Baroness Pidgeon (LD)
My Lords, in the late 2000s there was an absolute cross-party ambition in the UK to build a high-speed railway connecting London and the north of England, and ultimately Scotland, and increasing the capacity of our railway was at the core of that ambition. The Liberal Democrats—and I am speaking on behalf of my Benches today—have always supported this. It is not about a nice-to-have, fast, shiny new railway line which we all love, but helping to alleviate the pressure and capacity restrictions on the existing rail network, and supporting growth.
This Statement, the James Stewart review, which is to be commended, and the associated papers set out a damning story of Conservative mismanagement. What should have been a fantastic example of investment, connecting our great cities of Leeds and Manchester with London while boosting economic growth, has in reality been a Treasury spending spree wasting billions of pounds of public money and causing years of delay, based on a political whim of the day. It is a textbook example of how not to build modern infrastructure, and the Conservative Party should be ashamed of their mismanagement.
The Conservative Government focused on a schedule before sufficient design work had taken place—a recipe for disaster that we have seen play out—and constantly changed the scope and requirements of the project. Reading the Statement about HS2 brought back many memories about what happened with Crossrail. There was no real oversight, and there were confused lines of accountability. Key people were not listening to those who were reporting that the build was not on time, and they chose to water down those warnings up the line. There was constant pressure to change the scope, an obsession with an opening date above all else, and a lack of capacity in the Department for Transport to oversee major infrastructure projects.
This reset for High Speed 2 is therefore absolutely welcome. To date, the project has failed to follow international best practice in building major projects. We on these Benches stress how much we welcome the new leadership of Mark Wild, as chief executive of High Speed 2, and his forensic work in unpicking what happened and getting the programme back on track, to a realistic timescale and budget. He took over Crossrail when it was on its knees and turned it around, motivating the team to deliver the Elizabeth Line, which is such a pleasure to use and is one of the busiest train lines in the country. I know he can do the same with High Speed 2.
The project has again shone a light on poor procurement and poor contract management within the Department for Transport. What actions will the Government take to address insufficient capability within the Department for Transport, particularly in commercial and delivery expertise, and client work on major infrastructure projects on this scale? What will the Government do to build trust with local communities and wider stakeholders in this new HS2 project? What changes will the Government make to the governance structure and financing of High Speed 2 to ensure that costs and schedule estimates are reliable? As always, we want to gain wider learnings from this. As I called for after Crossrail—in fact, I briefed a previous chief executive of High Speed 2 and Ministers about the issues we had found during the Crossrail delays—we want to build more transport infrastructure to help our regional economies grow. To do this, however, we need a structure to deliver it on time and on budget.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, I start by emphasising the benefits of a new railway to the Midlands and the north of England. Both the noble Lord and the noble Baroness referred to the capacity of the West Coast Main Line, and it is not in contention that new capacity needs to be built. Connectivity drives growth, jobs and housing, and the skyline of Birmingham is testimony to Birmingham’s expectations of a faster link to London. Indeed, the Government have put significant money into connectivity for the sports quarter, which, clearly, would not be being proposed were it not for HS2 serving Birmingham in the future. The development opportunities at Old Oak Common are already being realised, as will those at Euston. The benefits of greater connectivity are there to see and are really important for our country and its economic future.
We can also do some big projects. The trans-Pennine route upgrade is a £14 billion project to an existing railway and is on time and budget. But it is true, as both the noble Lord and the noble Baroness said, that HS2 has gone badly wrong, and it falls to this Government to sort it out, because we cannot carry on like this. Currently, we can predict neither when it will open nor how much it will cost. That is a pretty terrible position to be in and it has to be said the consequences are as a result of actions taken by previous Governments.
I welcome the fact that both the noble Lord and the noble Baroness welcomed the appointment of Mark Wild as chief executive and Mike Brown as chair of HS2. I have every confidence that both those people will begin to put this right and fundamentally restructure the company and the approach to the project through a very detailed review of where it is now—because, unless you know where it is now, you will not be able to find out where it is going in the future.
It must be the case that the criticisms of the governance model are justified. Indeed, James Stewart’s report sets out a whole a whole raft of recommendations that the Government have fully accepted. My own department clearly shoulders some culpability. The noble Lord asked what has happened in the department and, although I do not think it is not right to delve into senior personnel, he will, of course, note that a new Permanent Secretary is about to be appointed, the previous incumbent having retired.
