HS2 Ltd Corporate Plan 2014 to 2017assets.hs2.org.uk/sites/default/files/inserts/HS2 Ltd Corporate...4 Hs2 Ltd Corporate Plan 2014 to 2017 Foreword When the Victorians laid the first

April 2014

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HS2 Ltd Corporate Plan 2014 to 2017

www.hs2.org.uk

High Speed Two (HS2) Limited has been tasked by the Department for Transport (DfT) with managing the delivery of a new national high speed rail network. It is a non-departmental public body wholly owned by the DfT.

High Speed Two (HS2) Limited,2nd Floor, Eland House,Bressenden Place,London SW1E 5DU

Telephone: 020 7944 4908

General email enquiries: [email protected]

Website: www.hs2.org.uk

High Speed Two (HS2) Limited has actively considered the needs of blind and partially sighted people in accessing this document. The text will be made available in full on the HS2 website. The text may be freely downloaded and translated by individuals or organisations for conversion into other accessible formats. If you have other needs in this regard please contact High Speed Two (HS2) Limited.

© High Speed Two (HS2) Limited, 2013, except where otherwise stated.

Copyright in the typographical arrangement rests with High Speed Two (HS2) Limited.

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Hs2 Ltd Corporate Plan 2014 to 2017

Contents Foreword 41 Introduction to HS2 7 1.1 Purpose 8 1.2 Background 8 1.3 Remit 9 1.4 Some recent milestones 10 1.5 Board and Executive Team 11 1.6 Governance framework 112 Strategic direction 12 2.1 Themes and goals 13 2.2 Values 14 2.3 Application of principles 15 2.4 Equality, diversity and inclusion 19 2.5 Transparency 20

3 Activity planned for 2014/15 to 2016/17 21 3.1 HS2 as an engine for growth 22 3.2 Phase One 23 3.3 Phase Two 264 Risk management 28 4.1 Risk management policy 295 Organisation and resources 30 5.1 People and organisational development 316 Tracking our performance 32 6.1 Monitoring internal performance 33 6.2 Health and safety 33 6.3 Organisation and people 34 6.4 Quality 34 6.5 Time 35 6.6 Costs and financial control 35 6.7 Communication and engagement 35 6.8 Property 367 Finance 37 7.1 Funding overview 38 7.2 Proposed expenditure 39 7.3 2014/15 budget 40 7.4 Cost control and value for money 41 7.5 Review of performance in 2013/14 42

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ForewordWhen the Victorians laid the first track of what was to become the West Coast Mainline, they had no idea they were building a railway which would become one of the arteries of the nation – a line that would not just make it possible to travel in a day from Glasgow to London, but would transform Britain in the process.

They only planned to construct a series of local lines between individual towns and cities, and it was almost by accident that those lines were connected into the national network we know today. Hence the twists and turns that make the West Coast Mainline so challenging to maintain; hence the need for tilting Pendolino trains.

HS2 starts from a different place. The aim is not only to connect cities up and down the country, but also to act as a catalyst for change – for the transport system and for the economy as a whole. The new railway can relieve the congestion on commuter services north of London, but it can also help make it possible to re-balance our economy – and, in doing so, drive on the regeneration of cities in the Midlands and the North.

Britain’s economy is almost uniquely capital-centric, with power, wealth and influence concentrated in and around London. Of the FTSE 100 top companies, 66 are based in the South East, with only six in England north of Birmingham – and none in Manchester or Leeds. A further six are in Scotland. This distribution reflects the importance that such companies place on being connected - to the national centre of power, but also to the global market. Our current transport system makes that easier in and around London.

Historically, this confluence of skills and creativity has been to the benefit of London and the country as a whole, but it is now in danger of becoming counter-productive. The focus on London is turning up the pressure: rising house prices, some of the highest commercial property rates in the world, and a congested transport system. Living and working in London is increasingly difficult and expensive. In contrast, much of the rest of the country needs the infrastructure to support its true potential.

