Publicly Funded Infrastructure Projects

Baroness Randerson Excerpts

Tuesday 2nd July 2019 Grand Committee

[Baroness Randerson (LD)]

My Lords, I thank the noble Lord, Lord Berkeley, for initiating this important debate. It pinpoints our national inability to build big projects successfully. They are almost always dogged by controversy, delay and cost overruns. Why has the “can-do” country of the 19th and early 20th centuries become the “Can we? Can’t we?” country of the 21st. We have a system which takes so long that the approach to the project—if not the project itself—is outdated before we start. The Heathrow third runway is an example of this. It has been kicking around for decades and, in that time, approaches to aviation have changed and we would not invent the project now. There is a very lengthy, cumbersome planning process, with delays to big projects. I am not arguing for public opinion to be ignored, but it should not be beyond us to streamline the system without sacrificing democracy. Above all, there is a system of tendering which incentivises both project sponsors to encourage funders with an artificially optimistic idea of the project and tenderers to minimise costs. This means minimising problems and failing to allow for a realistic level of difficulties encountered during construction.

We deal with these projects piecemeal and efforts to have a joined-up approach to skills have so far failed because we agonise and dither for so long and because government is structured to take the short-term approach. We do not have an integrated approach nor a long-term programme for government, so we cannot get skills co-ordination on a grand scale. I give the example of Great Western electrification. It has cost double what was anticipated, and some major errors have been made along the way. Yet another emerged this weekend: equipment installed in the Severn tunnel is rusting before it has even been used. We have known for more than a century that the Severn tunnel is very damp.

For the rest of my speech I shall concentrate on HS2. I take a rather different view from that of the noble Lord. I call myself a critical friend. I am 100% behind the purpose of the project. I support linking the Midlands and the north and eventually Scotland using a new line created according to the highest standards. The problem is that HS2 has not been good at PR, to say the least. There has been a lot of opposition to the project, some of it local, for obvious reasons, and some of it for entirely misguided reasons. HS2 has entirely failed to inspire us and to answer those criticisms. A country that still reveres Brunel does not feel the same about HS2. Important decisions on the progress of HS2 have coincided with the macho posturings of the two men vying to be leader of the Conservative Party. It has become a kind of virility test to denounce the project.

Conveniently, that fits with the financial hole they are rapidly digging for themselves. All those tax cuts have to be paid for, and HS2 has a very big price tag. It would normally be unthinkable to cancel a project so late in the day, a project that is so well advanced with so much money already spent, but there is nothing normal about the times we live in. There is a very urgent need for HS2 to get its act together and bring its costs under control. The north is already suffering from a lack of trust in politicians. If the Government cancel HS2, they risk a massive backlash, and if they take fright at the cost of phase 1 and cancel the rest of it, all they will have done is to change Birmingham into a outer suburb of London, and the north will not forgive them for that.

If the Government cancel HS2, we will be an international laughing stock, but there are serious criticisms that must be addressed. The Economic Affairs Committee report published in May lists those serious concerns and the solutions to some of them. Speed costs money. The report questions the value for money of building to the highest speeds in the world, especially when a large part of the route will be in tunnels where it is not possible to do very high speeds. It points to the flaws in the cost-benefit analysis, which artificially relies on aggregating up very small time savings per journey. One must question the value of saving five minute on a journey of several hours. The committee also pointed to the elderly surveys on which the cost-benefit analysis relies. They must be updated. Finally, it also questioned the obsession with Euston. Old Oak Common would be an excellent terminus. It is a real regeneration project and is very well placed in a network of rail lines. That is where the terminus should be.