HS2: Update following the Northern leg cancellation
Public Accounts Committee
Closed
Inquiry
In October 2023, the Government announced the cancellation of Phase 2 of the High Speed 2 (HS2) railway from the West Midlands to Manchester, as well as a smaller HS2 station in London Euston. Following this announcement, the Department for Transport (DfT) and DfT’s arm’s-length body HS2 Ltd began work …
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8
Recommendations
43
Conclusions
1
Report
1
Oral session
15
Letters
1
Event
Activity timeline 19 events
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Report published
Oral evidence sessions 1 session
19 Dec 2024
View on parliament.uk
Alan Foster · HS2 Ltd
Alan Over · Department for Transport
Dame Bernadette Kelly DCB · Department for Transport
Mark Wild · HS2 Ltd
Reports 1 report · click to expand
| Title | HC No. | Published | Items | Response |
|---|---|---|---|---|
| 10th Report - HS2: Update following the Northern leg cancellation | HC 357 | 28 Feb 2025 | 51 | Responded |
Recommendations & Conclusions
23 results
4
Recommendation
Deferred
10th Report - HS2: Update followin…
Assess new nature restoration fund's impact using HS2 bat tunnel case study
HS2 Ltd’s efforts to reduce the environmental impact of HS2 are not delivering value for money, with the c.£100 million cost of a protective ‘bat tunnel’ more than doubling the cost of that section of railway alone. The Committee does …
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Government Response
The government agrees to provide a final response by early 2026, after proposed Planning and Infrastructure Bill measures are finalised, regarding how the Nature Restoration Fund would have impacted the bat tunnel case study. They are already working with DEFRA to inform the operation of these measures.
HM Treasury
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12
Conclusion
Deferred
10th Report - HS2: Update followin…
HS2 Ltd's latest Phase 1 cost estimate significantly exceeds prior figures and funding envelope.
Prior to the October 2023 announcement, HS2 Ltd estimated that the total costs of Phase 1 would be £49 billion to £57 billion. The Department’s estimate was lower, at £45 billion to £54 billion but still above the funding envelope …
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Government Response
The government agrees with the 'recommendation' and commits to finalizing a cost estimating methodology over the summer, with full implementation as part of the programme reset in 2026, following a comprehensive review by the HS2 Ltd CEO.
HM Treasury
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13
Conclusion
Deferred
10th Report - HS2: Update followin…
HS2 cost estimates in 2019 prices are unsatisfactory, projected to reach £80 billion.
We expressed to the Department how unsatisfactory we found it that the cost estimates for completing the programme are still in 2019 prices. The Department agreed, telling us that it expects that any funding agreed at the spending review will …
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Government Response
The government agrees with the 'recommendation' and has commissioned a comprehensive review of the programme and its cost position, aiming to inform a programme reset in 2026. They are finalizing a cost estimating methodology, with full implementation planned as part of this reset.
HM Treasury
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14
Conclusion
Deferred
10th Report - HS2: Update followin…
HM Treasury to challenge HS2 revised costs before final programme budget agreement.
The Department confirmed that as well as agreeing a revised cost for the programme with HS2 Ltd, there will also be challenge from HM Treasury before a revised budget for the programme can be set. It told us that HM …
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Government Response
The government agrees with the 'recommendation' and is commissioning a comprehensive review of the programme, including its cost position, to inform a reset in 2026. They are finalizing a cost estimating methodology with HM Treasury advice over the summer, to be fully implemented as part of the programme reset.
HM Treasury
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15
Conclusion
Deferred
10th Report - HS2: Update followin…
Department manages HS2 via annual funding despite need for long-term profile.
The Department emphasised the need for a long–term spending profile for the completion of HS2, acknowledging to us that agreeing annual budget settlements was really poor for long–term infrastructure delivery.26 20 C&AG’s Report, para 4.6 and 4.7; Department for Transport, …
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Government Response
The government agrees with the 'recommendation' and has commissioned a comprehensive review of the programme and its cost position, aiming to inform a programme reset in 2026. They are finalizing a cost estimating methodology, with full implementation planned as part of this reset.
HM Treasury
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16
Conclusion
Deferred
10th Report - HS2: Update followin…
HS2 Ltd revised Phase 1 construction contracts in 2020, increasing its liability for cost overruns.
