The latest National Audit Office (NAO) report on the Department for Transport has revealed major financial losses over the past two years following a series of project cancellations
The National Audit Office (NAO) has identified more than £2.7bn written off from cancelled UK transport projects between 2023–24 and 2024–25, including parts of HS2 and several National Highways road schemes.
Affordability pressures and shifting government priorities drove the cancellations. The write-offs cover money already spent on designing, planning, and preparing projects for delivery before they were scrapped.
The HS2 Phase 2 cancellation accounted for £2.1bn
Almost £1.1bn was written off before the cancellation of HS2 Phase 2, with nearly the same amount lost afterwards on related projects, including the rescoping of Euston Station and the Phase 2b West work.
This means that of the £2.7bn in write-offs over the two years, the cancellation of HS2’s Phase 2 accounted for £2.1bn.
The rest of the money is accounted for by National Highways road cancellations, including the all-lane-running smart motorways, A303 Amesbury to Berwick Down, A1 Morpeth to Ellingham Dualling, A27 Arundel Bypass, and the A358 Taunton to Southfields, which all combine into the extra £62m.
Last year, the NAO released a report predicting that the cancellation of Phase 2 would cost £100m in reversal procedures.
The report also highlighted disagreements between HS2 Ltd and DfT on the costs of Phase 1, where DfT estimated £45-54bn, while HS2 Ltd predicted £49-57bn.
HS2 has since announced a reset
The NAO’s report kicked off a series of criticisms against HS2, leading to a report from the Public Accounts Committee (PAC) titled HS2: Update following the Northern leg cancellation.
The summary of the report states: “The High Speed Two (HS2) programme has become a casebook example of how not to run a major project.”
At the time, Sir Geoffrey Clifton-Brown MP, chair of the Public Accounts Committee, said: “Our Committee has not made recommendations in our report on delivering better outcomes for HS2’s future passengers. We are long past that point. It is time to deal with HS2 as what it is – a cautionary tale that should be studied by future governments in how not to run a major project. We are sceptical of Government’s ability to successfully deliver even a curtailed scheme, one which we already know will on its face bring very poor value for money. The question has instead become: what possible benefit can the Government now salvage for the taxpayer, from a mess that presents real risks to the UK’s overall reputation?
“This Committee has scrutinised HS2 since its inception. Our report lays out a catalogue of warnings proceeding from that scrutiny which, if heeded, may have brought about a different outcome. Both DfT and HS2 Ltd. must now begin the hard work of making this project the best possible version of itself in the circumstances, while swiftly addressing the needs of those impacted by decisions made under this scheme who are still waiting for answers. The government must now look to future, and deliver on its responsibilities to Parliament and the wider public – through the lens of its accountability to the PAC.
“It is ultimately the Department of Transport that has failed to manage this enormous project and manage HS2 properly. This is likely to have wasted billions of pounds of taxpayers money in delays and overspends. The department as well as resetting the project must now reset itself to manage this project to a workable conclusion in line with the eventually agreed budget and timescale. To do this they will need to employ people with the correct range of skill sets to critically supervise and oversee this huge project. This is the only way to salvage its severely tarnished reputation. We expect to see a real improvement when we next examine this matter.”
The PAC’s report can be read in full here.
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