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Mon 25 October 2021

Two former senior members of staff claim that they were sacked after they sought to reveal the true property costs of the project

Lauded by Boris Johnson as the “spine” of a new transport network to fix what he diagnosed as “the great musculoskeletal problem of UK transport”, High Speed Two (HS2) is the Government’s flagship rail infrastructure project, aiming to build a new line connecting London to Birmingham, Leeds and Manchester.

In 2018, the independent spending watchdog – the National Audit Office – noted that, in order to build its first phase, between London and Birmingham, “the Government will need to acquire approximately 70 square kilometres of land along the route of the railway”.

It said that “HS2 estimates that it will have to compensate between 6,000 and 10,000 claimants who have land and property interests affected by the route, including property owners, leaseholders and tenants”. HS2 said it would be required to issue up to 50,000 compulsory purchase notices – orders that allow authorities to purchase a property if it obstructs any development or infrastructure project that benefits the ‘greater public good’.

However, in this special investigation, Byline Times can reveal more claims about what unfolded in HS2 from November 2015 to April 2016, as the scheme progressed through Parliament. According to its former head of property planning and performance Andrew Bruce, this period was marked a conscious suppression of reality and a contortion of the truth designed to secure parliamentary approval for the controversial rail scheme.

HS2’s core land budget was therefore based on little more than a £35,000 very rough and incomplete estimate of likely land costs

Doug Thornton, former land and property director, HS2 Ltd

Byline Times has seen a signed affidavit given by Bruce in August 2019, detailing his experiences working for HS2 Limited – the Government-funded private company that is tasked with delivering the railway.

A former Lieutenant Colonel, his work in Iraq and Afghanistan did not fully prepare him for the personal battle that he faced on domestic soil beginning in 2015, overseeing one of the largest property acquisition exercises in British history, and attempting to deliver a historic new railway line.


Enter: Andrew Bruce

April 2004 witnessed the bloodiest battle in the Iraq War: the Second Battle of Fallujah – a six-week siege on the city located roughly 70 kilometres west of Baghdad, flanking the Euphrates River. The offensive was a three-way collaboration between American, Iraqi-Government and British forces. From these troops, 107 were killed and 613 wounded.

The British presence in Iraq was largely based out of the southern city of Basra and, while American forces represented the majority of military combatants, British personnel provided a steadying influence in the campaign to build a post-Saddam Hussein state.

Key to this effort was Lieutenant Colonel Andrew Bruce – a senior military commander who had served in Kenya, Cyprus, Germany and the US.

While working as a senior military staff officer in the Scottish Brigade Headquarters in 2005, Bruce was seconded to southern Iraq as the director of construction and logistics. These were crucial early stages for the new country – which had been ruled by the authoritarian Hussein from 1979 until his death in 2003 – and for the ongoing military operation.

Lieutenant Colonel Andrew Bruce. Photo: Andrew Bruce

During his year at the helm, Bruce delivered more than 300 projects for the Iraqi army, police and border agency. In total, he procured, delivered and distributed nine million items of equipment worth some £300 million.

He returned to the Middle East as NATO’s chief engineer in southern Afghanistan in 2010, leading a workforce of 8,500 people from 17 nations, and then served as chief engineer in south-west Afghanistan from 2013 to 2015.

Two months earlier, he had been headhunted – offered the role of head of property planning and performance for HS2. While the role did not have the kudos of a mission in Iraq or Afghanistan, Bruce was relishing the task ahead.

But then reality hit.


Blacklisting the Black Hole

The first matter of concern for Bruce was a report by the management consultancy firm Deloitte, which had exposed holes in HS2’s property operation.

The report noted that Bruce’s team “did not have sufficient resources, capacity or capability” to carry out its future work effectively. It also said that the existing Property Cost Estimate (PCE) – essentially the value of land and properties that HS2 expected to buy along the route – required a significant re-work.

The Deloitte report followed a review conducted by the consultancy firm PricewaterhouseCoopers in March 2015, which came to similar conclusions.

“This is a model and not actual individual property cost estimates,” the Deloitte report, seen by Byline Times, states. It said that there was a risk that properties “have been undervalued” and “information may be outdated”. In order to achieve the necessary detail and accuracy for parliamentary approval, Deloitte recommended an “additional, concerted and coordinated effort” to update the PCE.

According to Doug Thornton – who for a short time acted as Bruce’s director – a rough, abridged PCE was first produced by a consultancy firm in 2009. HS2 only paid £35,000 for this report and an update in 2011 – which was written in large part by interns, Thornton claims. These calculations, with subsequent revisions – notably in 2013 – essentially served as the basis of HS2’s property cost estimate until the hiring of Bruce in November 2015. This is confirmed by the NAO’s 2018 report.

“HS2’s core land budget was therefore based on little more than a £35,000 very rough and incomplete estimate of likely land costs,” Thornton states, in an affidavit provided alongside Bruce’s.

