by Harry Fone, grassroots campaign manager at the TaxPayers’ Alliance.
Since High Speed 2 (HS2) was first imagined the TaxPayers’ Alliance has doggedly campaigned against this monstrosity of a transportation project. As I’ve said on many occasions, HS2 has consistently over-promised and under-delivered, which is exactly why it should be scrapped. Unfortunately the government ignored common sense and gave notice to proceed in April this year. Consequently, we must now focus on stopping the runaway budget from soaring past the current estimate of £106 billion. If ministers don’t get a grip on the situation then as we warned the prime minister at the time a final bill of £150 billion becomes increasingly likely. As construction work officially begins on HS2, the TaxPayers’ Alliance (TPA) is calling for greater independent oversight to save taxpayers £44 billion.
A cursory glance at HS2 Ltd’s latest annual report suggests this white elephant is finally on track. But look closely and you soon realise that many of the claims made don’t pass muster. Let’s start with chairman Allan Cook and his comments on how the project is progressing. He proudly states:
“HS2 Ltd have assembled, under the leadership of our CEO Mark Thurston, an experienced and talented team. They are absolutely committed to providing value for money for the UK taxpayer in terms of meeting our commitments to delivery, cost and scope of the programme.”
Adding… “The Stocktake, undertaken by the company in 2019, provided the Government with a detailed analysis of the programme and a cost and schedule for Phase One they can be confident in.”
So how much value HS2 Ltd is providing for the taxpayer? In 2011 the entire project cost was estimated at £33 billion. This soon rose to £42 billion in 2013 and £55.7 billion by 2015. The Oakervee Review recently put costs at £81-88 billion and even hinted at the now commonly accepted figure of £106 billion – which doesn’t even include the £7 billion needed for the actual rolling stock. How anyone can describe a project that has tripled in cost as “providing value for money” is truly baffling. Given past experience, how can those taxpayers have any confidence that this will be the final bill?
Let’s turn our attention to CEO Mark Thurston. In the report he proudly avers that he wants to “establish a firm grip on the cost” of HS2. But it is under his reign that costs have soared so dramatically. What makes his claim all the more ridiculous is that he literally doesn’t put his money where his mouth is. Since taking the role his taxpayer-funded remuneration has increased from £601,000 in 2017-18 to £651,448 in 2018-19 and £659,416 in 2019-20 making him the highest paid government official. As of September 2019, there were 48 employees at HS2 Ltd who took home pay packets in excess of £150,000 per year. Talk about a gravy train! A cut in executives pay would certainly be a welcome first step in trimming the fat.
Moving onto timescales, Mr Thurston also proclaims he wants to get a grip on the project’s schedule. Again, under his watch there have been significant delays. Phase 1 (London to Birmingham) was due to be completed in 2026, but has been pushed back to 2031. The entire project was supposed to be built by 2032 but commuters must wait an additional 8 years until 2040 before they can board the first trains from London to Leeds. Incredibly, in a section of the reported title “Are we on time?” it is claimed that Phase One is indeed on target at 91 per cent efficiency. HS2 bosses have lost touch with reality if they think being 5 years behind schedule counts as “on time”.
Things don’t get any better on the environmental side of things. HS2 has long claimed it “will support the transition to a net-zero carbon UK economy.” Yet, the Oakervee Review can’t back that claim up. Yes, in the best case scenario net emissions are expected to reduce by 3 million tonnes of carbon dioxide equivalent (tCO2e) emissions. But in the worst case HS2 would pollute Britain with an additional 4 million tCO2e. In what I suspect is an attempt to mitigate against this, the report claims:
“Currently we’re forecasting a 6.5% carbon reduction for Phase One, equivalent to a reduction of almost one million tonnes of carbon dioxide equivalent emissions (MtCO2e)”.
Given the woeful record on cost, timescale and many other factors why should anyone believe this forecast? After all, HS2 is going to scythe through mile after mile of English countryside destroying many areas of ancient woodland.
It’s clear that HS2 is a runaway train, but what can be done to stop it going off the rails? Quite simply the government must do more to hold project leaders accountable. As a recent report by the Public Accounts Committee made clear, HS2 Ltd shows a “wilful disregard for accountability and transparency”. Our own research has shown, project managers who fail to acknowledge the scale of the problem will only increase the risk and amount of cost overruns. We therefore believe that existing measures will be insufficient to bring discipline - the dangers of horrendous cost overruns remain a real and terrible prospect.
The government was right to appoint a minister specifically for HS2 but more must be done. Only consistent, well informed and belligerent scrutiny can improve currently poor standards of transparency and accountability. So the TaxPayers’ Alliance is calling for the appointment of an independent commission to monitor project costs. Before the Oakervee Review was published, one of the independent panellists felt so strongly about the flaws of the project that he published his own separate review. The document from House of Lords member Lord Berkeley offered a brutally honest analysis and gave the public a long overdue and genuine insight into the problems. In the end, that analysis had to come from an independent parliamentary source, not a government-sponsored panel. That’s why we believe an independent commission is so important.
This body should operate alongside but separately from the existing construction commissioner. The commission should scrutinise costs related to HS2, and be able to investigate any matters relating to it without hindrance. Perhaps most importantly, it should be resourced separately from the Department for Transport and HS2 Ltd - senior staff must not be former members of either body. It could report to a new parliamentary committee, completely independent from government. It could oversee a system of conditional remuneration, making sure bonuses were paid only when price promises were met. The commission's first duty would be to keep down costs, not whitewashing the numbers.
In terms of cost, the new commission would be comparable to the Independent Commission for Aid Impact (ICAI) which works to ensure UK aid is spent effectively. For 2019-20 the taxpayer paid £3.8 million for the ICAI. Without proper scrutiny the final bill for HS2 could be as high as £150 billion, £44 billion higher than the current estimate of £106 billion. Spending around £4 million per year in order to save over £40 billion makes economic sense.
By putting these measures in place there might finally be light at the end of the tunnel. A commissioner with a mandate for independent investigation would offer the best chance to save taxpayers billions of pounds which are about to be wasted. Without a mechanism like this, that train may have already left the station.