HS2 Reset

Baroness Pidgeon Excerpts

Thursday 19th June 2025 Lords Chamber

[Lord Moylan (Con)]

My Lords, the history of the HS2 project is not a happy one. It was initially proposed in its current form by the noble Lord, Lord Adonis, and endorsed by Gordon Brown in the wake of the global financial crisis, then taken up enthusiastically by the coalition Government, in which all major decisions were made by a quad that included Nick Clegg and Danny Alexander, and, indeed, in which the noble Baroness, Lady Kramer, sadly not in her place, was a Minister, as was Norman Baker. It was then taken forward further by the Conservative Government following 2015. Failure often has many parents, and there is no doubt that HS2 has been a mess. The letter from Mark Wild and the report from James Stewart leave us in no doubt of that at all.

I thank the Minister for the Statement. I welcome the appointment of Mike Brown as chairman of HS2 and the appointment last year by the Conservatives of Mark Wild as chief executive. Both are people with whom I have worked in the past, as has the Minister.

My first question to the Minister is whether there has been equally significant change in senior personnel at the Department for Transport. I ask that because the James Stewart report leaves one in no doubt that the Department for Transport failed sufficiently to distinguish its various roles in this project, including as sponsor, as funder, as policymaker and as shareholder.

This brings me to questions of governance model. The settled orthodoxy in recent years has been that, for government-supported projects to succeed, there must be a clear structural division between a sponsor body and a delivery body. On paper this is logical. The sponsor sets the strategic direction and prevents outside parties changing the objectives by gold-plating and adding further requirements as time goes by. It holds the delivery body to account, and the delivery body focuses on the execution.

In the case of HS2, this model has not functioned as intended: it has broken down. Rather than providing a framework for responsibility and efficient delivery, it has resulted in a culture of what might be called “deferral”. The dominance of the Department for Transport—well known anecdotally by those familiar with the project—over the board of HS2 has resulted, as James Stewart identifies in his report, in the board not carrying out its functions but deferring important questions it should have taken to the department. As a result, decisions were delayed, accountability was blurred, and independence of delivery was undermined.

At the same time, the department itself did not fully separate its own strategic oversight role as sponsor from its various operational entanglements. There was no clear split within the department between those who were supposed to hold the project to account and those who were working with it in other regards. We are therefore left with very serious questions that go way beyond HS2. They affect, for example, the restoration and renewal project of the Palace of Westminster. Something we relied on as a dependable structure—which appeared to prove itself largely in the case of Crossrail, for example—has broken down. My second question to the Minister, then, is, what thinking are the Government giving to a new model that is going to work well for future projects, or are we now steering blind?

My final point relates to Euston station. Euston is, strictly speaking, no longer part of HS2 Ltd’s responsibilities, as I understand it. It was a decision of the last Government to put it into a separate company, but I am not aware of the existence of that separate company; perhaps it exists on paper. I am not aware of the board of that company, or the chairman of that company. I am not aware of what that company is actually doing, because, while the Government have committed to taking the tunnels forward from Old Oak Common to Euston station, there is as yet no plan for the delivery of platforms at Euston station, which would allow passengers to make use of those tunnels.

I am not speaking for my party now, so much as for myself, when I say that I have always felt that a terminal-station solution for Euston was somewhat old-fashioned. We should perhaps take as an example Thameslink at St Pancras, which simply has two platforms underneath the station, and the trains come in and they go through. Perhaps we should be thinking now—it would cost money, but then, the plan for Euston station is going to cost a great deal of money—about alternative solutions that might take the lines through to a depot to the east of London. Can the Minister say something about the plans for Euston and how open the department now is to alternative solutions?

[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.