 Ltd, Network Rail, the London Borough of Camden, Greater London Authority, Lendlease and Transport for London to agree the plan for Euston. The Department intended for the Board to bring together the right stakeholders to make the “right trade-offs”.31 The Department told us the Board had brought extra momentum and impetus to the work at Euston and had helped to resolve some problems, although we noted final decisions are still outstanding, with a planning decision on Euston expected in September 2022.32

14. The Department acknowledged that Euston is a “very urgent and immediate challenge”. HS2 Ltd similarly noted that decisions on the final options are time-bound, and that it was concerned that the programme will “literally run out of time”.33 HS2 Ltd explained that it was setting up Old Oak Common as the terminus for the railway when it first opens to decouple the delivery of this element of the programme from the risk of Euston.34 In our 2020 report we pointed out that Euston is an important transport hub and business area, so ensuring minimal disruption and developing the site in a way that benefits all stakeholders will be crucial..35

15. We asked the Department what assurances it could give that whatever happened at Euston, it would not affect the delivery of the programme overall.36 The Department provided us with details of the assurance process it follows more broadly on the High Speed 2 programme, including lines of assurance within HS2 Ltd, the Department and the ministerial taskforce. The Department also told us that it has separated out its work on Euston from that on the rest of the programme, due to a specific set of issues related to Euston, and that the delivery of Euston Station is now overseen by a separate body—the Euston Partnership—which is chaired by Sir Peter Hendy and is made up of representatives from, for example, HS2 Ltd, Network Rail, the London Borough of Camden, the Greater London Authority and Transport for London.37

Integrating the various elements of the programme

16. The High Speed 2 programme has many interdependent elements, including stations, infrastructure and railway systems. We raised concerns in our previous report that, given the scale of the programme and its future impact on the rail network, if the Department does not give enough attention to managing the interdependencies within the programme and other rail programmes, passengers and other services could suffer.38 From Crossrail, we have also seen the problems that can arise from poor integration of railway systems, and the delays and cost increases that this can cause.39 In our report on the programme in 2021, we found that Crossrail had suffered delays and cost increases as a result of the failure to effectively install and integrate and integrate the systems required to operate the railway.40

17. The Department recognised two primary risks in relation to railway systems: the physical practicalities of different contractors working on the ground together; and, systems not integrating effectively.41 We asked HS2 Ltd how it planned to avoid the issues with railway systems experienced on the Crossrail programme. HS2 Ltd told us that in its capacity as system integrator, it had undertaken work to develop a reference design on which the work of all systems contracts should be based, and had been engaging with the Crossrail team.42 HS2 Ltd explained that the contracts to design and install to the railway systems will include performance requirements for the systems to ensure the systems integrate.43 HS2 Ltd explained that it will include a “last responsible moment” in the contracts to ensure there is a point where the system design can no longer change, to avoid new designs causing delays.44 HS2 Ltd told us that it expected the building work needed for integrating railways system to be ready by 2027, and for most of the systems to have been designed by then, so it would “be very much getting into systems installation from the late 2020s”.45 We asked whether it had the continuity of people needed to do this. HS2 Ltd told us that it expected some of its current railway systems team to remain in place through to the delivery stages of the programme for continuity, but also intended to transfer people with suitable skills from its civil construction teams. It explained that it had consulted with “all the big global contractors that can do this work” about this approach and their response had been positive that this was “the only way you can really do this”. The Department told us that it had examined HS2 Ltd’s approach and that it was satisfied that the approach it was adopting was the best one and a sensible model. It also told us that HS2 Ltd had set up a panel of external experts to support it on integration the railway systems.46

