Calls for inquiry into whether ministers misled Parliament over HS2 costs

The former deputy chairman of Boris Johnson’s review of High Speed 2 is calling for an inquiry into whether ministers misled Parliament over the costs of the scheme.

In a letter to Simon Case, the Cabinet Secretary, Lord Berkeley highlighted new evidence showing that Theresa May’s ministers were told in April 2019 that the line “could not be delivered to the current scope within the current schedule and budget”. Despite this, Nusrat Ghani, the then transport minister, later told the Commons that the project was “on track”, adding: “I stand here to state confidently that the budget is £55.7 billion.”

The review commissioned by Mr Johnson later that year warned that the costs of the line could rise to £106 billion, and more recent independent estimates cited by Lord Berkeley suggest a figure as high as £142 billion.

Lord Berkeley’s intervention came as it emerged that an internal economic analysis by HS2 Ltd, the government-owned firm behind the project, concluded that the section of the Y-shaped line between Crewe and Manchester represents “poor value for money”.

In a letter sent to Mr Case on Friday, Lord Berkeley asked the Cabinet Secretary to consider whether ministers had broken the ministerial code during Mrs May’s premiership. His letter cites several occasions on which he says it was made clear to government figures that the scheme would exceed its budget, including at a conference in 2015 at which officials were told that the costs of the scheme could top £100 billion.

He also cites documents obtained under the Freedom of Information Act which suggest that Chris Grayling, the then transport secretary, and Ms Ghani, were told in April 2019 that the scheme was facing £7 billion in cost overruns and a three-year delay. Allan Cook, the chairman of HS2 Ltd, told the pair that “phase one could not be delivered to the current scope within the current schedule and budget”.

Mr Cook was in the process of carrying out a review of HS2 Ltd’s finances, which he finalised in August 2019.

Minutes of the meeting added: “The HS2 Ltd board had been told by the exec that the latest point estimate for phase one was approximately £28 billion, with a £6-7 billion gap in the forecast, and a two to three year change to the schedule." Despite this warning, Ms Ghani told MPs on July 10 2019: “The business case is clearly solid: there is one budget and one timetable – HS2 will continue on track… I stand here to state confidently that the budget is £55.7 billion and that the timetable is 2026 and 2033.”

Legislation paving the way for the first phase of the line was given royal assent in 2017, despite opposition from 50 MPs. A bill for phase 2a – from Birmingham to Crewe – was voted on by MPs in the summer of 2019 before becoming law earlier this year.

Lord Berkeley said: “Parliament would expect that ministers would have complied with the ministerial code by ensuring that the true costs and time for project delivery were placed before it for its scrutiny and debate in a timely manner during the [legislative] process, so that it could have an opportunity to affirm its support for the project or otherwise.

5. HS2

“I therefore conclude that… ministers misled Parliament multiple times, either by omission or misinformation, and that this misleading has continued.”

Meanwhile, unredacted minutes of HS2 Ltd’s June board meeting, seen by this newspaper, state of the Crewe to Manchester leg of the line: “Emerging findings of the Economic Analysis indicated that the central case Benefits Cost Ratio (BCR) is likely to be below one (i.e. ‘poor’ value for money).” 

Mr Cook said: “The phase 2b economic analysis represents early advice to the Department for Transport from HS2 Ltd and is work in progress.”

Mr Grayling declined to comment. Ms Ghani did not respond to a request to comment.

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