Transparency data

High Speed 2 (HS2) Phase 2a revised delivery arrangements: accounting officer assessment (May 2021)

Updated 27 November 2023

Background

On 11 February 2020, the Prime Minister announced that the government intended to proceed with High Speed 2 (HS2) and confirmed the current scope of Phases 1 and 2a. Phase 2a is a strategic priority in support of ‘building back better’ and as a central part of the government’s levelling-up agenda. It remains a route extension and connection project and the benefits it delivers are fully realised as part of the wider HS2 programme and a full Western Leg to Manchester.

Revised cost and schedule ranges have now been developed for Phase 2a, which align with the final scope set out in the Phase 2a Act and reflect further development of design, maturity in cost estimation and adjustments resulting from delays to royal assent, alongside extensive work on a new delivery model for the project.

Following cross-government approval of the new estimates and delivery model, HS2 Ltd will be authorised to procure a design and delivery partner and advanced civil works, alongside continued delivery of its early work on scheme design, land acquisition and early environmental works

Summary of advice against the standards

Feasibility

HM Treasury has now approved the revised delivery arrangements for the scheme predicated on a cost range of £5.2 billion to £7.2 billion and a delivery into service range of 2030 to 2034. These arrangements will be formalised at the next fiscal event, expected to be later in 2021.

A new commercial model for the construction works has also been approved which comprises a new design and delivery partner, and new procurement framework, centred on smaller and more contestable construction packages.

Value for money

The value-for-money (VfM) case for Phases 1 and 2a remains positive as of April 2020, when assessed as part of the phase full business case, with a benefit to cost ratio (BCR) of 1.2:1.

HS2 is a transformative project and the strategic case for the programme sets out how it contributes to the government’s objectives to deliver more sustainable lasting growth, that is widely shared across the country, as well as the wider economic impacts of HS2 that are not monetised in the core economic case, namely the creation of jobs, critical skills and the regeneration of the Midlands and the north of England.

The Department for Transport (DfT) has not yet completed modelling the sensitivity of its major project business cases to post-coronavirus (COVID-19) demand scenarios or economic changes. As a predominantly long-distance service, HS2 is expected to be less sensitive to changing working patterns than commuter services. This will be assessed more fully in the 2023 full business case for Phase 2a and as part of the outline business case for the western leg of Phase 2b, expected by early 2022. DfT is, in parallel, updating its approaches to the Green Book.

Propriety

HS2 has been confirmed as government policy. Now that a new cost range been agreed by HM Treasury, and a new funding envelope and spending profile are to be confirmed at the next fiscal event, continued investment in HS2 is deemed proper. The HS2 development agreement and framework document provide comprehensive control frameworks and mechanisms for the HS2 programme and HS2 Ltd as an organisation. Compliance is monitored by DfT on a regular basis and by the National Audit Office (NAO).

Regularity

There remains legal authority to spend money on Phase 2a of HS2. The 2 relevant acts, Phase 2a Act (West Midlands to Crewe) and High Speed Rail Preparation Act, provide a very broad set of powers and there is, therefore, no uncertainty around having the powers to build and maintain the railway. Sufficient controls are in place to ensure that HS2 Ltd is exercising those powers with regularity, for example, in relation to undertakings and assurances.

As of 12 April 2021, Public Health England (PHE) guidance continues to permit on-site construction works to go ahead where it is safe and appropriate to do so, provided workers adhere to social distancing policies.

Conclusion

As the Accounting Officers, it is appropriate, at this point of the Phase 2a project, for us jointly to provide an updated assessment of wider Accounting Officer issues relating to the scheme.

The government provided its commitment to delivery of Phase 1 and Phase 2a in early 2020. Revised cost and schedule ranges have now been agreed with the funding envelope to be formalised at the next fiscal event. On this basis, the scheme can formally be deemed feasible.

Phase 2a represents a key enabler for the future phases of the HS2 programme and the wider rail network, better connecting people and places and boosting productivity. It is central to the government’s levelling-up agenda to rebalance opportunities across the UK.

There is expected to be minimal impact from COVID-19 on the development of Phase 2a as the next phase of the project is mainly scheme design. No major work has yet concluded on identifying the long-term impact of COVID-19 on HS2 passenger demand. This will begin as part of the outline business case for Phase 2b, expected by early 2022.

We are content that the project continues to rely on clear legal powers and to accord with the generally understood principles of public life. The propriety of continued spend will be reinforced by regularisation of the governance and contractual framework for delivery that has been agreed by HS2 Ltd and DfT.

On this basis, we are content that investment in Phase 2a as part of the wider HS2 network is consistent with official guidance on managing public money.

Permanent Secretary, DfT

CEO, HS2 Ltd

15 May 2021