HS2 ‘con’ will cost taxpayers billions

Whistleblowers allege multiple cover-ups of soaring costs in scheme that is ‘not fit for purpose’

THE Government-owned firm behind HS2 was last night accused of attempting to “con” Boris Johnson into giving the scheme the green light as former staff members issued explosive allegations about costs being covered up.

Today The Sunday Telegraph can disclose that HS2 Ltd has been “revising” agreements with firms carrying out the main construction works so that future cost increases will be borne by the company, funded by taxpayers’ money rather than private contractors.

The disclosure comes after damning witness statements by former senior figures at HS2 were passed to the Prime Minister’s advisers. The signed statements allege multiple cover-ups of spiralling costs at the firm, which is owned by the Department for Transport.

Separately, and speaking out for the first time today, Colin Morris, HS2’s former director of strategy, said the company appeared to be “artificially” lowering the estimated costs of the scheme in a move that could make the final taxpayers’ bill significantly higher than the current likely price tag of more than £100billion. Dame Cheryl Gillan, the former Cabinet minister, said: “We need to make sure the Government is not being conned once again by people with a vested interest.”

In a devastating attack, Mr Morris, said the scheme was “not fit for purpose” and compared it to someone tak

ing out a mortgage on a house they were unable to afford and expecting their children to foot the bill. His intervention came as pressure grew from MPs for Mr Johnson to cancel HS2.

In other developments The Sunday Telegraph can disclose today:

♦ Mr Johnson will meet Sajid Javid and Grant Shapps, the Transport Secretary, this week to decide the future of the scheme. The Chancellor is said to be the least convinced for pursuing it;

♦ A report commissioned by MPs and seen by this newspaper shows MPs approved the project on the basis of an estimate that failed to take account of the costs of buying thousands of homes and plots of land along the route;

♦ Ray Puddifoot, the leader of Hillingdon council in Mr Johnson’s constituency, insisted pursuing HS2 would be “throwing money down the drain”;

♦ Insiders allege that government officials, including from HS2 Ltd, were told as early as August 2015 that the costs of the scheme could top £100billion, in a briefing at Oxford University’s Said Business School;

♦ Signed witness statements by former senior staff members are understood to have been sent to Mr Johnson’s advisers within the last fortnight. In one, Doug Thornton, HS2’s former director of land and property, accuses the firm of coverups over costs and alleges he was asked to “misrepresent” the costs of buying land and property, to its board in 2015, before MPs voted on the scheme.

Theresa May’s government claimed

that the project would cost £56billion. But Mr Johnson is considering a review that was told it could reach £106billion – as this newspaper disclosed in September.

HS2 says the changes to its agreements with its “main civil construction contractors”, which remove financial incentives for firms to stay within budget, will save about £1billion and were related to the collapse of Carillion in 2018. They surfaced in a 62-page report by the National Audit Office (NAO). But Mr Morris said HS2’s “short term savings” appeared to come at the “potentially substantially higher risk of increasing their liability for future cost rises – ultimately paid by the taxpayer: “This artificially lowers the cost now but inevitably the final price will be a lot higher.”

Joe Rukin, of the Stop HS2 lobby group, said this was evidence that HS2 Ltd was “conning politicians into making sure their gravy train keeps running”. The

NAO report, published last week, says: “HS2 Ltd was finalising revised commercial terms with its main civil construction contractors. HS2 Ltd estimates these revised terms will achieve £1billion of savings, through contractors reducing their pricings in response to the reduced risks that they will bear. Revising the commercial arrangements was a reasonable response to HS2 Ltd’s analysis on the reasons for cost increases. However these revised terms carry risks to value for money, which the Department and HS2 Ltd must manage.”

Contractors “were previously incentivised to control costs” as they were liable for 60 per cent of any forecast increase above a target price”, but “there is no longer a fixed target price for the contracts.

“HS2 Ltd has collaboratively developed an estimated cost with contractors and will be responsible for funding increases above the estimated cost.”

Mr Morris said the NAO report showed HS2 “is still not fit for purpose”. He added: “In the long-term it’s going to be a drain on the British economy. It’s like taking a mortgage out on a house that you can’t afford and then expecting our children to pay for it.”

An HS2 Ltd spokesman said: “Following the collapse of Carillion, HS2 Ltd recognised the need to engage a healthy industry while continuing to protect value for money for the taxpayer. Instead of artificially passing risk back and forth, as has happened on other publiclyfunded projects, contractors who do not meet the required performance will lose a proportion of their fee. This incentivises good performance and prevents windfall profits from public money.”

The spokesman added that the “executive team and board” had “almost completely changed” since the 2015 briefing and the report on land and property costs.

It disputes Mr Thornton’s claims.