It is rare to encounter a report as scathing as the one released yesterday by Parliament’s Public Accounts Committee regarding the tumultuous history of HS2, the high-speed rail project. The MPs described it as a “casebook example of how not to run a major project,” highlighting a “cycle of repeated failure” characterized by construction contracts that are “unacceptable to the public purse.”
After over a decade of development and with an astonishing £41 billion (in 2025 prices) already expended, HS2 has yet to ascertain the ultimate cost of the high-speed rail route, nor has it developed a reliable method to calculate that cost. The timeline for completion remains uncertain, and there is a lack of clarity on how the London terminus will be constructed or financed. The project is currently at a crossroads, unable to determine whether it is £10 billion or £20 billion over budget. The Department for Transport (DfT) and HS2 Ltd, the government-owned company responsible for the railway, are expected to collaborate to establish accurate figures in the coming year.
This week also marked a pivotal moment as Britain largely dismantled its overseas aid program, reallocating an additional £6 billion annually to defense. Remarkably, this sum is still nearly a billion less than the annual expenditure on HS2, which stands at £6.9 billion (again, in 2025 prices).
Seeking Solutions in a Staggering Mess
How can we rectify this astounding debacle? During an oral evidence session with the DfT and HS2, the Public Accounts Committee repeatedly sought answers to this very question but received no satisfactory responses. Mark Wild, HS2 Ltd’s new chief executive, and Alan Foster, its chief financial officer, discussed their intentions for a “fundamental reset” of the program. This reset involves the “renegotiation” of contracts that, as Wild conceded, are “effectively… cost reimbursable.” In essence, the contractors engaged in constructing HS2 are compensated for their expenses (typically up to a certain limit), along with a profit margin, creating little incentive for cost-saving—indeed, the opposite is true.
As Sir Geoffrey Clifton-Brown, the committee’s chair, pointedly asked: “Given that you are locked into contracts at the moment, how feasible is it going to be to renegotiate?” Foster acknowledged, “We have to manage our expectations around these changes… we clearly have to reach a compromise, but there are opportunities for improvement.” Thus, the reset appears less fundamental than initially suggested. For the time being, as DfT official Alan Over admitted, construction continues “on the previous basis.”
The DfT was eager to promote the “major review” it has initiated to streamline oversight of HS2. However, the individual leading this review, James Stewart, previously chaired KPMG’s infrastructure practice, which was hired by HS2 Ltd to validate the economic benefits of the project, a process that has been criticized by economists as “essentially made up.”
Michael Byng, a chartered surveyor whose cost forecasts for HS2 have consistently outperformed official estimates, has proposed a more radical solution. He argues that HS2 Ltd should be compelled into administration, similar to the much less disastrous Railtrack in 2001, thus allowing for the establishment of a new entity to manage the project. While this approach is not without risks—and could prove more challenging than with Railtrack, which was a bona fide private-sector operation—it might facilitate the dissolution of the project’s detrimental contracts or enable renegotiation from a position of strength. While a temporary halt in work would likely be necessary, superior contracts could ultimately lead to a more timely completion of the project.
Furthermore, this course of action could foster a genuine “reset” of HS2’s culture, which, despite its obvious shortcomings, compensates its executives with some of the highest salaries in the public sector. For instance, Wild’s predecessor, Mark Thurston, was the highest-paid civil servant in the UK, earning nearly £680,000 annually, including bonuses.
Beyond HS2: A Need for Systemic Reform
Yet another reckoning is essential—not just for HS2 but also for Whitehall and broader public life. The issue extends beyond poor management; HS2 was fundamentally the wrong project from its inception. There is widespread consensus regarding Britain’s infrastructure priorities: the pressing need for more housing, decarbonized energy sources, and efficient local transport systems outside London. This begs the question: how did an inter-city high-speed rail line ascend to the top of the priority list when it objectively shouldn’t have even made the top ten?
- How did the institutions designed to protect us from poor decision-making fail so spectacularly?
- Why did political elites, particularly in regional capacities, endorse a project that contradicted the wishes and interests of the very constituents they represent? (HS2 was guaranteed to divert funding from local services that voters actually utilize.)
Part of the reason supporting HS2 was politically expedient. For political figures like Andy Burnham, the mayor of Greater Manchester, it is far simpler to advocate for a high-speed rail line constructed by others than to enhance public transport themselves (through measures like congestion charging or reallocating road space for bus lanes), which might alienate certain voters. Polls indicate that approximately 40% of the British public opposed the new rail line, yet their voices were scarcely heard, as all political parties were in support of it. Although HS2 caused significant disruption, it affected a relatively narrow corridor of land, impacting fewer people directly compared to widespread housing developments or electricity pylons. Hence, politicians were quick to buy into vague assertions regarding HS2’s environmental, economic, and leveling-up benefits, without the rigorous scrutiny that would have revealed these claims to be largely unfounded.
Another source of the Public Accounts Committee’s ire stems from the belief that it was misled at a crucial moment when transparency could have made a difference. On May 15, 2019, Bernadette Kelly, the DfT’s permanent secretary, was directly asked whether HS2’s costs had escalated from the low-ball estimates that were previously published to support the decision to proceed with the project. She confidently replied that she was “not expecting that [the figure] to change.” In reality, as the committee later uncovered, her department had been formally notified by HS2 two months prior that it would not meet the published figure.
The MPs asserted that Kelly “withheld from us that the programme was in significant difficulty… even in response to specific questions about the programme’s delivery timeline and budget… failure of an Accounting Officer to provide accurate information to Parliament is potentially a breach of the Civil Service Code and a breach of parliamentary privilege.” Despite this, Kelly remains the DfT’s permanent secretary. The DfT has denied any breach of the code, stating that Kelly acknowledged in May 2019 that there were cost pressures, which the Department and HS2 Ltd were addressing in line with government policy at the time. These discussions were described as active and commercially confidential.
When the last government opted to cancel the northern section of the scheme in 2023, I and another adviser in Downing Street suggested that it should serve as a “teachable moment” for Whitehall, leading to inquiries and potential dismissals. Unfortunately, this did not come to pass. However, perhaps in the new and harsher reality following the disintegration of the Western security alliance, an authentic reset of SW1 could occur. We can no longer afford the waste, dishonesty, and self-delusion that has characterized this project, not to mention the financial implications.
Even if HS2 can only be partially salvaged, we might still find a way to prevent such a debacle from occurring in the future.
Andrew Gilligan is the head of transport at Policy Exchange.