Bruce claims that he used Deloitte’s recommendations to build an action plan – both for bolstering his workforce and improving the deficient cost estimate. However, Thornton was removed from his position over the Christmas period, and the first action of Bruce’s new boss was to blacklist the Deloitte report.

He “ordered all copies of the Deloitte report… to be removed from the HS2 office,” Bruce states, “Physical copies were gathered up and placed in the bins marked for shredding. Staff were instructed to delete any electronic copies”.

Bruce was given four days to develop a new plan of action without any assistance, he says. According to Bruce, the original document “was 118 pages long and had taken a team of eight highly experienced specialists two months to compile at an estimated cost of £1 million”.

“The new plan was written in less than a week and was just 12 pages in length,” he claims.


Dismissed with Immediate Effect

HS2’s property cost estimate stood at £2.8 billion – this was the amount that had been agreed with the Department for Transport (DfT) and widely publicised. However, according to Bruce’s analysis, of all the land parcels required to build the railway, only 52% had been valued. As reported by the NAO, this £2.8 billion total was based on an update to the £1.6 billion figure included in the DfT’s commercial case for HS2, presented in 2013.

However, from even a cursory analysis, Bruce believed that HS2’s £2.8 billion figure was a major under-estimate of the full costs. If this was the case, he alleges, “the whole HS2 project could be delayed by at least a year, Royal Assent would unlikely be granted and it could have ended the entire project”.

When all the additional factors were taken into account the new estimated cost was in the region of £4.8 billion… This was an increase of £2 billion

Andrew Bruce, former head of property planning and performance, HS2 Ltd

Bruce presented his initial analysis to senior members of the land and property division at HS2, as well as the deputy director of the DfT, who were seemingly startled by this revelation. He estimated that 1,500 land parcels were still being included in the estimate, out of roughly 13,000, despite no longer being needed – adding £200 million to the overall cost. However, some 3,000 land parcels had no value attached to them, while a further 2,400 had a listed value of £0. Therefore, in effect, only 6,000 of the 11,500 land parcels required by HS2 had been valued and accommodated into the property cost estimate.

Bruce was told not to publicise this information, but instead to conduct more detailed research that could be shown to the board. Bruce set about establishing a property cost estimate that he believed was a true reflection of the costs.

“When all the additional factors were taken into account the new estimated cost was in the region of £4.8 billion” Bruce notes. “This was an increase of £2 billion” from HS2’s existing figure.

This was a financial bombshell – but one that Bruce was determined to present to leadership figures. At 3pm on 6 April 2016, a meeting had been scheduled between Bruce, DfT officials and individuals overseeing the land and property operation. However, Bruce didn’t make it there.

At 2:30pm, Bruce says, he was called into a meeting with his director and a representative from human resources and was told that he was being dismissed with immediate effect.

“I was advised that I had not passed my probation due to poor performance and that I was to leave the building immediately,” he states in the affidavit. He offered to share his work with other members of his team, so it could be continued after his departure. This offer was rejected, he says.


Royal Assent

The phase one HS2 hybrid bill was introduced for its third reading in the House of Commons in March 2016 and Royal Assent was granted in February 2017.

“This is about the future of our nation,” said the then Transport Secretary Patrick McLoughlin when he introduced the bill. “A bold new piece of infrastructure that will open to passengers in just 10 years’ time.” The estimate of expense for property and land submitted to and approved by Parliament stood at £2.8 billion.

“Nine months before the hybrid bill was put before Parliament for Royal Assent, HS2 – and therefore one would reasonably assume the DfT – knew the true cost, but I was fired and the true cost was concealed until after Royal Assent was granted… I believe I was fired deliberately to suppress and hide the true cost of land and property,” Bruce says in the concluding remarks to his affidavit.

The details that Bruce describes cannot be fully, unequivocally verified. Many elements of the story involved just a few other individuals aside from Bruce, who are unwilling to give their accounts – for obvious reasons. It is also uncertain whether the recognition of a higher PCE would have derailed the project, given that Parliament did not specify the level of detail that it required on the property and land budget before Royal Assent.

Andrew Bruce and my team… were finding errors cumulatively in the hundreds of millions. We were interrogating the available data and the bad numbers just kept coming

Doug Thornton

HS2 has maintained that it does not recognise Bruce’s version of events.

A HS2 spokesperson told Byline Times: “These allegations are simply not true. Furthermore, the claims made by Bruce and Thornton were put under intense scrutiny in 2018 by the National Audit Office as part of an investigation into the HS2 project’s property cost estimates. The NAO’s report, published in September 2018, found nothing untoward and concluded that the revised 2016 cost estimate was reasonable.

“The construction of HS2 is playing a vital role in Britain’s economic recovery from COVID-19, with over 16,000 people already working on the project, both directly and across our UK-wide supply chain. By providing a cleaner, greener way to travel, HS2 will help cut the number of cars and lorries on our roads, cut demand for domestic flights, and help the country’s push to reduce carbon emissions.”