18. HS2 Ltd recognised that the integration of railway systems would be crucial and explained that it planned to establish a collaborative alliance amongst the main railway systems contractors to encourage them to work together to deliver the integrated systems. Although HS2 Ltd’s pre-contract market engagement found suppliers to be receptive to this approach, it also admitted this was a “bold” and “complex” approach.47 It told us this approach had not been used in the railway sector before, but there were examples from other sectors of bringing together multi-party collaborative contracting, such as the oil and gas industry. We asked HS2 Ltd about the risks arising from this new approach, including how it would manage any potential legal challenges between the companies involved. HS2 Ltd assured us that it was committed to learning the lessons necessary from Crossrail and was working with the team responsible to identify how best to do this. It explained that discrete contracts also presented issues with legal challenge, interface risk between contracts, integration of systems and capability. It told us that taking a collaborative approach meant that it had a much better change of managing these interdependency risks and may be able to avoid the “knitting together” of contracts, as was being experienced on Crossrail. It told us that given all the work it had done at this stage, it was confident as it could be about its approach.48

2 Delivering the promised benefits and improving community engagement

Delivering the benefits promised

19. The Department and HS2 Ltd have repeatedly promised that High Speed 2 will bring about a wide range of benefits that go beyond the increase in capacity and reduction of journey times on routes between major cities. These promised benefits include jobs, economic growth, investment and regeneration. The Department told us that High Speed 2 was not just a railway, but a “catalyst for investment, jobs and growth”, and that the strategic case for High Speed 2 depends on these promised economic benefits.49

20. Both the Department and the West Midlands Combined Authority provided examples of how cities and regions that stand to benefit from High Speed 2 have ambitious plans for how to capitalise on the opportunity that High Speed 2 provides. For example, the development of public transport links in Birmingham and Wolverhampton, and the construction of new housing in Birmingham City Centre. The Department told us that there were examples of where benefits realisation work was happening, but that its next step was to develop a “programmatic” approach to bringing together government departments, local authorities and private developers to ensure that the benefits were realised.50

21. The creation of thousands of jobs is central to the Department and HS2 Ltd programme’s case for building the railway. The Department told us that the growth strategies of Greater Manchester and the West Midlands envisaged that the programme would bring up to 180,000 and 100,000 job respectively, plus around 65,000 jobs expected at Old Oak Common. It recognised, however, that it now needed to turn these expectations into a reality. While jobs created by investment in the areas that will benefit from the railway are promised to materialise once the programme is complete, the Department expects that thousands more jobs will be created to support the construction of the railway. It told us that so far HS2 Ltd had been responsible, through its contractors, for creating around 16,000 jobs, which was expected to increase to around 30,000 at the peak of the programme.51

22. The Department and HS2 Ltd asserted that many of the jobs from the programme will go to those who live locally to construction sites. However, the West Midlands Combined Authority told us that of a high number of the jobs promised to be created from work at Delta Junction, just outside Birmingham, only 35 went to local people. HS2 Ltd told us that these 35 jobs related to a specific job advert issued by one of its contractors.52 We are also mindful of the experience of the London Olympics where the number of real, sustainable jobs for local residents was somewhat overstated by people claiming a local postcode when they were, in practice, moving in and out of the site areas on a weekly basis. We asked what lessons the Department and HS 2 Ltd had taken from this and how it would ensure that communities benefit from the programme. HS2 Ltd told us that it was doing some work on postcode tracking and had asked suppliers to evidence how they were assuring themselves that local opportunities were truly local.53

23. We asked the Department about the private sector investment that would be needed as part of delivering the benefits expected from the programme. The Department told us that it had started to take steps to encourage private sector investment to ensure these were delivered. For example, it was working with the Ministry of Housing, Communities and Local Government and the Old Oak and Park Royal Development Corporation on their investment plans and the government had announced £50 million in the Budget to support development around Birmingham Interchange station to allow more land for development and regeneration. However, the Department conceded that the sooner it could provide certainty around its integration rail plan and what is expected for the rest of the rail network, the more helpful it would be to ensure that the investment that it expected to stimulate happened in practice. The Department did not commit to a date on which the integrated rail plan will be published but could only say that it will be published “soon”.54

24. HS2 Ltd described the work it was doing to protect the environment as the “untold story” of the programme. It stated that there would be no net loss to biodiversity from phases 1 and 2a, and that there could be a net gain to biodiversity from Phase 2b. HS2 Ltd provided examples of work it was doing to minimise its environmental impact. It told us that it had already planted 700,000 trees and bushes and plans to develop a ‘green corridor’ with around 7 million trees and shrubs and four square kilometres of land for wildlife. We look forward to the publication of the first environmental sustainability report for High Speed 2, which should provide an opportunity for HS2 Ltd to clarify the impact of the programme on the natural environment.55

