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 an estimated £1 billlion and were related to the collapse of Carillion, the construction giant, in 2018.
They surfaced in a 62-page report by the National Audit Office (NAO).
But Mr Morris said that HS2’s “short term savings” appeared to come at the “potentially substantially higher risk of increasing their liability for future cost increases – which would ultimately be borne by the taxpayer.
“This artificially lowers the cost now but inevitably the final price will be a lot higher.”
Joe Rukin, campaign manager of the Stop HS2 lobby group, claimed that the move was evidence that HS2 Ltd were “conning politicians into making sure that their gravy train keeps running”.
The NAO report, published last week, states: “At the time of publishing this report, HS2 Ltd was finalising revised commercial terms with its main civil construction contractors … HS2 Ltd estimates that these revised terms will achieve £1 billion of savings, through contractors reducing their pricings in response to the reduced risks that they will bear.”
It adds: “Revising the commercial arrangements was a reasonable response to HS2 Ltd’s analysis on the reasons for cost increases.
“However, like all contractual arrangements, these revised terms carry risks to value for money, which the Department and HS2 Ltd must manage.”
Contractors “were previously incentivised to control costs” because they were liable for 60 per cent of any forecast cost increases above a target price”, but “there is no longer a fixed target price for the contracts.
“HS2 Ltd has collaboratively developed an estimated cost for the works with its contractors and will be responsible for funding increases above the estimated cost.”
No fixed cost agreement is going to limit costs is it?
Just cancel the damn thing. By the time we’ve got to this sort of nonsense claim we’re well into something that can never, never, work.