We need a new model, but one in which the chair and board of HS2 take a far greater responsibility for the things they should be responsible for. The noble Baroness referred to Crossrail, where it was quite clear that the chair and board were not acting in the interests of the company. I say to the noble Lord, Lord Moylan, that I regard him as the best board member of Crossrail during his time as a non-executive director, because he diligently looked at the progress of the project. Indeed, the then chair of the project complained furiously, to me and others, about the noble Lord’s diligence in inspecting the real state of the project. That was as it should be and it is a shame that HS2’s boards do not seem to have done the same. It is right to have a new chair, and I have no doubt that in due course we will have a new or different board as well.
I will not go through the Stewart report. It contains a raft of recommendations, as I said, all of which the Government have accepted. It is also quite clear that, if you are going to put out big construction contracts, you should have a sponsor capability that is capable of understanding what the contractors are doing as they do it and of measuring how much is done and how much it has cost as it is happening. Mark Wild has found that HS2 itself is fundamentally unable to achieve that in its present state and will therefore change it.
What is in front of us in Mark Wild’s letter to the Secretary of State and the Stewart report is extraordinarily unhappy. Clearly, a number of really bad decisions have been taken. I helped Doug Oakervee with his review in 2020, and his strong recommendation was that the then construction contracts should not have been left in their current form because they had insufficient detail and there was insufficient design and encouragement to the contractors to perform properly and to budget. We can see the result of that here.
I will not go through the Secretary of State’s Statement in detail—because it is already in the public domain—nor the letter or the report. To answer the noble Lord’s question about Euston station, it is clear that Euston station is no longer to be delivered as part of HS2. That cannot be a great surprise because, as the Secretary of State remarked in the other place, faced with a first design that cost a huge amount more than the budget, when HS2 looked at it again, it came back with a design that cost even more—and that is without the air-conditioned platforms that were originally part of the design and were an eye-wateringly unnecessarily feature, since they do not exist even in railways in Saudi Arabia, where you would probably think they might like that sort of thing.
So, it is right for Euston to be dealt with separately. The reason the noble Lord is not aware of a separate company is that the Government have not yet got to that stage. It has taken a long and painful process to get to a stage at which all the parties involved in Euston now agree with the spatial plan, including the developer Lendlease and its new partner, the Crown Estate. The Government are now considering how best to procure that station, which includes an HS2 station and the concourse of the Network Rail station as a combined station, which it always should have been but, certainly when I started chairing the partnership board at Euston, was not. In fact, the original intention was to have two platforms numbered “1” because the HS2 people thought they were building a new railway in a separate station. How stupid was that?
So, we are progressing with Euston as a separate project to be delivered by a separate organisation. There will be more to say in short order, both here and in the other place, but the noble Lord has not missed anything. The state in which even that part of the project was left, after the peremptory cancellation of phase 2a and the statement by the previous Prime Minister that Euston should be built with no public funding, was one where it needed serious work to come to a conclusion. But I do not agree with the noble Lord that we should somehow further alter the design of Euston. We should get on with a plan that works in order to open this railway at the earliest possible time that Mark Wild can predict, at a cost he can predict, and with a delivery plan that will work.
Lord Berkeley (Lab)
My Lords, I welcome the Government’s Statement on HS2 yesterday. It has good detail and a lot of the plans that the Government intend to do. I was also pleased that the latest cost estimate of about £100 billion to get it to Birmingham, is much closer to the one that Michael Byng and I have been peddling for some years. I also welcome the new chief executive and chair of HS2 and, of course, the Ministers, who are both relatively new.
The worry I put to my noble friend is that the four new people at the top, excellent though they will be, have an incredibly difficult job ahead of them. One of the biggest problems is to unpick or change the mouthwatering contracts that most of the contractors have been given by the previous Administration, which means it will be very difficult to know what the future output costs will be and how they will be monitored. So, can one or two people—very good people, with two Ministers in charge—plan this without a much greater root-and-branch change in the Department of Transport and HS2? I hope I am wrong, but I think there is a lot of work to be done there as well.
