It remains unclear how government’s ambitions for Northern Powerhouse Rail (NPR) will translate into the promised benefits for the North.
In a new report, the Public Accounts Committee (PAC) warns that it is not confident that the Department for Transport (DfT) has learned all the lessons from its past failures in its management of other rail projects, with clear risks that the full programme and benefits cannot be delivered within its £45bn funding cap.
It has long been acknowledged that poor transport connections between cities in the North stifle productivity and limit opportunities for workers and businesses – but despite more than 12 years of planning, NPR remains at an early stage.
The PAC’s report illustrates the considerable uncertainty still clouding the project, with journey times, frequency, capacity, the exact route of the new line, who will build these new lines, and how investment in urban and industrial regeneration will be prioritised, all not yet determined. The report calls on the DfT to set out how it will keep Parliament updated throughout the programme.
The report highlights echoes of similar failures seen in the troubled HS2 programme, that risk being replicated on NPR. For instance, DfT lacks formal governance arrangements for joint decision-making with other Departments, and the PAC is further concerned that the system for working with local government will prove insufficient when it must make the difficult trade-offs that affect different areas disproportionately.
For example, without the injection of sufficient local funds, an enhanced scope to increase local benefits in Manchester could be at the expense of benefits in another local area. This is particularly worrying as it was the lack of robust governance in the early stages of HS2 which led to all the problems from which it has still not recovered so far.
The PAC further questioned why the DfT had appointed HS2 Ltd. to develop plans for the line from Liverpool to Manchester, given its track record of poor cost estimation. The report calls on government to explain how it will make sure HS2 Ltd's plans and cost estimates for phase 2 are realistic.
The PAC considers HS2 Ltd.’s involvement heightens the serious risk posed to the final phase of NPR (needed for the full connectivity and benefits) if DfT cannot scope NPR within its £45bn funding cap, or if early cost estimates prove unrealistic.
The PAC’s inquiry found that the DfT had no convincing plan for managing spending or prioritising benefits to remain within the cap of £45bn, and is further concerned that areas less able to self-fund or attract private investment will be left behind.
This cap was also determined before the entire project was designed, scoped and costed, making it unclear how HM Treasury arrived at the £45bn cap. DfT must now set out how it will manage its spending within this £45bn envelope, and the Treasury must similarly explain how the funding cap was determined.
Clive Betts MP, Deputy Chair of the Public Accounts Committee, said: “The government’s growth strategy earlier this year signalled that there is still an appetite to finally deliver the transport infrastructure the North so badly needs. But the spectre of HS2 hangs over Northern Powerhouse Rail.
"Our Committee has heard troubling echoes of the same mistakes in loose governance that HS2 made early on, and so much of the project remains almost impressionistic, twelve years on. HS2 have even been brought on board to develop NPR’s own plans. As HS2 has been a casebook example of how not to run a major project, so their involvement in NPR does not fill us with confidence.
“Both the Treasury and DfT have questions to answer about the project’s £45bn funding cap. Given the fact that this project has not been fully scoped or designed, it is hard to see how the government was able to arrive at a hard £45bn cap.
"We have therefore written to the acting accounting officer asking that question. We need to know how this figure was arrived at and how DfT will keep to it. Capping a project’s funding before it was even designed or costed feels like putting a roof on a house before the foundations are even laid. We also need to understand how mayoral authorities will have enough scrutiny for this project to be delivered successfully.
"Northern towns and cities desperately need better connectivity, and the growth that it will provide; what they and this Committee need right now, is a clear and deliverable plan to achieve that.”