The answer is obvious. Like many other major world economies, we need to spread our activity more evenly across different cities, not at the expense of London, but to the benefit of all. The first step in that journey is to put in place the connections that will allow companies to base themselves further north, where domestic and commercial property prices are lower and the transport system is less congested. The key is to improve the links not only between north and south, but also from east to west. HS2 is the answer.

“ If we do it right, HS2 can be a catalyst for fundamental change”David Higgins, Chairman

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Such a project is highly ambitious, and now faces a degree of scrutiny that would have been unthinkable in the Victorian era. This is as it should be. HS2 is a highly complicated project. It has a direct impact on people’s lives along the proposed route. It requires a massive commitment of money and political will. And it will take a long time to build, even if we can speed up construction.

That is why, when taking on the role of chairman, I decided that my first task should be to start a baseline review of the whole project. I wanted to examine its plan and purpose, its costings and its proposed route. In March, we published the first part of that review. The HS2 Plus report set out five key principles that HS2 must meet if it is to achieve its objectives. It must:

yy stand the test of time;

yy be the right strategic answer;

yy be integrated with existing and future transport services;

yy maximise the value added to local and national economies; and

yy be a catalyst for change, both nationally and locally.

In line with those principles, I recommended that:

yy the line should be extended further north, sooner, by completing the link to Crewe by 2027;

yy a more ambitious and comprehensive re-development of Euston should be considered; and

yy the proposed HS1/HS2 link should be dropped at this stage because of its impact on existing passenger and freight services.

I also reached two other conclusions: that the proposed budget for Phase One is adequate; and that there should be no cutback on the planned mitigation measures, whether for noise or broader environmental reasons. I also pointed out that although Parliamentary scrutiny is useful and necessary, there is a direct connection between the length of the Parliamentary process and the need to draw on the large contingency in HS2’s budget.

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These principles led me to one further conclusion, of particular importance to Phase Two. If HS2 is to maximise its impact as a catalyst for change, and truly stand the test of time, it must be considered as part of the overall national transport system. That means synchronising its development – above all, with the plans Network Rail has for the rest of the network, but also with the ambitions that towns and cities have for themselves as their communities develop. Urban centres in the Midlands and the North now see HS2’s potential to transform their relatively poor connections to London, and to bring their east-west destinations closer too. Less than 0.5% of commuters arriving in Manchester each morning come from Leeds, and vice versa – and yet these two major cities are only 40 miles apart. Common sense suggests an untapped potential that needs to be supported by fast, reliable connections.

It is an exciting time for the project, but we are all the more conscious of our responsibilities. HS2 isn’t just a line on a map. It has an impact on people’s lives – and our openness, clarity and assistance, to residents and communities, will continue to be vital. As we move into the next phase of our development, we will constantly try to remind ourselves of our responsibility, as well the opportunity that goes with building the first national railway line north of London for 170 years.

David Higgins Chairman

Introduction to HS2 Ltd

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1.1 Purpose High Speed Two (HS2) Ltd’s Corporate Plan covers the three-year planning period 2014/15 to 2016/17. It includes a review of performance in 2013/14 and sets out our key objectives and a high-level delivery plan for the three years to 2016/17. The Corporate Plan also incorporates our business plan for 2014/2015.

1.2 Background HS2 Ltd was established by the Government in January 2009 to develop proposals for a new high speed rail line between London and the West Midlands, and to consider the case for high speed rail services linking London, northern England and Scotland.

The HS2 network will bring the UK’s railway infrastructure dramatically into the 21st century, releasing space on crowded lines and bringing the whole country closer together.

The proposal is being taken forward in two phases. Phase One will run from London Euston to a new station for Birmingham at Curzon Street, with major new stations at Old Oak Common in West London and at Birmingham Interchange, connecting with Birmingham International Airport. Phase One is due to open to passengers in 2026.

