HS2 contracts under review as government rules out resurrection of second phase

The Labour government will not revive the axed northern section of HS2, the transport secretary has confirmed as she set out new measures to bring down costs on the remaining phase of the scheme.

Last October, then-prime minister Rishi Sunak announced his decision to scrap the second phase of the high-speed rail scheme and freeze the link between Old Oak Common and Euston, citing rising costs.

Since the election of the new Labour government in July, there have been rumours that the project could be revived, with the mayors of Greater Manchester and the West Midlands putting a privately-funded alternative on the table.

Transport secretary Louise Haigh recently gave a strong indication that the government would commit to building the stretch of rail to Euston, and there had been reports that next week’s Budget could see a further commitment to build phase 2a, which would run from Birmingham to Crewe.

However, a statement released by the Department for Transport over the weekend will dampen hopes within the infrastructure sector.

“The government has been clear it is not resurrecting Phase 2 of HS2, which was cancelled under the previous administration,” the department said.

It added that, while the government “recognises concerns” about connectivity between Birmingham and Manchester, its “primary focus now is the safe delivery of HS2 at the lowest reasonable cost”.

Haigh blamed the soaring cost of phase one on “poor project management, inflation and poor performance from the supply chain”. She announced that the incentives of the main HS2 contractors are also being reviewed, which could result in contracts being renegotiated or amended.

A major transport projects governance and assurance review has also been established by the government, led by senior infrastructure delivery adviser James Stewart.

The review will investigate the oversight of major transport projects, drawing on the experience of HS2 to make recommendations on the effectiveness of forecasting and reporting of cost, schedule and benefits, as well as actions to deliver cost efficiencies. It will present its findings back to the government this winter.  

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“One of my first jobs as transport secretary has been to urgently review the position I have inherited on HS2,” said Haigh. “It has long been clear that the costs of HS2 have been allowed to spiral out of control. But, since becoming transport secretary, I have seen up close the scale of failure in project delivery – and it’s dire.

“Taxpayers have a right to expect HS2 to be delivered efficiently and I won’t stand for anything less. I have promised to work fast and fix things – and that’s exactly why I have announced urgent measures to get a grip on HS2’s costs and ensure taxpayers’ money is put to good use.  

“It’s high time we make sure lessons are learnt and the mistakes of HS2 are never repeated again.”

Former Crossrail chief Mark Wild will soon take over as chief executive of HS2 Ltd, at which point he will be tasked by Haigh with assessing the current position on cost, schedule and culture. He will also provide an action plan for delivering the remaining work as efficiently as possible.