UK: DfT Called To Account On HS2

Last Updated: 18 September 2013
Article by Dougal Ainsley

This week's entry looks at the recently published review by the Public Accounts Committee (PAC) of the early programme preparation for HS2.

Early programme preparation covers a range of work that should be carried out by any promoter of a major infrastructure project long before the spades hit the ground, including route planning, timetabling, cost benefit analyses and articulating the business case.

On Monday 9 September 2013 the PAC published its review of the early programme preparation for HS2.

The DfT and HS2 Limited must have been quietly dreading this. The National Audit Office (NAO) report on the same subject back in May was not complimentary and would have made uncomfortable reading for the scheme's sponsors (see our blog entry number 3). And that was without a contribution from Margaret Hodge (the Chair of the PAC who has become well known recently for her robust approach).

Given that context, this report in fact does not add much in the way of new criticisms of the DfT's work to-date. We've heard a lot of this, or something like it, before. But that won't stop it being presented as another blow to the government's plans for HS2. More negative publicity - it's starting to stack up.

The PAC, responding to the NAO report, took oral evidence from senior figures responsible for the scheme - Philip Rutnam, Permanent Secretary of the DfT, David Prout, Director General for HS2, and Alison Munro, Chief Executive of HS2 Ltd. The DfT also submitted written evidence.

The PAC's published review is based on that evidence and makes five conclusions and recommendations. In summary, these are:

  1. The Department has not yet presented a convincing strategic case for High Speed 2.

    Recommendation: the Department should publish detailed evidence to show why it thinks that HS2 is best option for increasing rail capacity, improving connectivity and rebalancing the economy.
  2. The Department has so far made decisions based on unreliable data and unrealistic assumptions.

    Recommendation: the Department should base its decision on phase two on a business case for the Y-network using up-to-date information and realistic assumptions (for more information on Phase Two, see our blog entry number 11)
  3. The programme's large contingency seems to be compensating for weak cost information.

    Recommendation: the Department should allocate its contingency allowance to specific risks.
  4. The Department's time table for the passing of the Hybrid Bill if unrealistically ambitious (for more information on Hybrid Bills, see our blog entry number 7)

    Recommendation: the Accounting Officer should advise ministers on whether the Department can deliver the Bill within the set timetables to a high standard)
  5. The Department has a shortage of the commercial skills it needs to protect taxpayers' interests on a programme of the scale of High Speed 2.

    Recommendation: the Department should set out how it will secure the right level of resources to enable it to oversee a programme of this magnitude.

One interesting incidental feature of the review is its extraordinary admonition of ministers and / or DfT officials.

It notes that at the time of the NAO report, DfT sources anonymously briefed the press that the NAO had relied on out of date analysis and the report contained errors - which was unfounded as the DfT had agreed the facts in the report prior to publication.

The PAC makes clear that it takes a dim view of this 'manufactured public disagreement', lamenting its negative impact on transparency, effective accountably and constructive public debate.

Fortunately for the DfT and HS2 Limited, this week also saw the publication of a KPMG report commissioned by HS2 Limited on the economic benefits of the new line, providing ammunition for a rapid fight-back.

'HS2: the Regional Economic Impact' concludes that investment in HS2 could potentially generate £15 billion of additional output per year for the British economy in 2037, and that the productivity benefits will accrue to all regions, with strong gains in the Midlands and the North.

On Wednesday 11 September 2013 the transport secretary, Patrick McLoughlin, cited the report's findings in a speech at the Institute of Civil Engineers in which he emphasised that the case for HS2 comes from its delivery of necessary capacity and economic benefits, and not primarily from the speed of the trains and the reduction in journey times.

He pointed out that, given the potential economic benefits to the whole country, people won't have to use the trains to benefit from the scheme.

It will be a relief to the scheme's proponents to see some positive headlines for a change.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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