The eastern leg of Phase Two will extend high speed lines to Leeds, with intermediate stations in the East Midlands and at Sheffield Meadowhall, and a new station at Leeds New Lane serving the city centre. The western leg of Phase Two will continue the network to Manchester Piccadilly, with a proposed intermediate station at Manchester Airport. Phase Two is due to open to passengers in 2033.

However, HS2 services will continue onto the existing network, enabling passengers in many more regions across Britain to benefit. HS2 trains will serve destinations such as Crewe, Liverpool, Wigan, Preston, York, Newcastle, Glasgow and Edinburgh.

The HS2 network will bring the UK’s railway infrastructure dramatically into the 21st century.

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1.3 RemitSince 2009 a number of instruction letters from the Government have guided HS2 Ltd’s work as the project has developed, emphasising the key strategic aspects of each phase of work.

The letter of 27 June 2013 confirmed that HS2 Ltd continues to play an advisory role to the Government, reporting on longer-term options for intercity rail and on the current project’s costs, benefits and commercial issues. However, the company also acts in a delivery capacity – for example, in providing a route design, preparing to acquire property along the London to West Midlands route, and planning with local partners to maximise the benefits to city regions.

On 1 November 2013, the Secretary of State for Transport asked HS2 Ltd to explore options for improving intercity routes to Scotland, and ways of reducing journey times from Glasgow and Edinburgh to London to less than three hours – whether by building new high speed rail, upgrading infrastructure, or both.

The most recent remit letter, on 11 April 2014, reflects the Government’s response to the HS2 Plus report. Among other things, it instructs HS2 Ltd to work with Network Rail on:

yy a more comprehensive solution at Euston;

yy options for improving connections with continental Europe;

yy potential refinements to the Phase Two proposals and options to reduce cost;

yy initial advice on accelerating construction from the West Midlands to Crewe, and building a hub station; and

yy integrated development and improved East-West connectivity in the Midlands and the North.

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1.4 Some recent milestonesIn 2013 the High Speed Rail (Preparation) Bill received cross-party support. This paving Bill gained Royal Assent last November, allowing HS2 Ltd to pursue a number of priorities for the evolution of the project, including:

yy letting contracts for preparatory and enabling works;

yy carrying out ground investigation and ecological surveys; and

yy making compensation payments to homeowners.

The High Speed Rail (London-West Midlands) Bill – seeking powers to build, maintain and operate Phase One of the railway – is a landmark in the development of Britain’s transport. Published with it, on 25 November 2013, was one of the largest Environmental Statements ever submitted to Parliament.

At the Second Reading of the Bill on April 29th 2014, the House of Commons confirmed its support for the principle of building HS2, with 452 MPs voting in favour and 41 against. As Parliament provides the necessary legislative scrutiny of the Bill, HS2 Ltd is determined to continue its hard work, and prepare to make the project’s benefits a reality.

Between July 2013 and January 2014, a route consultation sought views on the proposed route from the West Midlands to Manchester, Leeds and beyond. The Secretary of State is responsible for the final decision about how it will proceed.

In March 2014 David Higgins assumed the role of Chairman. Bringing his experience from Network Rail and the Olympic Delivery Authority, he has reiterated that HS2 can be built on time and on budget. He has also called for the company and its government partners to be ambitious in seizing the opportunities of this unique project.

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1.5 Board and Executive TeamThe Board is:

yy David Higgins – Chairman

yy Alison Munro – Chief Executive and Board Member

yy Richard Brown – Non-Executive Board Member

yy Andrew McNaughton – Executive Board Member

yy Duncan Sutherland – Non-Executive Board Member

yy Mike Welton – Non-Executive Board Member

yy Beth West – Executive Board Member

The Executive Team, as of April 2014, is:

yy Alison Munro – Chief Executive

yy Roger Hargreaves – Hybrid Bill Delivery Director

yy Roy Hill – Phase One Director

yy Ian Jordan – Phase Two Director

yy Tom Kelly – Strategic Communications Adviser

yy Janine Mantle – Communications Director

yy Andrew McNaughton – Technical Director

yy Patrick O’Connell – Programme and Strategy Director

yy Kieran Rix – Finance & Corporate Services Director

yy Beth West – Commercial Director

Simon Kirby has been appointed as Chief Executive – Construction and joins in May 2014.

