Watchdog MPs have questioned a central element of ministers’ new approach for strengthening government’s grip on the nation’s biggest infrastructure projects – warning that critical programmes will “slip through the net”.
In June, the Office for Value for Money set out proposals for governance and budget changes for so-called “mega projects” – defined as schemes that are unique, risky and complex, and with a price tag in excess of £10bn. The plans have been accepted by Treasury.
The aim is to clamp down on routine problems with big-ticket government projects, including unclear objectives, budgets and schedules being announced too early, and work starting before plans are sufficiently detailed. The rocketing cost and shrinking scope of the High Speed 2 rail project is a prime example of such failings.
But a new report from parliament’s Public Accounts Committee notes that just three of the 200-plus schemes on the Government Major Projects Portfolio currently qualify as “mega projects”. They are HS2, the Sizewell C nuclear power station, and the Dreadnought submarine programme.
The committee says it is "surprising” that multiple critical programmes fail to meet the criteria to be considered as “mega” and will still fall under the previous approach to governance and decision-making, which they described as “not working effectively”.
In particular, PAC members described the HS2-related redevelopment of London’s Euston Station, the New Hospitals Programme, the Lower Thames Crossing, the Oxford-Cambridge Arc, and government’s digital transformation projects and use of artificial intelligence as notable omissions. The report acknowledged evidence given to the inquiry suggested that Euston could become a mega project in the future, because of its bespoke governance arrangements and “many” stakeholders.
MPs said the Treasury should set out the rationale for the £10bn cost criterion for mega projects, and say under what circumstances a scheme's complexity and importance could justify it being a mega project where its budget is less than £10bn.
PAC chair Sir Geoffrey Clifton-Brown said the committee supported the Treasury’s recognition that a “firmer grip” was required on mega projects, “given past failures”. However he said MPs wanted to be sure that other important projects also benefitted from appropriate oversight.
“The challenges implicit in successfully bringing into land the government’s costliest and most complex programmes are self-evident, and this change has the potential to completely transform how such schemes are managed,” he said. “However, it is surprising that under the current definition, the Treasury is only taking this greater accountability for three of over 200 of the nation’s most challenging schemes. We look forward to hearing more from government on the rationale behind this classification, as many high-profile programmes will still suffer from the same unsatisfactory governance demonstrated to be so ineffective in the past.”
Elsewhere in their report, MPs said it is not clear how the Treasury and the new National Infrastructure and Service Transformation Authority will be held to account on their progress in delivering the new 10-year national infrastructure strategy.
NISTA was created in April from the merger of the Infrastructure and Projects Authority and the previously-independent National Infrastructure Commission.
“There is a risk that bringing the NIC’s strategic role into government could leave an absence of independent scrutiny over the effectiveness of the Treasury and NISTA’s delivery of the infrastructure strategy,” MPs said.
They said NISTA and the Treasury should explain how they intend to report annually on progress against delivery of the strategy, and detail arrangements for how this will be independently assured.
Another area of concern in the report is the governance of major projects linked to the government’s cross-cutting missions drive, where mission boards rather than departments are responsible for delivery. MPs said they were “not yet convinced” that there is a “coherent approach” to making decisions on major projects in such circumstances.
Committee members asked the Treasury to explain how it will ensure major and mega project governance will align with mission and place-based governance in the delivery of the infrastructure strategy.
A Treasury spokesperson said: “We are fixing the failures of the past with a 10-year infrastructure plan to deliver the homes, schools and hospitals hardworking people need as part of our Plan for Change.
“The Office for Value for Money is working with departments to deliver £14bn of efficiencies per year by 2028-29 and published findings in the 10 Year Infrastructure Strategy from two value for money studies that will improve delivery of high-risk areas of public spending, and our new National Infrastructure and Service Transformation Authority puts strategy and delivery under one roof, guided by experts and accountable to ministers to ensure projects are delivered on time and to budget.”