Ensuring the skills to deliver

25. Ensuring that enough people with the right skills and capability are available to the High Speed 2 programme at the right time is critical to its success. In reports from 2013, 2016 and 2020, both this and our previous Committees have highlighted the importance of skills and capability, and concerns with the Department’s progress in this area.56 The Department is responsible for a substantial investment programme, including Highways England’s and Network Rail’s investment in the strategic road network and the existing railways respectively, and forthcoming projects from the integrated rail plan, as well as High Speed 2.57 The National Infrastructure told us that addressing the skills shortage in the infrastructure sector should be a continuous focus for government.58 We asked HS2 Ltd whether it was confident that it had the skillset that it needed to complete High Speed 2 to the timetable and budget that had been set. HS2 Ltd replied that it was confident but not complacent and that there was increased demand for skills in construction from, for example, house building projects. HS2 Ltd told us that it was making good progress with its apprenticeships programme and that it was working with government and industry to ensure that the right supply of skills was available. HS2 Ltd also noted that the workforce for later phases of the programme, such as the installation of systems needed to operate the railway, was likely to come from a global pool as those skills are rarer in this country.59

26. The Department and HS2 Ltd told our previous Committee in 2016 that the National College for High Speed Rail would be crucial in training people in the skills required to successfully construct High Speed 2 and other infrastructure projects. For example, at the time of our evidence session in 2016, there was a contractual requirement for HS2 Ltd’s civil construction contractors to train around 2,000 apprentices in the college.60 However, the Department admitted that the story of the College had to date been a disappointing one. It told us that the College had now merged with the University of Birmingham as the National College for Advanced Transport & Infrastructure. It said that it was confident that its new, broader remit, a new curriculum from September 2021, and new leadership gave it an opportunity to get the best out of the college.61

27. The Department explained that it was not, and had never been, directly responsible for the college as this fell under the remit of the Department for Education. It explained that it’s detailed involvement in the college had been limited and that this had “been a bit of a challenge”. It similarly noted that it had limited conversations with the University of Birmingham about the college, but confirmed that it had been involved in discussions with the Department for Education about the merger. It recognised, however, that it was within its strategic interests to have a really strong relationship with the college and ensure that it is providing skills and the curriculum that were needed.62

Engagement with communities

28. HS2 Ltd told us that the nature of the High Speed 2 programme means that the work required for it will be disruptive. HS2 Ltd estimated it had handled 124,000 queries over the past three years and interacted with over 76,000 people along the route.63 The Independent Construction Commissioner HS2 (the Commissioner) told us that the complaints the programme had received so far had mainly been about disruption to roads and traffic, vegetation clearance and noise and vibration from construction activity.64 With delivery of the main civil engineering projects on Phase One only formally beginning during 2020, both HS2 Ltd and the Commissioner told us that the volume of complaints was already increasing, but that this was inevitable.65 Complaints to the Commissioner rose to 86 in the first quarter of 2021 from 74 in the previous quarter.66 The Commissioner told us that while current volumes were unsatisfactory, the scale of the programme and the number of communities it impacted meant the programme was likely to generate large number of complaints, and that volumes of complaints were likely to continue to increase as the programme developed and more communities were affected. It explained that HS2 Ltd’s complaints system was so far working “extremely well” and that 90% of issues were resolved within the 20 working-day timetable. The Commissioner also told us it will be important to have a lessons learned process fully embedded in the programme, so lessons are shared between Phase One and Phase Two and mistakes are not repeated.67

