Starmer to delay HS2 after ‘litany of failure' revealed

Telegraph

5 hours ago

Sir Keir Starmer will delay the opening of HS2 as a damning official report reveals a 'litany of failure' that has driven up costs by £37 billion.
The Telegraph can reveal that on Wednesday Heidi Alexander, the Transport Secretary, will announce the remaining section of the high-speed line, between London and Birmingham, will no longer be completed by 2033. A delay of at least two years is likely.
She will say that the Conservatives increased the cost of HS2 by £37 billion between 2012, when the line was approved by the Coalition government, and the general election last year.
Ms Alexander will raise concerns that taxpayers may have been defrauded by subcontractors who have inflated costs, and pledge that 'consequences will be felt'.
She will accuse the Tories of turning British infrastructure projects into a 'laughing stock'.
She will accept 89 recommendations of an independent review into infrastructure projects prompted by issues with HS2 that was carried out by James Stewart, the former chief executive of Crossrail.
The Government will also appoint Mike Brown, the former Transport for London commissioner, as the new chairman of HS2 Ltd, the company that runs the project.
HS2 was given the go-ahead in 2012 with the idea it would speed up travel between London and other major cities, and reduce the burden on existing railways. It has since been decried as a white elephant that has run far behind schedule and over budget.
In a statement to the House of Commons, Ms Alexander will say she has drawn a 'line in the sand' on the project, which has been a 'litany of failure', after billions were wasted on 'constant scope changes, ineffective contracts and bad management'.
She will say; '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 dossier of failures to be published on Wednesday includes a 'Euston Ministerial Taskforce' announced in March 2024 to oversee the London terminal of HS2, which did not meet once before the July election.
The report will also say that the previous government spent £2 billion on the two legs of the project between Birmingham, Manchester and Leeds, before scrapping both, and that HS2 Ltd spent more than £250 million on two failed designs for a new station at Euston.
When the company was asked to provide a plan that would be cheaper than its first attempt, it submitted a second design costing £400 million more than the original.
The new report's comments are the latest in a long line of criticism of HS2. In 2020, Lord Berkeley, the deputy chairman of a review into the project, claimed that costs had run 'completely out of control'.
In 2022, a whistleblower was fired after raising concerns that costs were being misrepresented. Stephen Cresswell, a risk management consultant, later won more than £300,000 in compensation.
Meanwhile, the company came under fire for spending £20,000 on a scale model of the proposed Old Oak Common station the size of a kitchen table built from 15,000 Lego bricks.
Perhaps the biggest outcry came after plans were revealed for a £100 million 'bat tunnel', built to shield wildlife from trains in ancient Buckinghamshire woodland.
Government officials now believe the first HS2 trains are unlikely to run on the line until at least 2035, although independent estimates have suggested they may not begin until the late 2030s.
It is the first time the Government has admitted that meeting the 2033 deadline for services between Old Oak Common in North West London and Birmingham is no longer realistic.
Mark Wild, who was appointed as HS2 Ltd's chief executive last May, will continue to review the project and provide an updated cost estimate and a timeline for its completion in the coming months.
Suspected fraud
One HS2 subcontractor has already been reported to the taxman for suspected payroll fraud, and insiders said the review has uncovered additional examples of contracts that appeared designed to inflate costs.
The delay is the latest in a series of setbacks for HS2, which was first announced with a notional budget of £20 billion by Gordon Brown in 2009.
The first trains were originally due to run in 2026 and provide fast transport links between major northern cities and London, with a further 'Northern Powerhouse Rail' line to follow.
Since the project was announced, the cost has risen to £57 billion, while delivery of the services is now likely to be delayed by a decade.
Jon Thompson, HS2 Ltd's former chairman, has said the final bill could be £9 billion higher still, at £66 billion. Independent estimates have put the total cost as high as £100 billion, factoring in inflation and other unforeseen costs.
The project has become a major hurdle for successive governments, which have resented the high cost of construction, legal fees and land purchase. Labour did not mention HS2 in its election manifesto last year, but pledged shortly after taking power that it would continue with construction of Phase One.
Ministers are planning to use the recommendations of the Stewart review when proceeding with the Lower Thames Crossing and Northern Powerhouse Rail projects later in this Parliament.
Government sources said more details of future projects would be announced in the £725 billion infrastructure strategy to be announced by Rachel Reeves later this month.
The Government is concerned that without the planned HS2 Phase 2a, between Birmingham and Crewe, it cannot ease capacity on the West Coast Main line.
Officials are considering a plan backed by Andy Burnham, the Labour mayor of Greater Manchester, to build an HS2-lite track between those cities at a lower cost and with private finance.
The 89 recommendations of the Stewart review will include that HS2 Ltd changes its contracts to encourage providers to deliver on time and under budget.
When the company renews contracts, it will include clauses that will give firms a financial incentive to perform better. Insiders say deliberately open-ended contracts have been a key driver of delays and cost overruns over the last 13 years.
'Lack of trust'
It will also find that ministers have failed to oversee the project, allowing the company's former management to build the line virtually unsupervised, with taxpayers footing the bill.
Ms Alexander will describe the issue as a 'fundamental lack of trust between my Department and HS2 Ltd', pointing to former Tory transport secretaries and Treasury ministers who skipped meetings that were designed to keep the cost of HS2 under control.
Mr Wild and Mr Brown, who will now run HS2 Ltd, previously worked with Ms Alexander on the Crossrail project, when she was serving as Sadiq Khan's deputy in City Hall.
'Mark and Mike were part of the team, with me, that turned Crossrail into the Elizabeth line,' she will say.
'We have done it before, we will do it again.'
Sources said HS2 was likely to adopt some lessons from Crossrail, which became the Elizabeth line, including a phased opening that allows the railway to sell tickets before it is fully complete.
The Elizabeth line opened in May 2022, more than three years late and more than £4 billion over budget, although its budget was increased much less as a proportion of its total cost than HS2, which is expected to cost at least three times more than planned.
Although ministers will argue that the delay to HS2 was an inevitable consequence of management by the Conservatives, the latest news is likely to be received poorly by residents affected by construction works between London and Birmingham.
Protests against the project have included locals unhappy about disruption to picturesque villages and environmental activists who believe the new rail line will destroy habitats.
More than £120 million has been spent by HS2 Ltd on managing the cost of protests, which has included removing demonstrators from tunnels between Old Oak Common and Euston station.
A government source told The Telegraph: 'It's now crystal clear that previous Conservative governments have serially mismanaged HS2, with taxpayers and passengers paying the price.
'The cost was inflated out of all control, while 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.
'In the wake of these fresh revelations, this government is learning the lessons needed to restore trust and rebuild Britain.'