Mini-budget showed need to spend within means on HS2, says transport secretary

The chaotic fallout from last autumn’s mini Budget demonstrated the need for government to stay within annual budgets on big projects like HS2, the transport minister has said. 

Mark Harper admitted to the transport select committee earlier this week that recently announced delays to the project would not save money overall but insisted it was important to keep a tight leash on short-term spending. 

“In itself, delaying delivering something does not save money, but it does reflect the fact that we have a budget in each year,” he said. 

“Last year, we saw what happens if we borrow money in a way that is not sensibly controlled – there is a very bad response – so I think that the government have to live within annual budgets.” 

Last September, then-chancellor Kwasi Kwarteng announced a swathe of tax cuts as part of an ill-fated growth plan that sent currency and bond markets into a tailspin and ultimately led to the downfall of the short-lived Liz Truss government. 

“We have to deal with that, and we made choices to slow the project down to deal with those annual budgets,” Harper added. 

Last month, the secretary of state told the House of Commons that the stretch of HS2 between Birmingham and Crewe would be hit by a two-year delay and that work on the central London terminus at Euston would be stopped to contain escalating prices for the project. 

A National Audit Office report later revealed the cost of the mothballed station at Euston had already hit £4.8bn, a rise of £2.2bn on the original budget. 

Harper told MPs the first phase of building on HS2 – between Old Oak Common in west London and Birmingham – would continue apace because of the “very significant costs from demobilising” that part of the scheme.  

He also recommitted to eventually delivering the line to Euston and admitted that there would be “some cost” involved in demobilising the site and leaving it “in a way that is sensible for people who live in the area”.  

Mace chief executive Mark Reynolds said last month that leaving the Euston site as it was for too long would “scar central London”. 

The company, which is the main contractor for Euston in joint venture with Spanish firm Dragados, had around 360 staff on the job before Harper hit the pause button. 

>>See also: ‘Just get on and build the thing.’ John Armitt goes in to bat for HS2

>>See also: This one looks set to run and run: the continuing angst of HS2 and its budget of billions

The project’s design team, made up of Grimshaw, Arup and WSP, had a further 600 staff, with around 300 operatives on site. 

Teams are being demobilised with firms moving staff to other parts of the job where they can, or different schemes entirely, but one source told Building that redundancies were inevitable. 

Euston station is now expected to be delivered alongside phase 2b of the project which will run between Crewe and Manchester. 

The transport secretary also told the select committee he had discussed with the chancellor how they could get more private investment into HS2 and that this work was “ongoing”.