The Department for Transport and HS2 Ltd do not currently have the right skills and capabilities to make HS2 a success, MPs have warned.
In its first report on the revised high-speed rail programme since Labour came to power, the Public Accounts Committee said HS2 has become “a casebook example of how not to run a major project”.
The report asks DfT to set out how it will resolve the skills and capability deficiency "to secure the successful delivery of the programme" following the cancellation of the Northern leg.
It said HS2 Ltd needs to reinforce its capability in areas such as commercial management, and "focus its culture on the singular purpose of delivering Phase 1 for the lowest feasible cost". The company has tasked new chief executive Mark Wild with delivering the reset of the programme, and the committee notes that Wild "brings experience of delivering Crossrail".
The report says DfT will also need to make changes to how it works with HS2 and organises itself internally, but warns the committee is “not convinced that DfT has sufficiently considered how it can bring fresh thinking to its own leadership of HS2, or whether it has the right skills and capabilities in place to lead the programme effectively and credibly”.
The committee has repeatedly raised concerns over gaps at the DfT in key areas such as risk management and assurance, project management and project controls.
Sir Geoffrey Clifton-Brown, chair of PAC, said: “It is ultimately the Department of Transport that has failed to manage this enormous project and manage HS2 properly. This is likely to have wasted billions of pounds of taxpayers' money in delays and overspends.
“The department, as well as resetting the project, must now reset itself to manage this project to a workable conclusion in line with the eventually agreed budget and timescale. To do this they will need to employ people with the correct range of skillsets to critically supervise and oversee this huge project. This is the only way to salvage its severely tarnished reputation. We expect to see a real improvement when we next examine this matter.”
PAC said the department should, alongside setting out how it will address gaps in skills and capabilities, "include the performance measures or indicators that leaders will be reviewed against".
The report, HS2: Update following the Northern leg cancellation, also says the department and HS2 Ltd have “failed to work together effectively, which is starkly illustrated by their continued disagreement on how much it will cost to complete” the programme’s first phase.
DfT’s estimated range in November 2023 was £45bn to £54bn compared with HS2 Ltd’s latest estimate of £54bn to £66bn in June 2024, both in 2019 prices. Once adjusted for inflation, the total programme costs could be close to £80 billion, the report says.
“It is unacceptable that over a decade into the programme we still do not know what it will cost, what the final scope will be, when it will finally be completed or what benefits it will deliver," the report adds. "It remains to be seen whether the fundamental reset of the programme will be any more successful than the department and HS2 Ltd’s previous attempts to break out of a cycle of repeated failure.”
The report also laments that DfT and HS2 Ltd “have repeatedly said they are learning lessons but there is little evidence that lessons have been applied effectively and mistakes avoided”. It asks DfT to write to the committee setting out the key lessons it has drawn from the programme and how they have been put into practice.
Following Labour's election victory last summer, the department commissioned an independent review into the oversight of HS2. The department told PAC that it expects the review, which is due to conclude next month, to make a number of recommendations over the oversight and sponsorship of the programme, including how the department’s boards are organised and changes to how it works with HS2 Ltd.
DfT told the committee that "any changes, where considered needed, will be implemented as quickly as possible".
A DfT spokesperson said: “The continuously climbing costs of HS2 are completely unacceptable. That is why the government acted swiftly to get the project back under control by bringing new leadership to HS2 Ltd, directing the company to begin work on resetting culture, schedule and costs, and reinstating robust ministerial oversight.
“HS2 Ltd is working with its supply chain to reset the programme and deliver the railway safely and at the lowest reasonable cost.”