Year by year, the tale of HS2 grows more wretched. The latest report on the fiasco, by James Stewart, former chief executive of Crossrail, depicts contractors behaving like a gang that tarmacs driveways taking advantage of an octogenarian widow.
Endless wheezes have been devised to drive up costs, with HS2 Ltd – the government-owned company set up to handle the project – seemingly too gullible to prevent itself from being ripped off. Some of what has gone on, according to the report, may constitute outright fraud.
Contracts were signed off even before aspects of the design were decided upon, effectively giving expensive additions a blank cheque. An elaborate remodelling of Euston station was abandoned, but not before £250 million was blown on design work. It beggars belief not that a firm charged £20,000 to make a model station out of Lego, but that HS2 paid it. In all, costs have been inflated by an astonishing £37 billion since 2012. To put that into context, Rachel Reeves’ eye-watering tax rises in last October’s budget were supposed to raise an extra £40 billion.
The culture at HS2 is prodigal and woe betide any miser who tries to spoil the party. When risk assessor Stephen Cresswell raised concerns that the ballooning HS2 bill was ‘actively misrepresented’, he was soon shown the door in 2022. He took the firm to an employment tribunal and was this month awarded £319,000 compensation. His condemnation afterwards was withering: ‘HS2 is not an organisation that should be trusted with public money.’
And yet, we give it more public money. While the official estimate for its final cost is between £45 billion and £54 billion, many fear it will cost more than £100 billion.
One of the many ways in which the project was misconceived from the start was that it was needlessly designed to be the fastest train service in the world, even though all the cities it connected were less than 200 miles apart. Consequently, far more earthworks were required and far more properties had to be demolished than if the line was built for a lower speed.
Even at its original estimate, HS2 was going to cost, per mile, multiples of what the high-speed line from Paris to Strasbourg – its first phase was completed in 2007 – cost.
It is bizarre that then-prime minister David Cameron and chancellor George Osborne waved through HS2 as a fully taxpayer-funded project in 2012 at the same time they were taking a scythe to public services to try to close Gordon Brown’s gargantuan spending deficit. In their hubris, they imagined that Whitehall would make a better fist of HS2 than was made of HS1 – the line from London St Pancras to the Channel Tunnel – which was built with private money and sailed over its budget by around 20 per cent.
An artist’s impression of an HS2 train. Even at its original estimate, HS2 was going to cost, per mile, multiples of what the high-speed line from Paris to Strasbourg – its first phase was completed in 2007 – cost, writes Ross Clark
An HS2 worker stands in front of tunnel boring machine Karen at the Old Oak Common station box site during preparations for completing the 4.5 mile HS2 tunnelling to London Euston
How could they have not noticed the lousy record of cost control in almost everything run by the state?
Time and time again, we find ourselves paying through the nose for things that other countries seem able to build for far less. Just look at the Stonehenge tunnel, a billion-pound project that has been 30 years in the making but was cancelled last year because of its mushrooming costs. And the less said about a third runway at Heathrow, the better. While other countries build things, we spend billions talking about it, holding endless inquiries, backtracking and redesigning the whole thing.
We are about to go through the whole tortuous process again with the construction of Sizewell C. Like HS2, the Suffolk nuclear power plant follows a similar private sector project – in this case, the Hinkley C station in Somerset, which has itself been delayed and overrun its budget.
Even by nuclear reactor standards, its design is complex, as the same plants in Finland and Normandy have proved with 14-year and 12-year delays, respectively.
It’s little wonder that the private sector judged Sizewell to be too risky, but that has not stopped the Government ploughing taxpayer money into the scheme in the deluded belief that, yet again, the public sector will manage it better. Don’t believe it. Private enterprise doesn’t always manage things well, but at least it has a strong incentive to keep a lid on costs and avoid extravagance. Let spending spiral out of control and you can crash your company – taking your bonus and pension with it.
In the public sector, on the other hand, you just run off to the Treasury with a begging bowl, assured that the Government has invested so much of its political capital in it that it won’t be brave enough to pull the plug. That is what has happened with HS2. Contractors know that ministers are desperate to get the project over the line, and behave accordingly.
We are never going to solve the problem of infrastructure unless we first tackle the culture of the public sector. Public officials need proper incentives and penalties pegged to performance, and have it drummed into them that they are spending our money, not a bottomless pit of funds.
Yet introducing a dash of private-sector dynamism into Whitehall is anathema to this Labour administration more concerned with union demands that civil servants continue to run the country from their sofas.
Rachel Reeves sees spending on infrastructure as key to future growth, but with more projects on the horizon – such as building small modular nuclear reactors and updating the National Grid – there’s little hope that these won’t become very expensive millstones around the taxpayer’s neck.
