High-speed rail – the National Audit Office lays into the programme

The National Audit Office has published one of the most critical reports I’ve seen in a long time, covering HS2, the high-speed rail programme to connect London with “the north”. They talk about a lack of clarity around objectives; a weak business case with limited evidence that HS2 will generate regional growth; errors in cost-benefit analysis; issues with programme management and oversight; a funding gap of £3 billion; and an over-ambitious timetable. (Apart from that, its fine...!)

It really is a nicely written, but surgically precise hatchet job from the NAO.

Politicians immediately began fighting back using hard evidence such as “look what the railways it did for industry in Victorian times”. Seriously, I heard a politician saying that on TV. The Transport Minister talked about “fretting bean counters” without actually addressing the NAO’s issues.  There was also a lot of talk about “vision”, another sign that the hard numbers don’t add up.

It all reminded me of another government project that ended up as a money pit for the taxpayer. I worked for a year or so on the ID Card programme back in 2007, a programme that ultimately cost the taxpayer hundreds of millions and delivered no real benefits whatsoever. And there were real doubts about its workability even before the new Coalition government killed it off in 2010.

There was never a real business case for that programme. Each different Home Secretary – and there were many during the course of the programme – had a different idea or “vision” in terms of the real point of the scheme. Now at least with a railway, that is a bit clearer, and there will be a tangible finished product presumably, whatever it costs!

But the flakiness of business case appears to be similar to that for ID Cards– in terms of both predicting costs and benefits estimation.  As soon as I heard that one of the business case assumptions is that business people don’t work on trains, then the warning bells sounded on HS2.  We used to hear politicians describing the ID programme in terms of “it’s just the right thing to do”. That’s always a guaranteed sign that the numbers don’t add up.

As well as the flaky business case, the NAO has also asked questions about the Department of Transport’s ability to actually run a project of this magnitude, given they are quite busy already with Crossrail, rail franchising and so on. And despite all the protestations of openness and transparency, the government won’t release the Cabinet Office  Major Projects Authority reviews of HS2, so we can’t get any independent view of how things are going to date. However, NAO say enough to indicate those reports have also identified some major issues here.

One final procurement related point – has any research or analysis been done in terms of the economic effect of construction projects?  For every pound spent, how much is “retained” within the UK? Certainly a high proportion of construction workers in London don’t seem to be Brits. And what proportion of construction materials are imported? It would be interesting to know for HS2 how much of an economic effect there is really likely to be.

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  1. Trevor Black:

    I don’t recall the usual sheepish “lessons learnt” excuse following the ID fiasco. The politically and commercially inept will push on with it but it is interesting to note that Wakefield Council have agreed that it is without justification. They have calculated that based on the cost per mile that the £1.48 billion that it would cost to go through their area would be better spent on bringing the highways up to scratch and improving the local infrastructure. That sounds like a better business case to me!

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