The cancellation of HS2’s northern leg – learning lessons is released by the ICE as we approach the one-year anniversary of former prime minister Rishi Sunak’s decision to axe the rail line and ahead of the Autumn Budget on 30 October where chancellor Rachel Reeves will outline spending plans up against the £22bn “black hole” in the nation’s finances.

The report’s findings are drawn from interviews and written submissions from key decision makers involved throughout HS2’s lifecycle.

They are intended as lessons for the new government as it undertakes major infrastructure projects around home building and the energy transition. They are also to be heeded by the Department for Transport (DfT) as it undertakes its review of its capital spending portfolio, which could see more major infrastructure projects cancelled in the wake of the unceremonious killing of the A303 Stonehenge Tunnel scheme.

The key lessons drawn in the report are outlined below.

Who is in charge of infrastructure projects must be clear

The ICE says that leadership in major infrastructure projects must be established and made clear. HS2 Ltd has been hampered by changing guises from an organisation focused on concept and design, then as an advocacy body to develop the Phase 1 Hybrid Bill, then as a delivery organisation while also developing Phase 2 Hybrid Bills.

This meant a regular turnover of staff and a loss of institutional memory, something that must be avoided on future long-term projects.

The ICE also notes that “it became unclear who was making decisions, how they were made and when, and whether those decision-makers had all the information required to make informed decisions”.

This meant that “external stakeholders, such as local authorities, lacked clarity about how they could influence decision-making”.

It also caused an unnecessary and confusing duplication of efforts, which is a lesson to take forward to future projects.

The ICE says there was a lack of a coherent organisational model which may have been one of the root causes around unrestrained decision making around the project’s scope.

It also criticises the DfT for “excessive scrutineering” which it says is not productive and not the oversight needed on HS2. Instead technical design oversight was needed to ensure that what was being built represented value for money.

This should be used as a lesson to ensure departmental oversight is focused on the right areas, the report says.

Stronger client and departmental capability is needed – particularly on technical assurance and ‘owning the project’

The ICE’s discussions have concluded that the model of departmental ownership works, but only if it is reinforced by strong departmental capability and robust advocacy.

It found that following the upheaval of the EU referendum in 2017, “the loss of ‘guiding minds’ and champions for the project meant that the capability to challenge the design and costs was eroded across the government, DfT and HS2 Ltd”.

This saw technical aspects outsourced and an increasing reliance on consultants.

“While design consultants felt able to challenge HS2 Ltd, the failure to explain decisions and cost implications heightened the sense of no control,” the report states. “The ICE has also heard that designers were frustrated by the inability to pursue innovations because of the relentless focus on meeting programme and cost milestones.”

It suggests that the use of expert challenge panels could have been improved in order to have robust design control.

It also found that the rapid turnover of ministers hampered the project as it “afforded limited opportunity for office-holders to master their brief”. It also meant they lacked sufficient understanding of infrastructure delivery and budgets.

“More stability in appointments is required, but will inevitably be subject to wider political factors,” the ICE states. “Ensuring Ministers receive appropriate advice before making decisions or even training to understand how a project works at budget and programme level would help.”

It continues: “The scale of mega-projects requires expert oversight and visibility, both deep down and across the project, of what progress is being made.

“The expected merger of the National Infrastructure Commission (NIC) and the Infrastructure and Projects Authority under the new government is an opportunity to strengthen support for major infrastructure planning and delivery. However, the scope of the body’s powers remains uncertain.

“Some have argued that a dedicated Department for Infrastructure (with a Minister for Infrastructure) or a super-project management office is needed to strengthen civil service capability and oversee major infrastructure projects adequately.”

Any programme of this scale and significance needs more development time before commencing works

The ICE underlines the point that spending more time on the conceptual stages of a project will help it to achieve more as client control and flexibility are high while cost expenditure is low.

“Engineers will not arrive at cost-effective designs if they are following an inappropriate scheme,” it explains. “Key decisions should happen by considered choices rather than be subject to chance.”

Coupled with this is the ICE’s belief that there should be a Design Champion within major projects, which was first suggested by the National Infrastructure Commission in 2018. This person would be required to sit on the board of every major infrastructure project to advocate for design principles at the highest level.

The report says that HS2’s development phase and resulting high specifications were driven by politics, with the outgoing Labour government undertaking a “huge amount of work” in 2009 for fear that the new Conservative government would not continue with the project if detailed designs were not developed.

This meant that “not all factors affecting the cost were considered and, due to the speed with which HS2 Ltd’s initial proposals were developed, the opportunity to build in greater flexibility was lost, the government of the day being keen to act quickly to accept the proposals and avoid the project becoming embroiled in a political row”.

It also criticises the Hybrid Bill process, which requires designs to only be 4-7% complete for them to progress. “So much of that is guesswork, and the risks are unknown and unappreciated at that point,” it states.

