22.07.16
NAO head cautions against ‘unrealistic expectations’ for HS2 following Brexit
Balancing HS2 with other major infrastructure projects will be more challenging than ever in light of the UK’s vote to leave the European Union, the head of the National Audit Office (NAO) has said.
Speaking at the Institute for Government last night, Sir Amyas Morse said: “We need to ask ourselves, can the public sector deliver Hinckley Point C, a third runway, HS2, a Northern Powerhouse, nuclear decommissioning, Trident renewal and Restoration and Renewal of the Palace of Westminster all at the same time?”
He added that the public sector had a tendency to “over commit” to infrastructure projects because of the desire of each government minister to “make his or her mark” by starting new projects.
He also said the sector suffers from “unrealistic expectations” and “optimism bias” about delivering projects at an appropriate cost.
For example, Sir Amyas said HS2 was “relying on developing a whole new, cheaper, supply chain” in order to stay within its planned cost.
A recent NAO report said that HS2 is behind schedule, and Sir Jeremy Heywood, the head of the civil service, is conducting a review of the project to try to ensure that it stays within its £55bn budget. This has led to cost-cutting measures such as plans for the line to stop at Sheffield Midland instead of Meadowhall.
Sir Amyas said these problems were exacerbated by the UK’s withdrawal from the European Union.
“Add to that our massive major projects portfolio, and my experience of watching the public sector at close quarters tells me the system could come to a halt under its own weight” he added.
“We will have set civil servants a Herculean task and set them up to fail. And none of us can afford that.”
This could mean civil servants being pulled away from existing projects to manage the changes to policy needed because of the UK’s withdrawal, as well as the increased possibility of Scotland becoming independent.
A report from Balfour Beatty, published yesterday, warned that the UK’s withdrawal from the EU is also likely to cause staff shortages and a loss of funding for major rail projects.
Clive Heaphy, HS2’s director of finance and operations, has also admitted that HS2 is “worried” about the long-term impact of the referendum result.
Sir Amyas argued that “a wider, overarching and imposed approach” from the government was needed to help reduce the number of commitments, which could involve “not adding projects, or cancelling existing ones”.
“Let's use this historic juncture to change the way we manage government,” he said, “and plan on a holistic basis so that ministers and civil servants can look across the whole of government activities and decide what is essential and what is not. This is crucial for achieving value for money.”
Sir Amyas’ speech comes as HS2 published its annual report and accounts for 2015-16, showing that it has successfully stayed within its growing budget as the project comes closer to its start date, with the HS2 Bill currently passing through Parliament.
Its budget for 2015-16 was £404.1m, compared to £230m in 2014-15, and it spent £352.9m, compared to £189.6m the previous year, achieving an underspend of £51.2m or 12.7%.
In his foreword to the report, Sir David Higgins, chair of HS2, said: “For HS2, the last year has been about becoming less of a concept, and more of a reality.”
(Image c. Stefan Rousseau from PA Wire and Press Association Images)
Have you got a story to tell? Would you like to become an RTM columnist? If so, click here.