1.6 Governance frameworkHS2 Ltd is sponsored and funded by grant from the Department for Transport (DfT).

The governance framework within which HS2 Ltd operates and its relationship with the DfT is set out in the HS2 Ltd Framework Document. HS2 Ltd is incorporated as a company limited by guarantee. The company has a single member, the Secretary of State for Transport. It is classified as an executive non-departmental public body by the Cabinet Office and is treated as part of the central government sector by the Office for National Statistics.

“ The Bill marks the move from aspiration to delivery. Now is the time to be bold and ensure HS2 becomes a reality.” Secretary of State for Transport, Patrick McLoughlin

Strategic direction

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2.1 Themes and goals Although its effect on the nation’s transport will be hugely significant, HS2’s potential is far greater. It can be an engine for growth: connecting our city regions, encouraging regeneration where it is needed, supporting the creation of long-term jobs, and inspiring young people to pursue a wide range of skills and careers.

The HS2 programme will set the standard for the delivery of transport systems and infrastructure by:

yy engaging with all our stakeholders fairly;

yy delivering value through the effective management of the design and build programme; and

yy building and operating a safe, sustainable and reliable system to provide exceptional levels of service to passengers.

We will report publicly against the following goals and will achieve them through the application of our values (see Section 2.2). In the interim, our performance is monitored against the areas outlined in Section 6.

Health, safety and security We will design, build and operate the railway to the highest safety standards.

EnvironmentWe will be an exemplar project that is built and operates sustainably, responsibly and with respect for the communities, wildlife and places affected by it.

Benchmark for delivery and operational excellenceWe will seize the opportunity to transform how we design and build major projects and operate railways.

Vibrant city regionsWorking in partnership with Britain’s city regions, we will be an effective catalyst to create great places to live and work throughout the country.

Designed for the passengerWe will deliver a modern transport solution that is reliable, seamless and easy to use for all passengers, and well integrated with existing transport systems.

Skills and employmentWorking with our suppliers, we will build a skilled workforce that fuels further economic growth across the UK.

On timeWe will deliver all the benefits of HS2 on time.

On budgetWe will relentlessly focus on controlling costs and driving value.

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2.2 ValuesHS2 Ltd seeks to put into practice its core values of safety, respect, leadership and integrity.

Safetyyy We design safety into everything we do.

yy We look after one another, creating a safe and secure work environment.

yy We keep our information secure, and safeguard the personal or commercially sensitive information of others.

Respectyy We treat other people the way that we want to be treated.

yy We listen to people without pre-judgement.

yy We work as a team, communicating across the project.

yy We make sure we understand the effect our decisions will have on other groups and individuals.

Leadership yy We are all responsible for our deliverables – collectively

and individually.

yy We take timely decisions and communicate them effectively.

yy We aim to be world-class and to learn from other projects.

yy We celebrate our successes and strive to improve on them.

Integrityyy We always act professionally.

yy We are honest and open with information whenever we can be.

yy When we cannot be open, we explain why.

yy We always aim for the highest standards of public service, in our conduct and care with public money.

“ Although its effect on the nation’s transport will be hugely significant, HS2’s potential is far greater. It can be an engine for growth.” HS2 Plus

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2.3 Application of principlesHS2 Ltd’s new chairman, David Higgins, has established five connected principles which sum up the project’s transformative potential and long-term importance to Britain:

yy HS2 must stand the test of time;

yy It must be the right strategic answer;

yy It must be integrated with existing and future transport services;

yy It must maximise the value added to the local and national economies; and

yy It must be a catalyst for change, both nationally and locally.

