Civil servant pressed on ‘massive scale delivery failure over Euston HS2 pause’

A senior civil servant was forced to defend the Department for Transport’s handling of HS2 after the pause to the Euston element of the project was described as a “failure of delivery on a massive scale”.

Appearing before the Public Accounts Committee on Monday, Dame Bernadette Kelly, permanent secretary at the department, described the near doubling of the costs of the London terminus to £4.8 billion as “very disappointing”.

But Conservative committee member Jonathan Djanogly raised concerns over the Department for Transport’s oversight of the project and a perception that contractors were deliberately pitching low to secure contracts.

Confronting Dame Bernadette on the issue, he said: “Can you see why I may think that taxpayers may think they are being taken for a ride on this?”

Responding, Dame Bernadette said: “I disagree that the contracting process has done that.

“It is (HS2 Ltd) that carries these contracting processes out and they are extremely complex.

“But I would say in the department’s oversight of those processes, what we are always trying to ensure is happening is that taxpayers’ interests are being properly reflected in the process.

“Within the department, I think we are certainly having accountability for ensuring overall delivery of the project is aligned with the interests of taxpayers and we work very hard to do that.”

Mr Djanogly countered by describing the Euston situation as a “failure of delivery on a massive scale” and asked if anyone in the department had been held accountable.

Dame Bernadette said: “What we have done now is got to a point where we have a better understanding of the complexity of the current design and its cost and we will need to proceed from here to try and work out what the right options are to consider and how we get to a better outcome.”

“I’ll take that as no,” Mr Djanogly responded.

In February, the Government announced it would pause work at Euston as costs for a redesigned HS2 station with fewer platforms had ballooned to £4.8 billion compared with an initial budget of £2.6 billion.

HS2 trains are now not expected to run into Euston until 2041 at the earliest after initially being scheduled for 2026.

A report by the National Audit Office last month warned the pause would “lead to additional costs and potentially higher costs overall”.

Alan Over, senior responsible owner for HS2 at the Department for Transport, said initially Government officials had “reasons to be confident” that scaling down the Euston development to 10 platforms would lead to lower costs.

He added: “We took some comfort that that would take (cost) down, not necessarily to £2.6 billion, and we would have been prepared to use Government contingency (funds) if necessary.

“But we were surprised that that progress was not made and the discovery of the £4.8 billion came late in the process.”

Mr Over added that bodies involved in the project, including Transport for London, Network Rail and Camden Council, may have to reprioritise their requirements “so that we have a hierarchy of need and get to a position where we won’t meet all those requirements, but we can do it at a more reasonable cost to the taxpayer”.

Dame Bernadette said problems with large infrastructure programmes are now being identified earlier than has historically been the case.

But she admitted there were more lessons to learn on “cost estimation and treatment of contingency” and “how we handle the integration of these big complex stations”.

Dame Bernadette added: “I wouldn’t want to leave the committee either with the impression that we haven’t already learned and are not embedding lessons.”