In July 2017, HS2 Ltd let contracts with four joint venture companies for the main civil construction work on Phase 1. However, in 2020, once the cost of building the railway became clearer, it revised the terms of the contracts …
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Government Response
The government "disagrees with the committee's recommendation" but "agrees with the substance," stating that contract renegotiations are ongoing and subsumed into a wider program reset, and further updates will be provided later.
HM Treasury
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17
Recommendation
Deferred
10th Report - HS2: Update followin…
Previous Public Accounts Committee warned HS2 Ltd about managing revised contracts and cost risks.
However, the previous Public Accounts Committee was clear on the risk of these changes and that HS2 Ltd needed to closely manage these contracts. In its May 2020 report it warned that: “Now that it is bearing more of the …
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Government Response
The government states it disagrees with the recommendation but agrees with its substance, needing more time for an update as commercial renegotiations are subsumed into a complete programme reset by the HS2 Ltd CEO. HS2 Ltd will apply robust contract management in the interim.
HM Treasury
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18
Conclusion
Deferred
10th Report - HS2: Update followin…
HS2 Ltd acknowledges suboptimal contract risk management contributed to a £6 billion cost increase.
HS2 Ltd acknowledged that it has not managed these contract risks in an optimal or coherent way.30 In September 2023, HS2 Ltd estimated that the forecast cost of main civil construction work alone had increased by £6 billion (2019 prices) …
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Government Response
The government disagrees with the committee's observation but agrees with its substance, explaining that HS2 Ltd is undergoing a complete programme reset, including commercial renegotiations, and will provide further updates as the commercially sensitive work concludes.
HM Treasury
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19
Conclusion
Deferred
10th Report - HS2: Update followin…
HS2 Ltd is seeking to renegotiate unproductive civil construction contracts for better risk allocation.
HS2 Ltd told us that it is now seeking to renegotiate these contracts.32 It considers that the current contracts are unproductive and that reset provides the opportunity for a fair allocation of risk and an opportunity to find different ways …
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Government Response
The government states it disagrees with the recommendation but agrees with its substance, needing more time for an update. Commercial renegotiations are ongoing and subsumed into a complete programme reset by HS2 Ltd's new CEO, with robust contract management applied until that work concludes.
HM Treasury
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20
Conclusion
Deferred
10th Report - HS2: Update followin…
Major HS2 contractors willing to renegotiate terms for future infrastructure programme opportunities.
We challenged HS2 Ltd on the feasibility of renegotiating existing contacts to deliver significant cost savings given the lack of incentives for the contractors to change terms. It told us that all major contractors have expressed willingness to discuss and …
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Government Response
The government "disagrees with the committee's recommendation" but "agrees with the substance," explaining that contract renegotiations are ongoing and highly commercially sensitive, forming part of a wider programme reset, with further updates promised in future six-monthly reports.
HM Treasury
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21
Conclusion
Deferred
10th Report - HS2: Update followin…
Committee concerned about contract renegotiation impact on HS2's small and medium enterprises.
We expressed our concern to HS2 Ltd for the potential for the large main contractors to pass any financial consequences of contract renegotiations down the supply chain to the small and medium–sized enterprises, of which HS2 Ltd told us there …
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Government Response
The government states it disagrees with the recommendation but agrees with its substance, deferring a full update until ongoing commercial renegotiations, which are subsumed into a broader programme reset, are complete. HS2 Ltd will apply robust contract management in the interim.
HM Treasury
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22
Recommendation
Deferred
10th Report - HS2: Update followin…
Ensure environmental legislation requirements do not disproportionately increase major public infrastructure project costs.
We challenged the Department on the balance in legislation that needs to be taken between meeting environmental obligations and costs, raising the example of the £100 million cost of a protective ‘bat tunnel’.36 In order to mitigate HS2’s impact on …
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Government Response
The government agrees with the recommendation and intends to provide a preliminary response by Summer 2025. A final response is deferred until early 2026, pending the finalisation and Royal Assent of proposed measures in the Planning and Infrastructure Bill.
HM Treasury
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23
Conclusion
Deferred
10th Report - HS2: Update followin…
HS2 Ltd concluded £95m bat tunnel was most efficient option after considering 15 alternatives.
HS2 Ltd confirmed that it was its decision to build the structure and not one required by Natural England. However, the Department and HS2 Ltd told us that, despite its cost, that they had concluded the ‘tunnel’ structure was the …
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Government Response
The government agrees with the observation but defers a final response until early 2026, pending the finalisation and understanding of measures in the Planning and Infrastructure Bill, while committing to a preliminary response by July 2025.