These ambitions should be reflected in the way HS2 interacts with the public, with organisations and public bodies, and with businesses, and in the way it seeks to manage its impact on the environment.

Engagement with residentsFor all the benefits of the project, it is important to address the consequences of its impacts on communities and individuals. HS2 Ltd remains committed to engaging reasonably and helpfully with all those affected by its plans.

An independent Communities Commissioner will hold HS2 Ltd to account in all its compensation activities, and provide reassurance that applications to HS2 Ltd for assistance or compensation will be handled fairly and efficiently. A new Residents’ Charter sets out what members of the public are entitled to expect, including plain, non-technical explanations of compensation options and a single point of contact for questions.

ConstructionThe Code of Construction Practice sets out many of HS2’s commitments to being a good neighbour. It covers everything from air quality to keeping worksites tidy and minimising construction traffic. It also deals with the clean-up of previously contaminated sites, so they can be restored for agriculture, ecology or community use.

Its guidance will apply to the organisations delivering the new railway – not just HS2, but also all its contractors. It will:

yy guarantee the good planning and management needed to limit the effects of construction for people, businesses and the natural and historic environment; and

yy provide ways for HS2 and local communities to communicate and work together.

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Commitment to environmental standardsThe publication of the Environmental Statement for Phase One marked the culmination of one of the most detailed environmental assessments ever undertaken in the UK. It provides an in-depth explanation of the design and other measures included in the project to avoid, reduce or manage any adverse environmental effects. It also provided a basis for public consultation and feedback.

HS2 Ltd aims to carry its environmental commitment into the next phase of the project. Our Sustainability Policy includes commitments to:

yy reducing the carbon footprint of HS2 as far as practicable and delivering low-carbon, long-distance journeys that are supported by low-carbon energy;

yy building a network which is resilient for the long term and seeking to reduce the combined effect of the project and climate change on the environment;

yy making efficient use of sustainable materials, maximising the proportion of material diverted from landfill, and reducing waste; and

yy engaging with stakeholders to create seamless transport links with other modes, while ensuring accessibility for all.

In addition, HS2 Ltd will set high environmental standards for all stations and depots: they need to be sustainable in their design, construction and use. It will achieve this in conjunction with BREEAM (Building Research Establishment Environmental Assessment Method). This is a leading assessment and rating system for buildings which encourages low-carbon, low-impact design and reduces the energy demands that buildings create.

HS2 Ltd is committed to achieving a rating of Excellent for stations and depots, using a bespoke BREEAM assessment methodology. HS2 Ltd is currently working with the Building Research Establishment and other organisations on the creation of a new BREEAM standard and certification scheme for Infrastructure. This new methodology will be piloted on three sections of Phase One.

“ HS2 is determined to ensure sustainability is embedded in the DNA of this project.” HS2 Sustainability Policy

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A responsibility to employeesAs the project prepares to enter the construction phase, with the first ground investigation surveys expected to take place later in 2014, HS2 Ltd’s commitment to safety at work and the wellbeing of its employees assumes a new dimension.

The project already seeks to reflect the safety-at-work standards of other successful, world-class projects. The next phase of the project will centre on reducing risk in the design, construction and operation phases, aligning with major contractors and managing HS2’s first operational activity.

Engagement with businesses The Growth Taskforce Report, published in Spring 2014, challenged the project to set new standards in open procurement. A programme of events is underway, bringing together companies from all tiers of the potential supply chain, so they can start building their own collective plans for tendering. Over 600 organisations were represented at HS2 Ltd’s first Supply Chain Conference in Birmingham in November 2013; notably, over 75% of the UK companies in attendance were based outside London.

Regional roadshows will encourage business of all sizes to see what HS2 can mean for them. A further engagement programme will look at procurement of those key products and services – from steel and aggregates to transport management and security – that offer the greatest added value.