Lord Hendy of Richmond Hill (Lab)
I thank my noble friend for that. There is no latest cost estimate. One of the things we are absolutely resolved to do is not to have such a cost estimate until Mark Wild and the people he is bringing in have been through this project in such detail that an estimate can be reliable. It is not at all satisfactory to have contractors working on such huge contracts without a full understanding by a decent sponsor of what they have delivered as they deliver it, how much it has cost, and what the remaining work is. That is also a feature, because the contracts were let too early and the design was not certain, so all that work needs to be done.
My noble friend is right that four new people by themselves cannot do all this—not by a long chalk. But noble Lords will, I hope, have read Mark Wild’s letter in detail, in which he sets out that, fundamentally, HS2 is unfit for purpose and he will have to restructure that company, alongside getting proper estimates of cost and timescale. He will need some help doing it and much of my and the Secretary of State’s discussion with him in the last weeks and months has been about how many people he needs to do that, who they are, whether we can trust them and how quickly we can get them in. Those elements are all important.
One of the really important things in this is that, I think for the first time for a long time, we will have a chair and a chief executive of HS2 who are communicative, collaborative, straight and honest, and we can have a discussion with them about where this is going and what it is doing. One of the characteristics of this company so far and of the Crossrail company for most of its life is that they were both arrogant enough to believe that they knew what they were doing without any supervision and without telling anybody what was really going on. In both cases, it went badly wrong. Mark knows that he has to change the culture of the company. There clearly are some good people there, but they need to be led and directed properly.
Lord Howell of Guildford (Con)
My Lords, I declare my interests as a former Secretary of State for Transport, I think one of rather many in this House, and as an adviser for many years to the Central Japan Railway Company, which is now busy building the fastest railway in the world, the Yamanashi Maglev. It may be of some comfort to all sides of the House that it is running considerably over budget and two or three years late, emphasising the point that these gigantic projects again and again, almost for the last century, have been becoming wildly over budget and raising all sorts of issues, such as social and environmental consequences, that were not seen to start with and were not brought into the consultation. That remains the situation.
I welcome the moves the Government are making to pull it together with the new appointments, which I am sure are of the highest quality. I think we should all try to live with the remarks of the Minister and others that it is all the previous Government’s fault. They always say that. We should swallow our pride and recognise that if we have joint support, all round, of the least partisan and most constructive kind, we will get this project through. My Japanese friends said from the start that building should have begun from the north and come downwards rather than starting from London. There might have been rather different politics if it had.
Is the Minister aware that there will be more overruns? There will be more costs that no one had foreseen. Their efforts should be welcomed, as I said, but they must also be prepared for being quite frank in coming before this House, and obviously the other place, with the details of where the overruns are and how they fit in. There is a much bigger lesson, as my noble friend rightly said in his excellent opening remarks, that in these giant projects, we have not quite got right the co-operation between the Government, the state and the private sector. I see another huge whitish elephant coming up at Sizewell C, not because there should not be nuclear power there—I am all for that—but because it is the wrong design. It is vast. It is going to take years, and it is going to cost nearly the same sort of money in the end as we are spending on this railway. Figures of £30 billion to £40 billion are freely mentioned. There needs to be a vastly greater concentration on combining finance by the state that does not end in borrowing and taxation that we cannot afford with the private sector, where there is lots of money ready to go into well-formed and properly investable projects.
Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)
I remind the House that this is an opportunity for Back-Benchers to ask questions. We have several who want to intervene, and we will run out of time if we are not careful.
Lord Hendy of Richmond Hill (Lab)
I thank the noble Lord and former Secretary of State, of which there seem to be very many on the Opposition Benches, for his remarks and observations.
Lord Inglewood (CB)
My Lords, I am sure the Minister will agree that the point of railways is moving people and freight around the country and that the railway system is not a kind of glorified train set for the great men of our age to play with. I have travelled up and down the west coast main line for more than 50 years, and during that period we have all experienced a great deal of trouble and difficulty. Can the Minister confirm that, as well as the other factors that are being taken into account in consideration of this woeful debacle, the interests of the travelling public and their convenience will be at the forefront of the consideration of what happens next?