HM Treasury
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24
Conclusion
Deferred
10th Report - HS2: Update followin…
Department and HS2 Ltd recognise need for improved balance between environmental compliance and cost.
The Department strongly agreed, however, about how the balance between compliance and cost should be considered when delivering national infrastructure in the future.41 HS2 Ltd also recognised that it was a complex issue and a sensitive area, telling us that …
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Government Response
The government agrees but will provide a preliminary response by July 2025, with a final response by early 2026, as the full assessment depends on proposed measures in the Planning and Infrastructure Bill which are not yet finalized or received Royal Assent. The department is working with DEFRA on these measures.
HM Treasury
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25
Conclusion
Deferred
10th Report - HS2: Update followin…
Bat protection structure increased specific railway section costs from £73 million to £168 million.
In follow–up evidence, the Department confirmed that the total cost of building the structure will be £95 million (in 2019 prices). The Department also reported that the cost of building that section of the railway, irrespective of any mitigation works, …
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Government Response
The government agrees with the committee's observation and commits to a preliminary response by July 2025, with a final response by early 2026 after proposed measures in the Planning and Infrastructure Bill are finalised and Royal Assent received.
HM Treasury
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26
Conclusion
Deferred
10th Report - HS2: Update followin…
HS2 Ltd fails to monitor total spending on environmental mitigation schemes.
HS2 Ltd does not monitor how much in total it spends on environmental mitigation. For example, we asked HS2 Ltd how much it was spending on wildlife migration schemes such as for the great crested newt at Halse Copse. In …
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Government Response
The government agrees with the conclusion but defers a final response until early 2026, pending the finalisation and Royal Assent of the Planning and Infrastructure Bill and a full understanding of its measures, which would inform a re-assessment of this issue.
HM Treasury
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27
Conclusion
Deferred
10th Report - HS2: Update followin…
Government plans new Nature Restoration Fund for simplified infrastructure environmental obligations.
In January 2025, the government announced that it will look to change how infrastructure projects meet their environmental obligations as part of its forthcoming Planning and Infrastructure Bill. It set out that this would include a Nature Restoration Fund which …
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Government Response
The government agrees with the conclusion but defers a final response until early 2026, pending the finalisation and Royal Assent of the Planning and Infrastructure Bill and a full understanding of its proposed measures.
HM Treasury
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33
Conclusion
Deferred
10th Report - HS2: Update followin…
Department defends new Euston delivery body necessity due to project complexity and private investment.
We challenged the Department over the necessity and added risk of establishing an additional delivery body to oversee the works at Euston and its surroundings. The Department recognised that setting up new organisations is far more complex and difficult than …
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Government Response
The government agrees with the committee's recommendation and commits to providing an update on progress at Euston in its next six-monthly report to Parliament, expected in Summer 2025.
HM Treasury
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40
Conclusion
Deferred
10th Report - HS2: Update followin…
Full disposal of HS2 surplus land dependent on future rail strategy decisions
However, the Department told us that overall decisions need to be made on future rail investment first. It explained that the government’s long– term strategy being developed for strategic rail investment, including on improvements to rail connectivity in the north …
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Government Response
The government agrees with the conclusion, stating that preparatory work for a Phase 2 land disposal programme is underway, and it will include its approach to addressing future West Coast Main Line capacity and northern rail connectivity in a future six-monthly report, following the outcome of the spending review.
HM Treasury
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43
Conclusion
Deferred
10th Report - HS2: Update followin…
Phase 2 cancellation limits HS2 capacity benefits to London-Birmingham route
The HS2 programme was originally intended to improve capacity on the West Coast Main Line. However, with the cancellation of Phase 2, the revised programme will only address capacity between London and Birmingham. The Department is exploring options to run …
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Government Response
The government agrees with the 'recommendation'. While preparatory work on a Phase 2 land disposal programme is underway, they will include their approach to addressing future West Coast Main Line capacity issues and northern rail connectivity in a future six-monthly report, following the spending review outcome.
HM Treasury
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44
Conclusion
Deferred
10th Report - HS2: Update followin…
West Coast Main Line capacity challenge expected by late 2030s due to HS2 changes
The Department acknowledged the capacity challenge on the West Coast Main Line as a consequence of not building Phase 2, estimating that it will reach capacity by the late 2030s. These capacity concerns were also raised with us in evidence …
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Government Response
The government agrees with the conclusion, stating it will include its approach to addressing future West Coast Main Line capacity issues and northern rail connectivity in a future six-monthly report, following the outcome of the spending review.
