HS2 in danger of coming off the rails as problems multiply

Exclusive: National Audit Office probe and Cabinet Office review add to uncertainty over the project

Chancellor George Osborne takes part in a tour of the train wheel manufacturers Lucchini UK, in Manchester, in 2013. The first phase of HS2 opens in 2026 (Getty)

The £50bn High Speed Two railway is being battered by an “emerging storm” of problems, damaging Chancellor George Osborne’s plans to wean Britain’s economy from its dependence on London.

The Independent on Sunday can reveal that HS2, which will take commuters from London to Birmingham in 49 minutes when the first phase opens in 2026, before heading north to Leeds and Manchester, is suffering because:

• HS2 executives have been “spooked” by an unexpectedly early National Audit Office (NAO) probe.

• There are fears the 1,300-person project team, HS2 Ltd, isn’t ready to oversee such a massive project, as a long delayed Cabinet Office review begins.

• Many senior staff have refused to relocate from London as the project shifts headquarters to Birmingham – and many staying put will commute on the very line HS2 is supposed to relieve of congestion.

The debate over HS2 highlights the tension between local communities and national interest over big infrastructure projects (EPA)

• Ministers believe the project will become bogged down in the House of Lords when the HS2 bill reaches the upper house.

• The appointment of the private sector partner to run the project has been delayed twice in the past few weeks.

The NAO is looking at the “latest position on costs, schedule and programme scope”, but HS2 executives had not expected this scrutiny until later this year.

The project’s business case was already criticised by the NAO in 2013, and a year later the public spending watchdog questioned HS2’s economic rationale. Mr Osborne believes HS2 will help northern and Midlands’ businesses grow to compete with those in the affluent south-east.

The latest NAO probe comes after tens of millions was added to the price, because of changes such as a longer tunnel in the Chilterns agreed by a committee of MPs last month. An industry source said executives were “spooked” by the NAO inquiry coming “so soon”.

“It’s an emerging storm,” said the source. “They’re concerned the NAO report is coming at the same time as the Cabinet Office review.”

The HSUK proposal

The Cabinet Office’s Review Point One should have started last autumn, but was delayed because of fears HS2 Ltd could fail crucial tests. The four-person review will begin later this month. A source close to HS2 said the organisation, led by chairman Sir David Higgins and chief executive Simon Kirby, might not be “fully mature” enough to pass. “Every day of delay adds to the risk of the project,” said another source. There are concerns HS2 Ltd has grown too big. A source said its size is “out of control” at 1,300 staff; officials are worried it is “far bigger in terms of numbers than the team that built the London 2012 Olympics”.

The HS2 Bill is undergoing line-by-line scrutiny in the House of Commons and will move to the Lords later this year. A Government source said getting royal assent by the end of 2016, as planned, was unlikely because it was “up in the air” how long rebellious Conservative peers will try to bog down the Bill.

HS2 Ltd was due to select its engineering delivery partner, the private sector consortium that will help manage the project, last month. Three consortiums led by US firms (Bechtel, CH2M Hill, and Parsons Brinckerhoff) are shortlisted for the £350m job. This had been delayed until tomorrow; now it is understood to have been moved to later this week, following an intervention from No 10 for media management reasons.

HS2’s HQ is moving from London to Birmingham, which has upset staff who don’t want to live in the West Midlands. Some will commute by rail, an irony given HS2 is to supposed to ease train congestion between London and Birmingham.

Joe Rukin, campaign manager at Stop HS2, said: “It is completely unprecedented for the NAO to be working on a third report on a project at such an early stage. Previously the NAO said there was a ‘lack of clarity’ regarding HS2 and the Government has been unrealistic about the project, but these serious concerns were brushed aside, so it is no real surprise that the NAO is investigating again. All the independent reports about HS2 have shown it is a disaster waiting to happen.

“The fact HS2 Ltd staff refuse to relocate to Birmingham is the ultimate hypocrisy from overpaid bureaucrats who are only interested in running their own gravy train.”

An HS2 spokesman said: “We welcome the NAO scrutiny as part of a process to ensure we deliver this vital project in the most effective way. We have been pleased to co-operate and work with Government as we approach our first Review Point …

“HS2 Ltd and Government committed to moving our HQ… two years ago. This is not only practical (as Birmingham lies at the heart of HS2) it is also cost efficient in terms of, for example, office rent. Inevitably, there will be a mix of new recruitment, relocation and redundancy.”