HS2 Could Come Under Full Government Control

The UK government is reviewing whether to bring HS2 Ltd under direct state control. This move comes after growing concerns about the project's spiraling costs, delays, and mismanagement.

What happened

• The Department for Transport (DfT) has commissioned a review led by James Stewart, former chair of KPMG’s global infrastructure unit.

• The review will evaluate the governance and accountability of HS2 Ltd and explore potential ways to reclaim money from contractors. It may lead to more ministerial oversight or even HS2 Ltd being brought fully in-house under the DfT.

• HS2 Ltd is currently tasked with delivering Phase 1 of the high-speed rail line between London and Birmingham, but costs and delays have raised significant concerns.

By the numbers

• The current budget for HS2 is officially between £49bn and £56.5bn (in 2019 prices), but estimates suggest the project could now cost as much as £67bn.

• The cancellation of the northern leg (Phase 2) last year has already cost taxpayers £2bn.

• Over 40 senior staff at HS2 Ltd earn more than £150,000 annually.

• HS2’s four main contractors have submitted more than 3,000 compensation claims in the first two years, contributing to cost overruns.

Why it matters

The review comes in response to mounting criticisms about the management of HS2, which has faced accusations of poor cost control and mismanagement. Contracts with major contractors have reportedly given them too much power, allowing them to push up costs and file large compensation claims.

The National Audit Office (NAO) and the Institution of Civil Engineers (ICE) have both criticised how HS2 Ltd has handled contracts. The NAO found that contractual incentives to control costs have not worked as intended. Meanwhile, ICE reported that HS2 Ltd has been "overwhelmed" by compensation claims, leading to cost escalations.

What they’re saying

• Tony Travers, a professor at the London School of Economics, noted that “bringing HS2 in-house could provide more control over spending but raises questions about Whitehall’s ability to deliver such a massive project.”

• The DfT stated that they are thoroughly reviewing the situation and will announce their next steps soon. HS2 Ltd has declined to comment.

What’s next

The outcome of the review could lead to significant changes in how HS2 is managed, with more direct government control likely. If HS2 Ltd is brought fully in-house, the Department for Transport will assume responsibility for both the project's construction and its future operations. In parallel, the government may renegotiate contracts with major contractors to regain cost control.

A decision on the future scope of HS2, including whether the line will extend to Euston or stop at Old Oak Common, is also expected in the coming months.

Bottom line

As HS2’s costs continue to spiral, the government is exploring stricter oversight and structural changes to keep the project on track and under budget.