Infrastructure Procurement

Motion made, and Question proposed, That this House do now adjourn.—(Mark Fletcher.)

Before I call Alan Brown, I wish to forewarn everybody that whoever is on their feet at 10 pm will have to resume their seat while the Adjournment motion is moved again by the Whip.

Thank you, Mr Deputy Speaker. I thought you were forewarning Members in this Chamber that they would have to listen to me.

Clearly, infrastructure investment and procurement is a critical Government function. Done correctly, it gives us improved transport connectivity, new housing, vital services such as water and sewerage, telecoms and the correct energy infrastructure needed to keep the lights on. Infrastructure investment can deliver regeneration, additional inward investment, construction jobs and long-term jobs. But done poorly, we pay more, face interminable delays and have less money to invest in other projects.

I intend to cover a few of the projects that UK Governments have had responsibility for and failed to deliver properly, and illustrate just how much that has cost the taxpayer. First, I should probably address a possible elephant in the room. Mr Deputy Speaker, you may well have heard that the Scottish Government have had issues over the delivery of two new ferries. This story seems to have been in the news every single day in Scotland. There are clear lessons to be learned, and I shall return to them.

Without being flippant, let me explain to the House that the ferries are currently expected to cost £300 million—three times the original contractual agreement. Mr Deputy Speaker, let me put this in cards parlance: I will give you the £200 million ferry overspend, then I will raise you the £45 billion on the HS2 phase 1 overspend, the £30 billion overspend on Hinkley Point C, the £10 billion overspend in the Shared Services network replacement, a very modest £3 billion overspend in Crossrail, and a couple of billion extra spent on the Great Western electrification project. Therefore, very quickly, we have a £90 billion overspend before we even get to the black hole that is Ministry of Defence procurement, whose current procurement plan has a £17 billion shortfall—or, in other words, a £17 billion overspend. Some £15 billion was spent on unusable personal protective equipment over two years. We have well over £100 billion of overspend in infrastructure projects without even digging too deeply. That is before we consider the £37 billion spent on the track and trace system.

The hon. Gentleman makes some very good points and has opened his speech well by mentioning transport connectivity. I am sure that he is aware that the tiny Faroe Islands have opened a 10.7 km tunnel which connects the island of Sandoy with the main island, at a price of around £90 million to £100 million. Given the sorts of costs that he has cited, for the price of the first phase of HS2 the Faroese could build a tunnel from the Faroe Islands to South Africa. Is there not something particularly wrong with UK procurement? Perhaps that might lie in the Treasury Green Book. He has shown that such waste of money is not getting us anywhere at all.

I agree with the hon. Member wholeheartedly. The Faroese have to be commended for the work that they have done on transport connectivity. There are certainly some lessons that Transport Scotland can learn from that. Perhaps we need to be bolder going forward in terms of what transport connectivity looks like in Scotland.

I shall briefly return to the ferries. It is quite clear from what I have outlined that there has been well over £100 billion in overspend across a few UK projects. The overspend on the ferries in Scotland suddenly becomes loose change down the back of the couch in comparison. Indeed, the overspend in capital costs of the ferries is equivalent to the money given to PPE Medpro, for which Baroness Mone received a healthy £20 million dividend. Indeed, it was the UK Government who awarded a ferry contract to a company with no ferries for £33 million. That puts a lot of things in perspective.

The reality is that the ferries in Scotland are a microcosm of the failures of so many UK Government major programmes. In Scotland, there was the political intervention to rightly save commercial non-military shipbuilding on the Clyde. However, the actual procurement process seems to have been too rushed. It was inadequately specified by Caledonian Maritime Assets Limited and then all the numerous changes to design increased the costs. That is what happens time and again in major infrastructure projects. We really must look at some of those in more detail, study what went wrong and see what needs to change going forward.

Let us start with HS2. The original business case and proposals were for it to extend to Scotland to help with a modal shift away from flying. This was to improve business productivity, which was based on assumptions that getting to London quicker limited down time, without considering the fact that many people now work on the move anyway.

Through time, the argument was then advanced that HS2 was needed to free up capacity on existing lines, particularly the west coast main line, thereby creating more capacity for both passenger and freight services. That principle is fine, and getting more freight delivered by train is good for decarbonisation, but what the different arguments and analysis mean is that there was never an established rationale for the key outcomes for HS2. That has made it easier, as part of the inherent north-south bias of a London Government, to make phase 1 of the project the London to Birmingham link, and to make that the most important aspect.