29. In May 2021, the Parliamentary and Health Service Ombudsman published a report that found that HS2 Ltd had misled and failed to communicate promptly and effectively with a family whose home was being purchased to make way for the railway.68 HS2 Ltd told us that although it had not accepted all the findings in the report, it had acknowledged and accepted the recommendations, and made good progress in its engagement with communities affected by the programme since.69 HS2 Ltd accepted that the report “shone a light on some failings of the company several years ago” but that it had learned from this and its local interaction was much better for it. It explained that it had spent nearly £100 million on local community projects and invested in around 161 local communities and business project. HS2 Ltd asserted, however, there would be limited value in assessing the costs and benefits of activity to mitigate complaints. HS2 Ltd told us that it was focused on working closely with contractors to ensure that disruption to communities was minimised, and that it behaved as a good neighbour. It also said it was working with local MPs and the supply chain on improving the availability of information about disruption to communities caused by the programme.70

30. HS2 Ltd told us that there had already been significant activity from environmental protests at various sites along the Phase One route. Most notably, protesters tunnelled beneath land owned by HS2 Ltd at Euston. HS2 Ltd told us that this disruption had cost it in the region of £75 million so far and had an impact on the programme. It recognised that those living on the HS2 route did not choose to live alongside the work, and that they had “every right” to peaceful protest but told us that it was concerned by protests becoming increasingly violent and disruptive. It explained that there had been around 300 arrests and nine prosecutions as a result of protests. HS2 Ltd told us that it and its contractors were not really geared up to manage the level of protests that had occurred so far, and that it would other support from Government to ensure that it is addressed.71

Formal minutes

Thursday 16 September 2021

Members present:

Dame Meg Hillier, in the Chair

Sir Geoffrey Clifton-Brown Nick Smith
Peter Grant

Draft Report (HS2 Summer 2021), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 30 read and agreed to.

Summary agreed to.

Introduction agreed to.

Conclusions and recommendations agreed to.

Resolved, That the Report be the Seventeenth of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134.

[Adjourned till Monday 20 September at 2.00:pm


Witnesses

The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.

Monday 21 June 2021

Sir Mark Worthington, Independent Construction Commissioner, HS2 Ltd; Sir John Armitt, Chair, National Infrastructure Commission; Craig Wakeman, Head of Transport Implementation and Lead HS2 Manager, West Midlands Combined AuthorityQ1–68

Thursday 24 June 2021

Bernadette Kelly, Permanent Secretary, Department for Transport; Clive Maxwell, Director General for High Speed Rail, Department for Transport; Mark Thurston, Chief Executive, HS2 LtdQ1–116


Published written evidence

The following written evidence was received and can be viewed on the inquiry publications page of the Committee’s website.

HS2 INQ numbers are generated by the evidence processing system and so may not be complete.

1 Gross, Mr Michael (HS20005)

2 Haville, Mike (HS20002)

3 Haville, Mike (HS20004)

4 Hyde Heath Village Society (HS20003)

5 Wendover Parish Council) (HS20007)


List of Reports from the Committee during the current Parliament

All publications from the Committee are available on the publications page of the Committee’s website.


Footnotes

1 C&AG’s Report, Progress in implementing National Audit Office recommendations: High Speed Two, Session 2021–22, HC 292, 10 June 2021

2 C&AG’s Report, para 2

3 C&AG’s Report, para 1.2

4 Douglas Oakervee CBE, FREng, Oakervee Review, December 2019, available at Oakervee Review (publishing.service.gov.uk); Written statement to Parliament, HS2 6-monthly report to Parliament: Autumn 2020, 13 October 2020

5 Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020, summary

6 Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020, conclusions 1 and 2; para 6; HM Treasury, Treasury Minutes, CP 270, July 2020

7 Qq 5–6

8 Qq 5, 15, 17

9 Written statement to Parliament, HS2 6-monthly report to Parliament: March 2021, 23 March 2021

10 Q 10

11 HS2 Ltd told us that the two-year commissioning period does not have a separate cost attached as it is time-based cost for the combination of contractors involved. The work includes systems integration and dynamic testing, leading into the trial operations of both the rolling stock and stations.

