This paper sets out how government can ensure future infrastructure spending is money well spent – and where ministers can learn from the mistakes of the HS2 project.
It assesses why HS2’s estimated cost rose from £48bn in 2011 to more than £125bn in 2020.
The government has made its ambitions for infrastructure clear by publishing a national infrastructure strategy, creating a UK Infrastructure Bank and pledging a sharp increase in infrastructure spending. But recent government infrastructure projects have suffered from over-optimistic cost estimates, a lack of time spent assessing alternative options, and projects being justified by aspiration rather than robust analytical cases. Some changes have already been made to address some of the problems that beset HS2, such as publishing cost estimates as ranges to better reflect the uncertainty that surrounds major infrastructure projects, particularly in their early stages.
But the paper calls for more improvements, such as in the analysis underpinning initial decisions and the scrutiny of those decisions, and in how ministers manage political pressures and work across different tiers of government. It also calls for a national transport strategy – which would give a sense of what the UK’s transport needs actually are, and how different projects align with them – to complement the national infrastructure strategy, which was published in November 2020.
With the government pledging over £600 billion of gross capital investment during this parliament, the paper also recommends that:
- Politicians should communicate clearly and publicly what they hope to achieve with new major projects so the expected benefits of the projects can be properly assessed as facts evolve.
- Ministers should avoid firmly committing to major projects until a full business case has been developed to ensure that political commitments are not made before the scheme’s feasibility has been demonstrated.
- The Treasury should bring more qualified civil engineers – and others with relevant expertise – on secondment to scrutinise departmental cost estimates.
- Permanent secretaries should provide regular information on the latest cost estimates of a project to parliament in a timely manner and the information provided should explicitly quantify any yet-to-be identified efficiency savings that are factored into the estimates.
- A House of Lords infrastructure committee should be created to improve parliamentary scrutiny and select committees should be able to recall ministers and officials who had been in charge of major infrastructure projects to discuss them even after they have changed role.
- Parliament should create a Commission for Public Engagement to give communities more of a role in shaping infrastructure decisions.