My hon. Friend touches on HS2. I know that he will speak about many more projects, but this is a gusting £100 billion project that was designed to connect the whole length of Great Britain. We knew that we were getting nothing out of it in Scotland. Manchester is disappointed, because it thought that it was getting something out of it. Birmingham was the best connected city to London anyway; it now has another railway line, but one that does not quite make it to London. My constituents in Angus will be footing £92 million of the £100 billion. We could do with a link to Laurencekirk. We could do with fixing the erosion on the Montrose Links. We could do with getting better flood defences in Brechin. We do not know where that money will come from, but we still have to fund £92 million of HS2. Does my hon. Friend think that that is right?

I wholeheartedly agree with my hon. Friend. It is almost like, when we look back historically, the oil and gas revenues paid for HS1 and the channel tunnel, but at the time we were assured that there would be a spur up the east coast and a spur up the west coast of high-speed rail. Now, all these decades later, we still do not have the promised spine, but as he rightly says London and Birmingham are getting better connectivity, even though there is some ambiguity about where the line will terminate in London.

We were told not to worry, and that the Birmingham upgrades would still mean much quicker journey times from Scotland to London. We were assured several times that trains will run from London to Scotland on day one of HS2 services, even though they will be going from Birmingham. Sure, trains to Edinburgh and Glasgow will run, but they are intended to run as one service stopping and decoupling at Carstairs. That is just deemed a minor inconvenience for those of us travelling to and from Scotland.

When HS2 looked at the purchase of rolling stock, the key decision was made that they had to be the quickest high-speed trains. That means that when that rolling stock accesses the existing tracks on the west coast main line, the trains will go slower than existing Avanti west coast services. Not only will we not get high-speed rail to Scotland, we will get a poorer service from the new high-speed rail once it is running on the west coast main line. How can that be a logical proposal for the most expensive infrastructure project ever undertaken by a UK Government?

My hon. Friend makes a point about the slow speeds. This is not news. A report that had a foreword by Philip Hammond, who was the Transport Secretary at the time—13 and a half years ago—suggested that the rolling stock could indeed decrease speeds, stating that

“journey times between North West England and Scotland could be potentially longer than at present”,

resulting in longer journey times between Scotland and London. Just a few weeks ago, we heard evidence in the Transport Committee that that is still the case, with times increasing by between five and 25 minutes. Does my hon. Friend not think that it is absolutely absurd that we have ended up with a gold-plated commuter line between Birmingham and London and slower journey times for the rest of us north of Manchester, and that that sums up Westminster’s attitude to transport infrastructure spending since time immemorial?

I wholeheartedly agree. I go back to my opening remarks about HS2: the whole premise of it going to Scotland was to encourage people not to fly and to get the train. Now the competition is going the other way; they will be incentivised to fly because the journey times will be longer. It is absolutely crazy.

My hon. Friend the Member for Angus (Dave Doogan) touched on the fact that the costs of HS2 spiralled to over £100 billion. What happened then? The eastern leg was removed. Next to go was the Golborne link, removing the link to the west coast main line and trains running to Scotland. Then the northern spur to Manchester was removed. HS2 does not know whether to terminate at Old Oak Common or Euston, despite upgrades already commencing at Euston Station. Clearly, there is no overall strategic thinking other than a continual form of panicked cost control.

Unfortunately, HS2 is a monument to a poorly developed concept of not knowing what the key strategic objectives would be, unrealistic budgets, politicians meddling in route alignment and increasing the amount of tunnelling, politician panic as costs increase, continual stop-start reviews all costing money, over-specification, unrealistic risk allocation, and clearly not enough up-front design and site investigation work or proper planning with regard to project delivery and discussions with contractors. But hey, as we have heard, passengers from Birmingham might now be able to get to London 20 minutes quicker than they can at present, which is not a bad outcome overall for a £66 billion project that does nothing strategically outside the midlands. That leg was originally estimated to cost £20 billion, so there has been a £46 billion project overspend.

