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rail@bauermedia.co.uk
MORE than two-thirds of the £36 billion from High Speed 2’s cancelled second phase will be spent on roads, Transport Secretary Mark Harper told MPs on November 15.
Under questioning from the Transport Select Committee, Harper justified the decision to switch rail funding to roads by saying “that’s sensible because most people get around on roads”. He added that road spending “meets what people actually do rather than where the spending was before”.
Two days later, the Department for Transport announced increased funding (£8bn over ten years) to repair potholes and resurface roads using money that government had planned to borrow to fund HS2’s second phase from the West Midlands to Manchester, which Prime Minister Rishi Sunak cancelled in October after a decade’s development work.
Sunak said that HS2’s costs were rising. And in a six-monthly update to Parliament on November 15, Rail Minister Huw Merriman revealed that HS2 Ltd’s latest estimate for completing the first phase from London and Birmingham is £49bn-£57bn (at 2019 prices).
Merriman said this was a “significant upwards revision” and explained that it stemmed from several problems, including “design performance, delivery productivity, consenting delays, and a difficult operating environment with COVID-19 and the Ukraine war affecting the supply chain”.
HS2 Ltd Chairman Sir Jon Thompson explained the increase to the Public Accounts Committee on November 16, saying:
“Government’s decision to let a cost-plus contract where there are very few incentives or penalties around them does not provide me any real levers on those contractors to do better in relation to schedule or cost.”
Thompson was talking about the main works contracts let to build the railway formation on which track, signalling and overhead line equipment will be installed, under ‘railway systems’ contracts which HS2 expects to sign next year.
He said that 89% of the cost increase between estimates made by the DfT last spring came in these main works contracts. They place most of the risk for unexpected costs onto HS2 Ltd, and so the government, because contractors were not willing to shoulder the risk themselves.
Thompson said that HS2L was now looking to renegotiate those deals, with proposals going to its internal commercial and investment committee in December.
He explained that the revised deals might be different on each of the four main works contracts. His reasoning was that on contracts with completed designs, it should be possible to be more certain about construction costs. He said one contract was 100% designed, while another was only 58% complete in design terms.
As HS2L looks forward to switching from civils to systems work,
