Lord Berkeley
Main Page: Lord Berkeley (Labour - Life peer)Publicly Funded Infrastructure Projects
Lord Berkeley Excerpts
Lord Berkeley
To ask Her Majesty’s Government what steps they take to provide Parliament with up to date cost and cost/benefit information for major infrastructure projects to which public money has been committed.
Lord Berkeley (Lab)
My Lords, it gives me great pleasure to introduce this debate concerning the information that Parliament and the public need about major projects. There is a lot of information around. According to the Treasury-owned Infrastructure and Projects Authority, more than £300 billion-worth of projects are on the go in the MoD and the Department for Transport alone. They are projects with government funding, but there are quite a lot of other projects which some argue should be included in this category, such as Hinkley Point. We should then ask: are they good value for money? Do they fulfil the function for which they were planned? Would there be a cheaper and better way of doing it? Are Ministers keeping an eye on their projects to make sure that they do not go badly wrong?
The IPA is supposed to give Ministers this information, but do they take any notice? The IPA has a successful role in project delivery. It does a great work in collecting and analysing data, looking at the structures of management and risks. As many noble Lords know, it publishes a score-card in its annual report—many noble Lords probably have a copy. It uses a traffic-light system: green means that a project is going well; amber denotes some concern; amber/red signifies:
“Successful delivery of the project is in doubt … Urgent action is needed to address these problems”.
Red is:
“Successful delivery of the project appears to be unachievable”.
There are hundreds of examples. I shall select two successful projects. DCMS’s broadband delivery programme has been green for four years, and the Department for Transport’s management of a search and rescue helicopter contract has been green for five years. Who are the culprits? The MoD earned five reds last year and many amber/reds—I shall not list them. The Department for Transport’s Crossrail programme had five years of green and then it went amber/red. Where is it going to go next? We do not have the latest information, but I expect that it will get rather worse.
What happens to the information that the IPA provides? My worry is that the answer is nothing much. Who challenges Ministers on whether what they want to build is the most suitable solution to a problem? It should be Parliament. One has a fear that many projects become vanity projects. Should the new Astute-class submarines be called the Penny Mordaunt class, or should HS2 be called the Grayling line? We could give all of them names, but it is not a good idea.
I fear that the policy of successive Governments on big projects is to set up a structure which defies scrutiny until so much money has been spent that they argue that it is too expensive to cancel or alter. Then the blame game starts, with those who fear for their future careers trying to jump ship before they are found out. I am afraid that this applies equally to Ministers and officials—who knows what and when?
I shall give two examples. Crossrail 1, a joint TfL/Department for Transport project, was going swimmingly until last summer. It was going to open in the autumn and now it will probably be two years late. We can debate why this has happened. Let us not go into blame game now, but how did the news of the delay and cost overrun not get to the promoters much sooner? We will know eventually, but it is pretty embarrassing for everybody concerned.
HS2 is 10 times worse, not only because its costs are very much higher than that of Crossrail but because the evidence of cost overruns, cover-ups and, I must say, fraud and worse are rampant even before the permanent construction work has started. I will not discuss the House of Lords Economic Affairs Committee report, which is excellent, because Ministers have promised us a debate on it before the Summer Recess. Many people on HS2 believe that the specification was ridiculously high. It started as a vanity project to get to the northern cities faster. It eventually became a project to create extra capacity on the network, but they did not change the spec.
On costs, the House of Commons Library briefing on 20 June noted:
“A comprehensive breakdown of costs for the full Y”—
of the scheme—
“has not been published since 2013”.
That is six years ago. This was confirmed by the IPA giving HS2 an amber/red category for six years running on a project estimated to cost more than £50 billion on the Department for Transport’s figures. The department argues with me and the cost engineer Michael Byng, who has suggested that it is more like £156 billion, but no one has ever challenged his estimate. The Government just say that they do not recognise it. They have not come up with any alternative, even in front of the Select Committee a few years ago.
I fear that there is a concerted effort by officials and successive Ministers to prevent scrutiny of the costs and programme, to refuse to discuss ways to reduce costs and generally to batten down the hatches over a six-year period for what I think is the single most expensive project on the IPA list. My worry, therefore, concerns, first, the project’s scope. There were many estimates. There are rumours that the estimate signed before the Select Committee was inaccurate. The property requirements for both permanent and temporary works have not been properly estimated. On parts of the engineering, the approaches to Euston, alternative proposals for Wendover, track design and, of course, the engineering and cost implications of very high speeds, came up against officials who would not consider any option offering to reduce the cost. There seems to me to be a strong element of putting your head in the sand, hoping it will all go away. Contractors have signed up to design-and-construct contracts but they cannot make the figures work. That is why we are getting delayed at the moment.