There is another major infrastructure project that is very similar in its overspend, delays and costs spiralling out of control: Hinkley Point C nuclear power station. It is a testament to political determination and aspirations over the reality of nuclear power. It was estimated to cost £18 billion, including contingency, in 2016, when the UK Government gave the go-ahead after a review. Just a couple weeks ago, however, EDF estimated that it would cost £46 billion in today’s prices. By last week, it had already increased to £48 billion. That is a mere £30 billion overspend on what was already the world’s most expensive power station. Instead of generating power in 2025, it will now be as late as 2031. As costs have continued to spiral, the Government’s attitude is, “It’s okay, the risk lies entirely with EDF,” which is completely head-in-the-sand stuff. China General Nuclear, one of the partners in the project, has already reached its cap on the amount of capital it will put into the project, so clearly EDF is having to fund a lot more borrowing. It beggars belief that the Government claim not to be speaking to EDF about this issue, especially when chief executive Luc Rémont stated last week:

Is my hon. Friend concerned, as I am, that the UK Government—specifically, the Treasury—seem not to have any concern for nuclear overspends? When it comes to nuclear, regardless of whether it is civil or military, there is no shortage of UK Government funding, yet all across GB there are plans for massive pylon lines going through communities. The pylon lines could be offshored but have to be done at the lowest possible cost, which means overhead lines. There is no parity between nuclear and anything else. Everything else is bargain-basement, Treasury Green Book “let’s screw the contractor down to the very lowest price”, except for nuclear.

Again—no surprise—I wholeheartedly agree with my hon. Friend. It is classic “penny wise, pound foolish” all the time, particularly when it comes to nuclear. The Government are kidding themselves about nuclear, because they still estimate that Sizewell C will cost only £20 billion. We already know that Hinkley, which is the model for Sizewell C, is costing nearly £50 billion, so why pretend that it will cost only £20 billion? They are setting their stall out wrongly and have a blinkered approach that suggests we somehow need nuclear, when clearly we do not actually need it. What they should be investing in is renewable energy, storage systems and, as my hon. Friend says, much better grid infrastructure as well.

I commend the hon. Gentleman for bringing this issue forward. Does he agree that there seems to be a disparity between those who live in towns and those who live in rural areas, where costs are, more often than not, much larger? Does he feel that it is time for the Government to have a centralised access point for infrastructure material, as a way of ensuring that each council area and constituency can access the same material for the same cost and begin to build what is broken in the way that it should be done in each area?

That is a fair point. There is always a rural premium, and people living in rural areas suffer disproportionately when it comes to infrastructure, upgrades, energy efficiency and heating their homes. I have long argued, particularly in relation to the roll-out of energy efficiency schemes such as ECO4, that the Government really need to consider a rural programme. Otherwise, all that happens is that urban homes get upgraded and—

Motion made, and Question proposed, That this House do now adjourn.—(Joy Morrissey.)

You did warn me, Mr Deputy Speaker, but I still got caught out.

Back to my favourite topic: nuclear and nuclear overspends. I have highlighted the failures of big nuclear projects, as well as the Government’s blinkered approach to nuclear. They need to reconsider the proposals for so-called small modular reactors. First, they are not small, and no proven design is operational anywhere in the world, but it seems that the British exceptionalism that the Government believe in means that Britain will somehow lead the way in all sorts of nuclear power generation.

Just recently, the Environmental Audit Committee has posed serious questions about that to the UK Government. Let us look at the evidence and the facts before us. NuScale, which was supposed to lead the way for SMRs, has already abandoned its proposed SMR in Utah after costs ballooned to more than £7 billion. But the Government, true to form, believe that they will be able to deliver SMRs for about £2 billion a go. That defies all logic and inevitably means yet more future infrastructure delays and overspend.

Compared with nuclear and HS2, the overspend on Crossrail was relatively modest, at just £3 billion. However, Crossrail was another example of bad news being buried until it could no longer be hidden. Years of delay suddenly emerged right at the end when the project was supposed to be at the stage of commissioning new trains. Those delays should have been highlighted much earlier. We need a culture in which delays and potential overspends are flagged up early enough to allow informed decisions to be made about the projects and to enable an understanding of what needs to be addressed in the budgets and programmes.

Another project that should generate regular headlines is the shared services network. That is the new communications network for the emergency services in Great Britain, so its delivery is presumably critical. According to a written answer I received, the original cost of the project was going to be just £1.6 billion, and the old system, Airwave, was intended to be shut down by 2026. Now the shutdown date is not known as procurement is ongoing, and the total expenditure is estimated to be £11.3 billion, so on the face of it, the cost of the project is up tenfold—nearly £10 billion over—yet it flies under the radar, for want of a pun. It is astonishing.