Building Magazine has uncovered that every company awarded contracts under Lot 1 of the HS2 Professional Services Contracts (Civil and Structural Design Services) has already gone over budget. This includes three companies, ARUP, Atkins & Mott MacDonald, who recently signed an open letter saying that they would not go over-budget on HS2 construction, in fact that they could get costs down.
The original cost of contracts under Lot 1 was £58.7 million, but the current bill is running at £69.3 million, which represents an 18% overrun. The status of the 11 contracts awarded by HS2 Ltd under Lots 2-4 is still unknown. The breakdown is as follows:
|London||Mott MacDonald||£13.2m||£14.4m||£1.2m (9%)|
|North||Capita & Ineco JV||£11.1m||£15.7m||£4.6m (42%)|
The open letter in September, which was signed by the heads of Laing O’Rourke, Arup, Atkins, Skanska, Balfour Beatty, Mott Macdonald and Kier stated:
“We gladly accept the challenge of completing Phase One of HS2 on schedule – and for less than the government’s target of £17.16bn. Funding secured for HS2 rightly includes a contingency – a responsible way to plan a project on this scale, yet artificially inflated figures circulated by opponents recently in no way represent the outcome we expect.”
Prime Minister David Cameron has recently said he wants Sir David Higgins, the former boss of the London Olympics to get costs down when he starts at HS2 Ltd next year, but the Olympics had an original budget of £2.4bn and officially came in at £9.3bn, with independent estimates of £11bn, £13bn & £24bn. In the short time that Higgins has been at Network Rail, their profits went down and their debts have gone up.
The Stop HS2 campaign has always maintained that the reason the Government introduced the HS2 Preparation Bill, which asks for a blank cheque on development of HS2, is because contractors are already over budget. This Bill will reach the House of Lords on November 19th.
Stop HS2 Campaign Manager Joe Rukin said;
“We have always said that there is only one way which the costs for HS2 will go, and that is up, because so far ever single figure involved in HS2 has been pulled out of the air. Everyone knows that Government projects go massively over budget, and the Government think we will be filled with confidence because they have appointed someone with a track record of overseeing escalating costs to get the costs of HS2 down. No one is going to buy it. It is no surprise that companies with vested interests have been trying to spin that they will get costs down, and it is exceptionally worrying that the heads of ARUP, Atkins & Mott MacDonald were willing to sign that letter two months ago, when surely they knew they were already over-spending. The question which has to be answered now is how are the other 11 contracts going?”
“HS2 contractors already notching up an 18% overspend for design work, which the Hybrid Bill Committee could order to be redone, is just plain scary. You have to remember these are just millions of pounds of contracts for design work, not billions of pounds of contracts for construction. This just shows that no matter what anyone says about controlling costs and keeping them down, that the costs of HS2 are uncontrollable and will just keep spiralling. There is only one way to stop this waste of money, and that is to scrap HS2.”
Penny Gaines, chair of Stop HS2 said,
“It’s been clear for some time that HS2 Ltd have been struggling with their costs, as shown by the sudden necessity earlier this year for the HS2 paving bill. So this latest revelation is no surprise.”
“HS2 Ltd have already got some aspects of the cost of building HS2 seriously wrong, such as they underestimated the cost of rebuilding Euston station by £500 million. So it’s no real surprise that the design work budgets were underestimated as well.”
“HS2 is a hugely expensive white elephant of a project, and it should be cancelled immediately, before any more taxpayer’s cash is wasted on it.”