Investigation launched into civils 'overpricing'

The government has launched an investigation after it found that civils projects in the UK cost twice as much as it would on the continent.

The chief executive of government body Infrastructure UK, James Stewart, said today that estimates by the team working up plans for High Speed 2, were that the project could cost nearly double what equivalent high speed rail projects cost to build in Europe.

His comments follow the announcement yesterday in budget documents that the body was commissioning an “investigation into the cost of civil engineering works for major infrastructure projects in the UK.”

Stewart said the estimate of cost being double, which had come from the HS2 team, was not certain, but it was undeniable that costs in the UK were higher.

Stewart said: “It has come to our attention it appears to cost double in the UK to put infrastructure down than in Europe. Since we've been given this evidence, we have tested this with industry, with the ICE, and no-one disagrees. Now we've got to do a proper piece of work to understand it.”

Stewart said it wasn't yet clear what the causes might be, because different firms had offered different suggestions. “The one thing we can say,” he said, “is there absolutely isn't one single reason behind this, there's lots of things playing in to it.”

The conclusions and recommendations of the report will be published before the end of 2010.

Stewart also gave more detail on how the £2bn Green Investment Bank announced in yesterdays budget will work. The bank will operate commercially, will be used solely to provide high-risk equity capital, and will have to wait for the sale of government assets before it has any money to invest.

A consultation in the summer will determine exactly what the criteria are under which it invests. Infrastructure UK aims to get it up and running by the end of next year.