In addition, there have been many staff changes. There is a churn of staff which is disastrous in such a project: get rid of people who know too much or who disagree with the policy and we will keep to the original budget over six years. The Permanent Secretary, Philip Rutnam, was promoted to the Home Office when the original cost estimates were challenged, and David Prout, who was responsible within the Department for Transport for HS2, retired to run an Oxford college. HS2 has had at least four chairmen in that period. The chief executive, Alison Munro, felt able to sign the estimates, knowing, I think, full well that the budget was shot to pieces. She left soon after, as did Beth West and Jim Crawford, who resigned last week. Two whistleblowers, Andrew Bruce and Doug Thornton, who are both highly skilled professionals on property issues, were sacked half an hour before they were due to present their findings on property costs to the Department for Transport’s client board. They were sacked because they refused to lie about property cost estimates.
The last matter here is that Simon Kirby, a former chief executive, was found a job at Rolls-Royce—very conveniently—because he was blamed for awarding £2.7 million of unauthorised redundancy policies to HS2 staff, which I have on good authority was actually used to pay off the whistleblowers. This is a very sad situation, coupled with a culture of secrecy. New Civil Engineer wrote a piece last week saying that HS2 has signed a total of 280 nondisclosure agreements,
“with ‘external parties’ between 2012 and March this year, with 40% of those signed in 2018 alone”.
The department found it more difficult to avoid internal scrutiny by the IPA. One of the senior advisers, Paul Mansell, was embedded in HS2 for a year and reported in a confidential report, which I think everyone now has, that,
“the status of the programme is between Amber-Red and Red”.
I will not go through all his conclusions but they basically say that the project will remain fundamentally flawed unless greater transparency and frankness are provided. Mansell’s report was leaked and the IPA confirmed his findings later.
There is a big problem here. I hope that the new “lessons learned” report from the Department for Transport will put some of these things right, but I believe that other government departments need to take note of what has gone really wrong with Crossrail and HS2 and come up with some solutions to make the new projects a better place.
Lord Snape
No, I just said that my noble friend did not say it should be cancelled, despite the massive cost overrun—about which I do not remember him complaining at the time, although I might be wrong. Because of the nature of the way that we do business in this country, most of these projects overrun.
The noble Baroness, Lady Randerson, touched on that point during her refreshing and accurate contribution. The fact is that these projects overrun, not just in this country. We have a habit of flogging ourselves and thinking that only we can get things wrong but these great infrastructure projects overrun all over the world. Fly to Berlin and try to land at Brandenburg Airport; building commenced in 2006 and the latest opening date is 2020, although even that is not particularly certain, and it is eight times over budget, yet we are born and brought up on the myth of German efficiency. I do not know whether the German equivalent of the noble Lord, Lord Framlingham, is wandering around Berlin shaking his head sadly at the overrun of that project, although I am sure that there are similar gloomy outlooks.
I am not surprised at the noble Lord being a member of a committee set up by the Taxpayers’ Alliance to look into this project, but I am a bit surprised at my noble friend. I have to say to him that I have never been a fan of the Taxpayers’ Alliance. Right-wing self-appointed guardians of the public purse do not normally attract members of the Labour Party so I am a bit concerned and surprised that my noble friend should have agreed, particularly as the organisation produced a brochure about a better way to spend the billions. The picture on the front is of a motorway junction, so there is a bit of a clue to where the Taxpayers’ Alliance would like money to be spent.
I do not think that the doom and gloom that we are seeing about this project is sustainable long-term. In my view it is a great project that should continue and be implemented and opened as quickly as possible. One thing that I never hear from its critics is any alternative, although I hear ethereal stuff about spending the money on “something else”. Let us look at the west coast main line, the area of railway that will get most relief from the completion of HS2. I picked a random hour of arrivals and departures at Euston station. Excluding the Underground, there were 42 trains in and out of Euston station between 10 and 11 am this morning. Three of them went to Birmingham, one through to Scotland, one direct to Glasgow and three to Manchester.
Where will these trains go? These days, it is impossible to modernise a railway system and run trains at the same time. It did not used to be. In my younger days—I confess that I remember the first electrification of the west coast main line—much of the work was done between trains, although there were lots of alternative routes. The Manchester trains went over to Great Central. The brains that run this country decided to close that line, so the trains went on the Midland main line, now closed between Matlock and further north. There are no alternative routes. The Liverpool trains went on the Great Western from Paddington to Birkenhead. That does not exist any more; indeed, part of it is a tramway through my former constituency.
There is no alternative to HS2, and I hope that the gloom mongers, sincere though some of them may be, will have their arguments refuted and that this great project gets the go-ahead.