HS2 Ltd could fall under direct state control after government review

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The taxpayer-funded company in charge of the High Speed 2 rail link could be brought under direct state control as a result of a new government-commissioned review, according to Whitehall and industry figures. 

The Department for Transport has asked James Stewart, former chair of global infrastructure at advisory firm KPMG, to lead a review into governance and accountability at HS2 Ltd.

The review, which will also examine if it is possible to claw back money from contractors working on the project, would lead to more ministerial oversight of the arms-length body, said people familiar with the matter.

The review could lead to HS2 Ltd being taken completely in-house by the transport department, meaning it would directly manage the construction of the new railway and its future operations.

Announced more than a decade ago, HS2 was an ambitious infrastructure project, stretching from London to Manchester and Leeds. But it has been hit by overspends and delays, as well as allegations of conflicts of interest and a lack of transparency.

Last year then prime minister Rishi Sunak scrapped the northern half of the new line, meaning it will run only between London and Birmingham.

The estimated cost of building HS2 between London and Birmingham has soared to as much as £67bn, more than the price tag for the entire original project. HS2 Ltd this year said the cancellation of the northern leg cost taxpayers more than £2bn alone.

Critics have previously attacked the high wages at HS2 Ltd, with more than 40 senior staff paid an annual salary of more than £150,000, which the company says is needed to attract experienced workers from the private sector. 

Tony Travers, professor at the London School of Economics, said: “So long as HS2 remains a separate entity, it will be hard for the government to control what is being spent.”

“Bringing it in-house would make it far more certain what is being spent but will also beg the big question of how Whitehall could deliver a project of that scale,” he added.

Transport secretary Louise Haigh indicated in July that she wanted a shake-up of HS2 Ltd’s management, saying on social media that “the Tories recklessly mismanaged” the project.

“We won’t make the same mistakes. We’re assessing the books and will set out next steps in due course,” Haigh added.

The transport department said:  “While we do not comment on speculation, we have been clear before that we will thoroughly review the position we have inherited on HS2, including decisions taken by previous governments,  and will set out next steps in due course.”

HS2 Ltd declined to comment.

In July 2023 Mark Thurston resigned after six years as chief executive of HS2 Ltd, with chair Sir Jon Thompson becoming executive chair. 

Mark Wild, former head of the Elizabeth Line, was appointed in May as the arms-length body’s new chief executive, but he will not start for several months because of existing contractual obligations. 

Sunak’s decision to axe the northern leg of HS2 has left questions about the project’s scope and benefits, with parliament’s spending watchdog warning in July that ministers in future may have to deter Britons from using the trains in busy periods.

HS2 Ltd is not expected to start running trains between Birmingham and Old Oak Common, a station to the west of London, until between 2029 and 2033, much later than originally planned. 

The government has yet to confirm if trains will subsequently travel for the final miles into Euston station in central London. HS2 Ltd was stripped of responsibility for developing Euston in October 2023.