Partnering with city regions HS2 seeks to engage with city regions, reflect their own aspirations for regeneration and growth, and work with local civic and business leaders. Working with London & Continental Railways Ltd, we will make proposals to establish a regeneration company. We will also ensure the effective integration of HS2 stations into the city networks and wider transport systems.

We will support collaborative and cross-boundary working across organisations, providing a route-wide strategic view to facilitate transport planning and growth delivery beyond the scope of local authority or local enterprise partnership boundaries.

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Inspiring new skills By stimulating young people’s interest in science, technology, engineering and maths (STEM), we can help to address the UK’s skills gap, and guide future STEM professionals into a rewarding career.

Women and people from ethnic minorities have traditionally not felt encouraged to consider roles in engineering, construction and the built environment. HS2 can help to change that, equipping a new generation for careers in engineering and beyond. Students from communities along the railway’s route and from deprived areas will also be prioritised for STEM outreach.

Over 40 HS2 Ltd staff have trained as educational ambassadors; their activities include visiting schools and promoting the wide range of careers in Science, Technology, Engineering and Maths. Staff have already volunteered over 1,600 hours of careers information, guidance and learning activities.

Planning with passengersThe HS2 Passenger Panel met for the first time in April 2014. Independently run by the passenger body Passenger Focus, the panel was established to give HS2 Ltd a better understanding of passenger needs – so that our thinking and key design decisions can be centred on the people who will use the new railway. The passenger panel is a key element in creating a modern railway that is reliable, seamless and easy to use for all passengers, as well as being integrated with existing transport systems.

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2.4 Equality, diversity and inclusionThe HS2 Ltd equality, diversity and inclusion policy addresses the need for inclusion in our workforce and the planning, design, construction and operation of the HS2 project.

Our project will be a catalyst for the delivery of inclusive transport systems and infrastructure by: engaging with all stakeholders fairly; delivering value through effective management of the design and building; and operating a safe, sustainable and reliable system to provide exceptional levels of service to passengers.

To this end, we will embed equality, diversity and inclusion in all project activities. Our plan involves working with other transport providers and with affected parties, including tenants, landowners and occupiers. Communities, staff, contractors, industry, and local and national government will also be key stakeholders.

We will be proactive in creating opportunities to advance the cause of equality, diversity and inclusion. With this aim in mind, we will continue to look for ways to:

yy minimise the potential for discrimination, harassment and bullying;

yy promote inclusive development; and

yy seek the views of stakeholders.

Our plan is to create opportunities for local, disadvantaged and under- represented people and companies to benefit from the investment in HS2. As a company, we will look for measurable indications that we have not only increased equal opportunity, skills and employment, but also ensured equal outcomes in the services that the HS2 project will provide. This will involve developing targets to measure progress, so that we can monitor how our aims are implemented.

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2.5 TransparencyInformation is crucial to HS2. Sharing and explaining it wherever we can is an ambitious aim. As a public body, with responsibility for spending public money, HS2 Ltd takes its responsibilities for transparency and communication seriously, and believes in going beyond the basic legal requirements. Here are some of the ways we demonstrate this in practice:

yy HS2 Ltd is committed to providing Parliament with the information it needs to ensure oversight of the project. HS2 Ltd representatives and DfT colleagues have provided evidence on past performance and future plans.

yy HS2 Ltd is subject to the Freedom of Information Act 2000 and the Environmental Information Regulations 2004, which allow individuals and companies to request a wide variety of material.

yy We are also subject to government transparency policy, and publish the upcoming procurement pipeline, details of contacts awarded and expenditure.

yy As the project develops, we will periodically review our data in a number of areas and make it available to scrutiny by the independent External Challenge Groups. These include the Economic Advisory Panel, which analyses HS2’s potential economic outcomes.