Another main recommendation in the design of a major infrastructure project is for it to be integrated with other infrastructure.

It found that, while some work was done on this for the HS2 project, more could have been done to integrate HS2 and maximise the benefits to the regions.

“These benefits should then be a major input to the cost-benefit analysis,” it adds.

There should also have been more work to uncover how the works on HS2 would disrupt other major infrastructure,

“Much greater planning effort needs to be put into thinking about where wider development can occur but also where disruption might be significant,” the ICE says.

The contracting approach should set up the project for best-practice delivery

One of the main factors that led to cost increases on HS2 Phase 1 was the approach taken to procuring and contracts.

The size of the contracts used on HS2 Phase 1 – which included design and build aspects – meant that contractors were in a more dominant position to make demands on changes to contract terms. The contractors also had an incentive to put the price up as, because costs went down, they would make more money from the contract incentives.

The ICE says it “heard that HS2 Ltd became overwhelmed by compensation event claims from the contractors, which would entitle them to additional time and/or money”.

In December 2022, NCE found that HS2 contractors had submitted 3,000 compensation event claims in the first two years of work.

“With the [contractor] contracts including design and assurance aspects, the expectation that many project assets would be standardised was lost,” the ICE reports. “It also meant HS2 Ltd lost the ability to act as the ‘guiding mind’ for the ongoing technical development of the project, eroding its capability as an intelligent client.

“On any project of this scale, control and visibility of designs are key to cost control.”

The ICE says that the importance of mature design and the planning process “still tends to be underestimated on major infrastructure projects”.

It believes that benefits of different approaches to procurement could be evaluated in greater detail.

Major projects and programmes require clarity and consistency on outcomes to achieve political and public buy-in and deliver value for money

The ICE has highlighted the fact that “from the outset, the discussion about HS2 was focused on transport, not outcomes”. However, “the government did not have an overarching transport master plan within which to situate HS2”.

There needed to be a plan for how HS2 would fit into the wider transport network to ensure that subsequent decisions did not deviate from its original purpose.

“Instead, the project arose from a politician’s vision and subsequent attempts at justifying it have been ‘after the fact’ rather than true drivers,” the report states.

While HS2 was originally promoted on the basis of improved journey times, “the messaging then became unclear – encompassing speed, capacity, British prestige, economic rebalancing and emissions savings – particularly when spread over 15 years and so many different decision-makers”.

The focus on HS2 during this period also saw other parts of the transport network neglected.

“Had the original HS2 proponents worked back from ‘what was the goal’, the answer may not have been a high-speed solution,” the ICE posits.

“To avoid building infrastructure for infrastructure’s sake, upstream planning needs to start by being agnostic about transport infrastructure and modes to establish the right solutions.”

It recommends that major projects must focus on the outcomes, not the costs. Without clearly stated outcomes and wider benefits of a project, there is nothing to judge it against when problems arise. This will lead the policymakers to narrow down decisions to a single lens: the cost.

This was the case with HS2, where constrained public finances and constantly shifting narratives about the purpose of the project eroded political support and made the decision to cancel it relatively easy.

“That extends to wider discussion about critical infrastructure projects,” the ICE says. “There is an onus on the engineering profession and membership bodies like the ICE to make the case for infrastructure investment by emphasising the wider benefits to society rather than defaulting to discussing the costs.”

Conclusions

The ICE laments the loss of the northern leg of HS2 and the associated benefits that it would have provided, especially as the lessons from Phase 1 would have made it “much more straightforward and efficient in comparison”.

It also decries the fact that its cancellation has undermined confidence in the UK construction sector.

It is therefore all the more important that the lessons are learned for future projects.

The ICE concludes: “It is not possible to separate politics from major infrastructure projects, but delivering those projects requires commitment over multiple political cycles.

“It is true that HS2 has also coincided with a period of unprecedented political upheaval in the UK. However, the experience shows the need for governments to think long term.

“Starting by selecting projects based on clear strategic need will make it much easier to build and maintain political and public support, navigate political change and deliver value for money.

“Getting this right is vital for the UK to prioritise, plan and deliver the infrastructure needed to improve people’s lives.”

Jonathan Spruce, ICE Trustee for policy and external affairs, said:

ICE Trustee for policy and external affairs Jonathan Spruce said: “The cancellation of HS2’s Northern leg exemplifies how impossible it is to separate major infrastructure projects from politics.

“To succeed and deliver desired outcomes, projects like HS2 require commitment that spans parties and political cycles. The number one lesson is that governments need to think long-term, select and prioritise projects based on strategic needs, and follow through. Getting it right improves people’s lives.”

Professor CK Mak, honorary professor at the University of Hong Kong, who chaired the paper’s steering group, said: “Political and public support for infrastructure projects is more important than ever. Understanding why a flagship project like HS2 failed and what needs to be done differently is relevant not just for the UK, but for governments all over the world.”

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