HM Treasury
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47
Recommendation
Deferred
10th Report - HS2: Update followin…
Department and HS2 Ltd repeatedly fail to embed crucial lessons from major projects
However, the Committee has needed to recommend repeatedly that the Department and HS2 Ltd improve the degree they reflect on past or current experiences and implement any lessons. In 2020, the previous Committee made clear its dissatisfaction: 80 “Given the …
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Government Response
The government commits to learning lessons and has identified key lessons, aiming to implement them during the HS2 programme reset. It will write to the Committee outlining key areas of lessons and provide further updates in the next Parliamentary report by Summer 2025.
HM Treasury
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48
Recommendation
Deferred
10th Report - HS2: Update followin…
HS2 Euston exemplifies department's failure to learn from past major rail projects
The previous Public Accounts Committee also concluded in its 2023 report on HS2 Euston that it was another example of the Department making the same mistakes and failing to learn lessons from its management of other major rail programmes, highlighting …
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Government Response
The government commits to learning lessons and has identified key lessons, aiming to implement them during the HS2 programme reset. It will write to the Committee outlining key areas of lessons and provide further updates in the next Parliamentary report by Summer 2025.
HM Treasury
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Correspondence 15 letters
4 Sep 2025
To committee
Letter from the Permanent Secretary of the Department for Transport and High Speed Two Limited Chief Executive relating to the 10th Report of Session 2024-25, HS2: update following the Northern leg cancellation, recommendation 1 and 4, 22 July 2025
Parliament page
9 Jul 2025
To committee
Letter from the Permanent Secretary of the Department of Transport and the Chief Executive of HS2 Ltd relating to Bat mitigation on HS2, 8 July 2025
Parliament page
8 Jul 2025
To committee
Letter from the Permanent Secretary of the Department for Transport and the Chief Executive Officer at HS2 Ltd relating to the recommendations of the Committee's 10th report, HS2: Update following the Northern Leg cancellation, 07 July 2025
Parliament page
3 Jul 2025
From committee
Letter to the Permanent Secretary of the Department for Transport relating to the updated estimate of the HS2 bat mitigation structure at Sheephouse Wood, 03 July 2025
Parliament page
30 Jun 2025
From committee
Letter to the Permanent Secretary of the Department for Transport relating to the Treasury Minute Response on HS2 update following the Northern Leg cancellation, 24 June 2025
Parliament page
26 Jun 2025
To committee
Letter from the Interim Permanent Secretary of the Department for Transport and Chief Executive of High Speed Two Limited relating to the Sheephouse Wood bat mitigation structure, 20 June 2025
Parliament page
9 Jun 2025
From committee
Letter to the Permanent Secretary of the Department for Transport relating to the cost breakdown of the HS2 bat mitigation structure at Sheephouse Wood, 05 June 202
Parliament page
19 May 2025
To committee
Letter from the Permanent Secretary of the Department for Transport relating to the 10th Report of Session 2024-25, HS2: update following the Northern leg cancellation, Recommendation 2, 4, and 8, 15 May 2025
Parliament page
17 Mar 2025
From committee
Letter to the Permanent Secretary of the Department for Transport relating to the HS2 Euston tunnelling schedule, 06 March 2025
Parliament page
4 Feb 2025
To committee
Letter from the Permanent Secretary of the Department for Transport relating to the cost breakdown of the HS2 bat mitigation structure at Sheephouse Wood, 31 January 2025
Parliament page
20 Jan 2025
To committee
Letter from the Permanent Secretary of the Department for Transport relating to a follow up on questions during the oral evidence session held on 19 December 2024, 10 January 2025
Parliament page
20 Jan 2025
To committee
Letter from the Deputy Chief Executive Officer at High Speed Two (HS2) Limited relating to the oral evidence session on 19 December 2024, 10 January 2025
Parliament page
20 Jan 2025
To committee
Letter from the Permanent Secretary of the Department for Transport relating to a follow up on HS2 Resident’s and Construction Commissioner role, 10 January 2025
Parliament page
2 Jan 2025
From committee
Letter to the Permanent Secretary of the Department for Transport relating to the oral evidence session held on 19 December 2024, 23 December 2024
Parliament page
19 Dec 2024
To committee
Letter from the Permanent Secretary of the Department for Transport relating to the publication of the High Speed Two (HS2) Parliamentary Report, 17 December 2024
Parliament page