Lord Hendy of Richmond Hill (Lab)
I can indeed absolutely assure the noble Lord of that. One of the difficulties I found in coming into this position is that clearly the previous management of HS2 thought it was a construction project—I think there are some lessons from Crossrail here too. There was a view that somehow it was a big construction project and at the end you incidentally got a railway. That cannot be right. The original justification for this was the capacity constraint on the west coast main line, which is still there, and the projected inability to do anything serious about its capacity without years of disruption. What has resulted is a project that has created years of disruption, but somewhere else other than on the railway. I have it in mind constantly that this project will produce a new railway for the United Kingdom that will be regarded as part of the railway network by its customers. I refer to the ludicrous proposition that Euston should have had two platform 1s. Nobody cares anything about that. What they want is a train to Birmingham or a train to Manchester, and they want it to run reliably. We have that very much in mind. Indeed, Mark Wild, as the chief executive, knows perfectly well that he needs to turn this present construction activity into a railway, which is what he did with the Elizabeth line, and I have every confidence that he will do it again.
Lord Grocott (Lab)
My Lords, this is a necessary but pretty depressing Statement announcing, as it effectively is, that when it comes to major infrastructure projects, whether they are railways or power stations or airports, this country does them very badly indeed. I hope we learn some lessons from that. I ask my noble friend to reflect that, on timescale, the Victorians managed in a period of 30 years, from 1830 to 1860, to build the whole rail network, and we cannot deal with one line in less time than that. I remind him as well that in the international context, pretty well every other country in the world—Italy, France, Germany, Spain, Belgium, the Netherlands, Finland, Norway, Sweden, Denmark and others—has been building, is building or has planned major high-speed rail systems. Will my noble friend give us answers to these questions? Why do these projects take so long when we know from our history that it is possible to do them much more speedily? What can we learn from all these other countries that do not seem to have any of the headaches, disasters, mismanagement and overspend that we have in building a very necessary railway because the old Victorian one, wonderful though it was, is crumbling?
Lord Hendy of Richmond Hill (Lab)
My noble friend is not quite right. We do not always do these things badly. Indeed, I deliberately referred to the trans-Pennine upgrade in my previous remarks because it is a very large project. It is very complex because it is being carried out on an operating railway. Its current value is £14 billion. It has been through innumerable scope changes, sadly, but it is now being delivered on time and badly.
Lord Hendy of Richmond Hill (Lab)
I am sorry. That is a slip of the tongue caused by looking at my notes. I should have said on time and on budget. We do not always do them badly.
If noble Lords look at the history of HS2 they will see not limited scope changes but enormous scope changes with miles of the railway being put into tunnels and some technical specifications that, now they are being contemplated, do not look half as clever as they did when somebody suggested the highest-speed high-speed railway in the world, which therefore has to go in very straight lines and might disturb bats and need a bat tunnel when a more modest railway would have gone around that issue rather than straight through it.
I have to say to my noble friend that it is not always true that the Victorians got it right, and I am sure that this must have happened to previous Transport Ministers too. When I got to Network Rail, I remarked that Brunel’s Great Western Railway cost three times what he suggested it would, and about a week later I got a letter in green ink several pages long from a retired engineer, who said that I was entirely wrong and had no idea what I was talking about: it was actually four times more expensive.
Lord Harper (Con)
When I was appointed to lead the Department for Transport, HS2 was already not in great shape, as is well known. I immediately implemented some changes to get a grip of the project by focusing the company on cost control, starting work to renegotiate those big civil contracts that the Minister referred to and cancelling the second phase—which, although controversial at the time, I notice the present Government have not changed—which freed up money to spend on projects across the country. The final thing was to appoint Mark Wild as the new chief executive. I am confident that, with his record in delivering the Elizabeth line, he will achieve great things.
I will ask the Minister two questions. First, I listened carefully to what he said about Euston. Of course, I worked closely with him in his previous incarnation as the chairman of the Euston partnership. Refocusing that as a development-led project with more housing, more business space, and more contribution from private sector investment and less from the taxpayer is the right thing. I am pleased with the progress that has been made. He said he would come back to your Lordships’ House “in short order”; can he give us a bit more detail about what that means? Is that before the Summer Recess or after? I would like to hear more detail.
