The HS2 affair has highlighted a number of weaknesses in UK public administration. The list is rather long, much like the prime minister’s shopping list of new and old transport schemes.
Most obviously there is the “presidential” style of the statement: “I am cancelling the rest of the HS2 project.” It is alleged that the prime minister pulled together his shopping list of replacement schemes without consultation with any of the statutory, affected and expert bodies such as Network Rail, local authorities, the National Infrastructure Commission or independent regulatory bodies. It is not clear to what extent the cabinet or departments of state outside No 10 (including the Treasury) were substantively involved. Parliament certainly was not involved, even though it must approve spending plans.
The announcement rode roughshod over any notion of devolution to the city regions. Had the new policy been to divvy up the money saved by cancelling HS2 and grant it to local authorities for them to spend, then it would have been different. In recent years, Manchester, Birmingham, Leeds, Liverpool, Bradford and other city regions have done more coherent planning of their transport systems than Whitehall has managed, and this was an opportunity for a government that believed in devolution to give them their head. But the cash is apparently to be spent in ways the prime minister has chosen.
There is an obvious difficulty with the credibility of the promise to spend the money on anything specific. This is not a lump sum, available to spend now. The cash was to have been spent on HS2 over two decades: less than £2bn a year. But there is no ready mechanism by which this government can bind a future government to anything—who can remember the spending commitments of 2003 or 2013? The Treasury operates a three-to-five-year budgeting and spending control regime that is largely detached from promises made in the past. In any case, the public accounts are so nebulous that it would not be possible to audit delivery.
The list showed signs of being cobbled together in a hurry. So how do the projects relate to the relevant statutory processes? Under railways legislation, the government and Network Rail are in the process of agreeing with the independent Office of Rail and Road a planned programme of work for the five-year period starting next spring. National Highways (the strategic roads) are following a similar process, one year behind.
What about the Treasury’s “National Infrastructure Strategy” of November 2020, the government plans for reaching “net zero” and the “National Policy Statement on National Networks”? This last forms the legal background for transport-planning inquiries under the Planning Act 2008. It is a formal statement, debated and approved in parliament. The current one was designated in 2015 and took as its premise that HS2 would be completed in full. Drafting a revision started some months ago.
How do the schemes in the list comply with the HM Treasury rules for ensuring value for money? Normally, a publicly funded scheme must be appraised according to the procedures set out in the Treasury Green Book, using the “five case model”: strategic, economic, commercial, financial and management cases. A final business case will form the background against which the accounting officer (typically the permanent secretary, in this case of the Department for Transport) must sign off their assessment that the scheme demonstrates “compliance of the programme with HM Treasury’s managing public money guidance”.
Speaking of which, the current Accounting Officer Assessment for the 2020 “Notice to Proceed” with Phase One of HS2 must now be nullified because it relied on the Leeds and Manchester links to mitigate the then “low” value for money for London to Birmingham (now much lower). What is now proposed is a different scheme. As the prime minister said, “the facts have changed”. A new business case, with accounting officer sign-off, must surely be required?
Like it or not, these procedures have been developed over the years to keep a degree of coherence and prudence in the spending of public money. Schemes are planned and assessed over time and they are subject to various elements of parliamentary scrutiny. The prime minister did not indicate how many of his schemes have completed due process.
An important constitutional and property rights difficulty was caused by the splitting of the HS2 scheme into two phases. Justine Greening announced in 2012 that, having considered the public consultation, the government would deposit a hybrid bill (combining elements of private and public legislation) for Euston to Birmingham. The bill takes the decision to build as a given—as formal government policy—and gives people affected an opportunity to petition for changes or compensation. Once the parliamentary processes are complete, the Act gives the government powers to make compulsory purchases of property.
The justification for damaging private interests is that the scheme is in the national interest. Nobody claimed that Euston to Birmingham alone was in the national interest—that would have been nonsense. The national interest was in the full scheme as set out in the 2010 White Paper and consultation. So, in seeking compulsory purchase powers for London to Birmingham, the pledge was made that the scheme would be completed in full. The problem is that, as we have seen, there is no mechanism by which the government of the day can bind a future government. The pledge was unenforceable and properties were compulsorily purchased on the strength of an unfulfilled premise.
HS2 has raised issues about the veracity and transparency of the information made available to parliament and the general public. We now know that, on occasion, the true costs were not what parliament was being told. The National Audit Office and the Public Accounts Committee have documented serious shortcomings. In particular, the crucial decision to give the Notice to Proceed was based on costings that, it turns out, could not have been robust because the designs at Euston were not useable and the detail north of Birmingham was not fixed. Sceptical reports from the Commons Transport Committee and the House of Lords Committee on Economic Affairs were not heeded. Meanwhile, public relations companies were employed at industrial scale to lobby and offer glossy virtual realities.
Whatever parts of HS2 eventually get built, this debacle has highlighted the need to improve the regard for evidence, systematic planning and due process in UK public administration in transport. Without reform, we will be forever condemned to struggling to make the best out of a bag of bits.
