Transparency data

High Speed 2 (HS2) Phase 2a: accounting officer assessment (June 2017)

Updated 27 November 2023

Background

An accounting officer assessment was prepared for Phase 2a of HS2 outline business case (OBC) by DfT’s accounting officer Bernadette Kelly in June 2017.

Overview

The key objectives of HS2 are to:

1. provide sufficient capacity to meet long term rail demand, and to improve resilience and reliability across the network

2. improve connectivity by delivering better journey times and making travel easier

3. boost economic growth across the UK

To do this, the HS2 programme will provide a new rail spine from London to the North in a Y-shaped network. Phase One takes HS2 from London to Birmingham and the West Midlands. Phase Two takes HS2 from the West Midlands to Leeds and to Manchester via Crewe.

In November 2015, the government announced its intention to accelerate the delivery of the section of Phase Two between the West Midlands and Crewe, known as Phase 2a.

An OBC to assess this decision was undertaken and supported the government’s decision to bring forward Phase 2a ahead of the rest of Phase Two of HS2.

The OBC explained that, at the southern end, Phase 2a will connect with Phase One at Fradley and, at the northern end, Phase 2a will connect with the West Coast Mainline (WCML) to the south of Crewe to allow HS2 services to join the WCML and call at Crewe Station.

Phase 2a was expected to be built and operational by 2027.

DfT’s Board Investment and Commercial Committee (BICC) [now Investment, Portfolio and Delivery Committee (IPDC)] received the OBC for Phase 2a on 5 June 2017. At the same meeting, BICC was asked whether they supported the deposit of a Phase 2a hybrid bill in Parliament in July 2017. BICC both approved the OBC and approved the deposit of a hybrid bill in Parliament in July 2017. The OBC was published and the High Speed Rail (West Midlands – Crewe) Bill was deposited in July 2017.

Regularity

Expenditure incurred by the programme up to 2017 has been provided for in the High Speed Rail (Preparation) Act 2013. This Act also allows for future expenditure on Phase 2a, including work to progress the case from OBC to full business case.

The expenditure involved in compulsory purchase and railway construction will be provided for when royal assent is granted to the High Speed Rail (West Midlands -Crewe) Bill. This Bill, when enacted, will also provide the powers to build and maintain the railway.

Propriety

The Phase 2a scheme is working to the HM Treasury Green Book 2018 and European System of Accounts and within the standards set out in managing public money.

The scheme requires and has DfT BICC approval. It does not breach any parliamentary control procedures or expectations.

Value for money

The estimate of the benefit: cost ratio (BCR) at OBC stage demonstrates that the case for Phase 2a has strengthened since it was published within the November 2015 strategic outline business case (SOBC) from 1.3 to 1.9, including wider economic impacts. This represents ‘medium’ value for money.

Risk analysis and sensitivity tests have been undertaken to understand the resilience of the central BCR. The central risk analysis gives an 85% chance of Phase 2a having a BCR of above 1.5 and a 38% chance of it being above 2.

At OBC stage, I am therefore satisfied that the analysis demonstrated that Phase 2a of HS2 represented value for money, delivering a significant level of benefits for passengers.

Feasibility

An Infrastructure and Projects Authority (IPA) project assessment review of Phase 2a was conducted in May 2017 giving an amber/green delivery confidence assessment for the programme.

The project assessment review report, dated 19 May 2017, noted that Phase 2a had:

an appropriate level of maturity, in terms of development and governance, with strong cross organisational commitment, to support the approval of the OBC and Hybrid Bill submission in July 2017.

The review also noted:

a strong and capable collective project team, working under a robust governance regime that has a comprehensive understanding of the issues and risks that the project faces and to have: strong evidence of significant and active incorporation of learning from HS2 Phase 1.

Conclusion

As the accounting officer for the DfT, I have prepared this summary to set out the key points that informed my decision in June 2017.

I have considered this assessment of the Phase 2a of the HS2 programme against the four accounting officer standards of regularity, propriety, value for money and feasibility.

I am satisfied the programme:

• relies on clear legal powers
• meets the standards of managing public money and accords with the generally understood principles of public life
• represents good value for money for the Exchequer as a whole
• is feasible to deliver.

Therefore, I am satisfied that the programme is a good use of public resources.

Bernadette Kelly, Permanent Secretary, DfT

5 June 2017