However, others involved in HS2 at this time can corroborate the overall picture that Bruce presents. Thornton, for example, describes a strikingly similar experience to Bruce.

“I had found absolutely no justifiable basis for the [figure] that was currently being used and that it represented a reasonable estimate,” Thornton states in his affidavit, referring to the property cost estimate. “Andrew Bruce and my team… were finding errors cumulatively in the hundreds of millions,” he adds. “We were interrogating the available data and the bad numbers just kept coming.”

Thornton claims that he wrestled with the same dilemma as Bruce – the demands of senior figures in HS2 about preserving the existing budget, at loggerheads with the overwhelming evidence that contradicted their calculations. Thornton was scheduled to brief the non-executive directors of HS2 about these issues on 16 December 2015. However, just weeks before this meeting, he had been informed that his services were no longer required.

Thornton claims that senior figures in HS2 instructed him to use figures that he and they knew were false.

“I believe I would have been committing a fraud by briefing board/non-execs using figures that I knew or suspected to be false or misleading,” he states in his affidavit. “In my view, [they were] either instructing me to lie or, at the very least, conceal the truth. In real terms this amounts to the same.”

“Between 2013 and 2016, HS2 Ltd had five directors of the land and property function,” the NAO logs in its 2018 report. Bruce and Thornton, both of whom spoke to Byline Times at length, believe that several other members of staff were subjected to the same treatment as them.

It was only in February 2017, the month that Royal Assent was granted, that HS2 increased its property cost estimate to £3.5 billion. The Treasury and the DfT has also accommodated contingency funds allowing for a budget of £4.3 billion. Bruce’s estimate in 2016 did not include a figure for risk contingency, yet still came out above this figure.


The Ballooning Budget

The question is: why does this matter now, more than four years after Royal Assent?

It could reasonably be argued that this tale of obscurity, in the name of masking cost inflation, has been rife within HS2 – even stretching to the present day.

The November 2015 Spending Review confirmed a budget for the whole project of £55.7 billion. As of December 2019, the DfT’s estimate of the cost ranged from £65 billion to £88 billion (2015 prices) – between 17% and 58% more than the available funding.

A 2019 review of HS2 by the project’s former chairman Douglas Oakervee suggested that the total cost could amount to £106.6 billion – while others have claimed that it could cost as much as £170 billion.

And whereas McLoughlin promised trains on the line by 2026, the current Transport Secretary Grant Shapps advised in a written statement to Parliament in September 2019 that it could now be 2028-2031 before the launch of HS2.

These are staggering sums of public money. The Coronavirus Job Retention (Furlough) scheme is expected to have cost some £54 billion in 2020/21, with the procurement of personal protective equipment (PPE) costing £15.2 billion. The UK Government borrowed £300 billion during the 2020/21 financial year, largely to pay for various measures related to the Coronavirus pandemic. HS2 is expected to cost one-third of this outlay, even on a relatively cautious estimate. On 15 July, Prime Minister Boris Johnson confirmed that £4.2 billion would be invested into local bus and train services in the UK – a figure directly equivalent to HS2’s current land and property budget.

HS2’s Ballooning Budget

2015 – Spending Review – £55.7 Billion

2019 – Department for Transport – £65-86 Billion

2019 – Oakervee Review – £106.6 Billion

2020 – Byng Estimate – £170 Billion

All the while, there has been mounting political controversy over the project. The Liberal Democrats recently overturned a 16,223-vote Conservative majority to win the Chesham and Amersham by-election, with HS2 occupying a prominent role in the campaign. Indeed, the railway cuts through the area and has already disrupted the natural and physical architecture of this Chilterns constituency – much to the chagrin of local residents.

Under pressure from his former chief aide Dominic Cummings, Boris Johnson commissioned the Oakervee review in 2019 to assess whether and how the scheme should proceed. Oakervee “strongly advised against cancelling the scheme” and the Prime Minister sanctioned this conclusion. Cummings subsequently told MPs that Johnson had approved the project based on “garbage” data predicting an exponential increase in demand for the service.

As recently revealed by Byline Times, HS2 has not yet assessed the impact of the COVID-19 pandemic on the viability of the project. It has been estimated that rail passenger numbers fell by as much as 70% due to COVID-19-related travel restrictions.

Finally, there is a human aspect to this story. Andrew Bruce says that becoming a HS2 whistleblower has led to scepticism from future employers – although he has since conducted work in the public sector, recently spending six months working with the UK’s much-heralded vaccine task force.

Doug Thornton, once a property director of Tesco, now drives one of its delivery vans. This is a job he enjoys, especially helping vulnerable people during the pandemic – but it is one that was largely forced upon him.

The Department for Transport has been approached for comment.

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