Secondly, the Minister also referred to the main works civil contracts. We started the work on renegotiating them. Can he say a little more about the progress that has been made? I recognise there is some commercial confidentiality involved there. It was referred to in James Stewart’s report, and it is important to get value for the taxpayer.
Lord Hendy of Richmond Hill (Lab)
I thank the noble Lord for the decision to appoint Mark Wild, which was obviously a good thing. The noble Lord is absolutely right that he did take some action. In the light of what has been discovered since, we could question how much action should have been taken, because this Government have clearly now taken some really strong action. In particular, we have had a serious look at governance. As a consequence, there is a new chair and there will no doubt be a new board in due course. That is one of the issues that has needed attention for some time.
I would be less complimentary about the cancellation of phase 2, which was pre-emptory. As for freeing up money, there was no money associated with phase 2. It is true that it would have cost money had it been delivered, but it was a delusion for many parts of the country. The Network North document promised everything to everybody without evidently having money in the short and medium term to deliver it. But everybody has had a part in this, and the truth is that this Government are committing themselves to this fundamental reset. Through that, we will get phase 1 to Birmingham and Old Oak Common and Euston done.
The Government are moving fast on Euston. I doubt we will be able to put anything in front of the House before the Summer Recess, but as soon as we are able to my right honourable friend the Secretary of State and I will come back about it. The noble Lord is certainly right about the main works civil contracts, but in order to have a reset of those you actually need to know where the project is. If you do not know where the project is and nobody can accurately say how much has been delivered then trying to negotiate your way out of those circumstances is really quite hopeless. Mark Wild is undertaking a granular review of how much has been constructed and how much value has been created through its construction. The noble Lord is right that we have to engage in discussion with the main works civil contractors and their consortia. We will do that in due course, but we first have to know where the project is in order to baseline those discussions.
Lord Hogan-Howe (CB)
My Lords, can the Minister explain exactly what the purpose of the Infrastructure and Projects Authority is? It was created in 2016 and has presided over a number of these types of projects which have not worked out. At the moment, the police are looking to purchase a new radio system, which has gone from £2 billion to £12.5 billion. In all the political knockabout—and I understand why there is political accountability in this—it seems to have been a silent body but, as far as I can see, it was set up to avoid this type of event.
Lord Hendy of Richmond Hill (Lab)
The Government are creating a new body out of the IPA and the NIC. We expect it to assist those projects to help them do these jobs better. There are a number of projects through government that have not gone well either—the project that the noble Lord refers to is one of them. It is really important for a body such as that to embrace the learnings, both from the James Stewart review and from the actual experience of these big projects, and help government not commit the same mistakes again.
Lord Stevenson of Balmacara (Lab)
My Lords, one of the problems encountered by all major projects such as HS2 is the difficulty of getting the public generally on side. I declare an interest here as a former owner of a property that was on the route of the original plans for HS2. I am sure the House will understand the issues that arise when you wake up one morning and discover that your house might have a tunnel underneath it, or worse, and the reaction you have to that.
My question is not so much about the detail of the current report, but to ask whether the department is thinking more widely about how it can get people on board prior to and during the process of planning new infrastructure of this type. Is the department aware of a scheme proposed a few years ago by members of the insurance industry to try to create a fund that would be available to remove blight from the political issues that departments face when making proposals? If he has not heard of that or had any discussions with it, would he receive a representation from me on it?
Lord Hendy of Richmond Hill (Lab)
It is right to say that the public need to be onside with these huge projects. Although, clearly, this is a high-speed rail project, I started what I said today with a reminder about the benefits of it because it is too easy just to refer to the project as a project without referring to why it needs to be done. I think there are some lessons in that. The other thing is that massive scope changes, such as the deletion of whole legs of a scheme, lead people to the conclusion that the original proposition was somehow not justified, and that is to be deeply regretted.
In detail, I have had many representations—as, no doubt, my predecessors did—from individual landowners, and it is clear that, in some cases, HS2 has not behaved properly or with due speed in what must be, personally and commercially, worrying and trying circumstances for individual landowners. We have just appointed a new commissioner for construction and residents, and I look to HS2 and to that commissioner to act with alacrity on some of the long-running claims that have clearly blighted individuals’ lives. I would like to hear further from the noble Lord about what he refers to, and I hope he will write to me.