12 Written statement to Parliament, HS2 6-monthly report to Parliament: March 2021, 23 March 2021

13 Letter from DfT to the Chair, 16 June 2021

14 Q 98.

15 Written statement to Parliament, HS2 6-monthly report to Parliament: March 2021, 23 March 2021

16 C&AG’s Report, High Speed 2: A progress update, Session 2019–20, HC 40, 24 January 2020, Figure 7; Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020

17 Qq 1, 13, Letter from Mark Thurston to the Chair, 13 July 2021]

18 Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020, conclusion 1

19 Qq 86–87; Written statement to Parliament, HS2 6-monthly report to Parliament: March 2021, 23 March 2021

20 Qq 86, 89

21 Qq 90–91

22 Qq 93–95

23 Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020, conclusion 4

24 Q 40; Note dated 30 November 2020 from Department for Transport; Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020, conclusion 4

25 Qq 45–46

26 Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020, conclusion 4, para 18

27 Note dated 30 November 2020 from Department for Transport, High Speed 2: Spring 2020 update, Third Report of Session 2019–21 – recommendation 4 – Euston update

28 Written statement to Parliament, HS2 6-monthly report to Parliament: March 2021, 23 March 2021

29 Qq 40–43

30 Q 40

31 Qq 5, 40

32 Q 53; Letter from Department to Committee, 13 July

33 Qq 5, 49, 50, 57

34 Q 55

35 Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020, conclusion 4

36 Q 55

37 Qq 5, 82

38 Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020, para 6

39 Qq 22–23; Committee of Public Accounts, Crossrail: progress review, Ninety-Second Report of Session 2017–19, HC 2004, 3 April 2019, paras 15, 22; C&AG’s Report, Crossrail – a progress update, Session 2021–22, HC 299, 9 July 2021, para 13

40 C&AG’s Report, Crossrail – a progress update, Session 2021–22, HC 299, 9 July 2021, para 13

41 Q 36

42 Qq 22–23, 32

43 Q 7

44 Q 37

45 Q 16

46 Qq 34–37

47 Qq 22–23

48 Qq 30–32

49 Qq 5, 63; Committee of Public Accounts, Progress with preparations for High Speed 2, Fourteenth Report of Session 2016–17, HC 486, 14 September 2016, conclusion 5; Committee of Public Accounts, High Speed 2: a review of early programme preparation, Twenty-second Report of Session 2013–14, HC 478, 9 September 2013, para 4, Q187

50 Qq 5, 63–64; Oral evidence: HS2 recall – pre panel, HC 178, Qq 2–4, 6

51 Qq 63–65

52 Qq 64, 69–71; Oral evidence: HS2 recall – pre panel, HC 178, Qq 53–54

53 Qq 72–73

54 Qq 60–63

55 Qq 78 - 79

56 Committee of Public Accounts, High Speed 2: Spring 2020 update, Third Report of Session 2019–21, HC 84, 17 May 2020, conclusion 3; Committee of Public Accounts, Progress with preparations for High Speed 2, Fourteenth Report of Session 2016–17, HC 486, 14 September 2016, conclusion 4; Committee of Public Accounts, High Speed 2: a review of early programme preparation, Twenty-second Report of Session 2013–14, HC 478, 9 September 2013, conclusion 6

57 Q 116

58 Q 69; Oral evidence: HS2 recall – pre panel, HC 178, Qq 45–46, 48

59 Qq 69–71

60 Committee of Public Accounts, Progress with preparations for High Speed 2, Fourteenth Report of Session 2016–17, HC 486, 14 September 2016, para 13

61 Qq 65–66, 116

62 Qq 66–69, 116

63 Qq 104, 108

64 Oral evidence: HS2 recall – pre panel, HC 178, Q 20

65 Q 108; C&AG’s Report, para 1.3; Oral evidence: HS2 recall – pre panel, HC 178, Q 24

66 Independent Construction Commissioner, Seventeenth report: Quarter One 2021, page 2

67 Oral evidence: HS2 recall – pre panel, HC 178, Qq 24, 33

68 Parliamentary and Health Service Ombudsman, An investigation into HS2 Ltd’s failure to communicate with a family about acquiring their home, HC 211, 26 May 2021

69 Qq 105, 108; Correspondence from Mark Thurston, Chief Executive Officer, HS2 Ltd to the Committee, Parliamentary and Health Service Ombudsman report, 29 May 2021

70 Qq 104, 108

71 Q 3