Transport secretary Chris Grayling has defended the choice of troubled contractor Carillion as one of the firms to build phase one of HS2.
Mr Grayling said Carillion’s role in a consortium that scooped two of the seven phase one civils packages would not present an issue on the contracts or the delivery of the works.
Carillion / Eiffage / Kier joint venture landed two of the seven packages: the £724m C2 package covering North Portal Chiltern Tunnels to Brackley, and the £616m C3 Brackley to Long Itchington Wood Green south portal.
Speaking to Sky News, Mr Grayling said: “[Carillion] are part of a consortium – they’re not alone in the contracts, and we’ve had to secure undertakings from all the members of the consortium that they will deliver that contract.
“So it’s not where one businesses has to deliver; it’s a group of businesses that have to deliver, and they’ve all committed to doing so.”
HS2 confirmed that it had carried out extra due diligence on Carillion following the contractor’s profit warning last week and had also received assurances from its partners, Kier and Eiffage, that they were able to deliver the contract.
A spokesman said: “Each company’s [Kier and Eiffage] boards have both given that assurance and confirmed that they underwrite the performance of each other in delivering the contract. And that is the key point. HS2, of course, will continue to monitor the situation.”
Carillion’s share price plummeted last week after a profit warning off the back of a provision on problem contracts totalling £845m.
Mr Grayling added: “My wish is that Carillion get through their current problems, but we’ve made sure that it’s not an issue for these contracts.”
On the back of the announcement from HS2 this morning, Carillion’s share price recovered slightly to as high as 70p today, up 24 per cent from the 56.45 where it closed on Friday.
Carillion’s interim chief executive Keith Cochrane, who took over from Richard Howson last Sunday, said he was delighted with the win and that it reflected the strength of the joint venture.
Costain / Skanska / Strabag and Balfour Beatty / Vinci were the other big winners this morning, scooping two packages each, while Bouygues / Sir Robert McAlpine / VolkerFitzpatrick secured the remaining package.
The estimated total value of all seven contracts has been put at £6.6bn by the government, £2bn lower than original upper-value cost estimates.
In an interview on BBC Radio 4’s Today programme, Mr Grayling HS2 insisted the project was on time and on budget and had a clear idea of what the construction would be.
“We are working against international benchmarks for a project of this size, the project is on time and on budget, we have a clear idea of the cost, and it will be delivered,” he said.
“I see no reasons to doubt at all [that phase one will be completed by 2026], it is moving quickly and we have started construction work already.”
The comments come after the Sunday Times claimed over the weekend that HS2 would be the most expensive railway line in the world, costing £403m a mile – 15 times the cost of high-speed rail in France.
Mr Grayling could not confirm whether that comparison was correct but suggested the UK’s approach to building infrastructure was more sensitive than its contemporaries abroad.
He said: “I don’t know about it being 15 times more because I don’t know what the cost of the last French line was, but what we are doing is spending money to have the best infrastructure as possible but doing it in a way that is as sensitive as possible to the environment it is going through.”
He used the example of the part of the phase one line which will see a tunnel constructed under the Chilterns.
“There are other countries that would have just ploughed through the Chilterns without that level of amelioration,” he said.
The figures reported in the Sunday Times came from a government-commissioned report from Michael Byng, the rail expert who devised the standard method used by Network Rail to cost its projects.
Mr Grayling dismissed the figures given by Mr Byng as ”nonsense” and said Mr Byng had been unable to explain to the Department for Transport how he had reached the numbers published.
He said: “We have experience of building high-speed rail in the country; he is suggesting that HS2 will cost five times as much as HS1, which of course it won’t.”
The DfT will today publish the final route plan for phase two of the line north Birmingham, nearly two years later than first expected.
Mr Grayling said that part of the reason for this delay was due to the government taking the right amount of time to take a decision on the route through Sheffield.
HS2: Grayling defends Carillion choice for civils deals