yy We will continue to liaise with individuals and groups in areas affected by the project, building on our success in 2013, when HS2 Ltd held over 100 consultation events in local communities. These events provide face-to-face opportunities for the public to ask questions about the project. We also make a point of writing to all respondents to our public consultations, and of publishing third-party reports on the results.

yy Using social media channels as an organisation gives us a valuable opportunity to demonstrate transparency and accountability. Replies to questions on Twitter, Facebook and LinkedIn are timed, visible and shareable; this gives us a significant incentive to get it right first time and to join discussions around project issues. Although these platforms provide a forum for project opponents, they allow us to reply in a respectful, even-handed manner and to establish ourselves as a direct source of reliable information.

Ultimately, HS2 Ltd is most often judged by its ability to maintain trust and transparency with the general public, and particularly with local residents who are most affected by the plans for HS2. A forthcoming charter, primarily for such residents, will be the cornerstone of an enhanced approach.

Activity planned for 2014/15 to 2016/17

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3.1 HS2 as an engine for growthHS2 will revitalise Britain’s rail network to provide the capacity and connectivity we need to drive national and regional competitiveness. It will be the first significant upgrade of the railway network since its original development in the nineteenth century.

From strategic direction into practiceDavid Higgins’s HS2 Plus report stated that HS2 must maximise the value added to local and national economies and be a catalyst for change, both nationally and locally. To fulfil this potential, it should be fully integrated into the plans that local authorities across the North are making to regenerate their economies and communities – it should be part of an effort to revitalise the northern economy as a whole.

In March 2014, the HS2 Growth Taskforce, led by Lord Deighton, published “HS2: Get Ready”. It sets out what the taskforce believes must be done now, to ensure that we extract full value from the project for the UK. The report calls for the ambition and collaboration that were so much in evidence as Britain prepared for and hosted a hugely successful Olympic Games. It recommends simplifying and joining up funding to deliver construction fast around HS2 stations sites. By accelerating regeneration and the development of brownfield land on the route, big benefits will be seen in just a few years. The report also calls for city regions to work together to integrate local transport networks.

“ This is about connecting our regions and providing fast, direct links delivering jobs and economic growth.”Sir Albert Bore, Leader of Birmingham City Council

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Regeneration Based on the findings of these two reports, we are planning to report on the priorities for enhanced connectivity in the Midlands and the North. We have already undertaken substantial work with regard to the Growth Taskforce recommendations and will continue to do so. We have begun work with London & Continental Railways Ltd on proposals for the form and function of an HS2 regeneration company, and plan to continue working on engaging regionally and locally to realise regeneration and economic benefits from investment in HS2.

Growth and skills, locally and nationallyWe will support local authorities and Local Enterprise Partnerships (LEPs) in considering HS2 in their Local Plans and Strategic Economic Plans, providing advice on approaches to planning frameworks, integration of station design, and associated infrastructure delivery across local boundaries.

Our plan includes supporting the development of a new college that will train the next generation of world-class engineers to work on the construction of HS2. It will be the first new incorporated Further Education College in over 20 years. In this and other ways, HS2 should deliver a tangible skills legacy that will serve the UK for the next century and continue the proud tradition the UK has for worldwide demand for its engineering expertise.

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3.2 Phase OneOn Phase One, we have met our goal of working towards the deposit of the London - West Midlands hybrid Bill by the end of 2013. The next deliverable is to make it possible for the hybrid Bill to be submitted for Royal Assent as soon as possible. Phase One is due to open to passengers in 2026.

Bill procedure and petitionsThe hybrid Bill is currently passing through Parliament. It seeks the necessary powers to build and operate Phase One and sets out the land requirements for the London to West Midlands route.

Despite detailed planning to ensure rapid progress of the Bill, Parliament will control how quickly it moves forward. For instance, the Select Committee established by Parliament will determine how much time petitioners have to make their case, and whether Additional Provisions should be recommended. Moreover, we will work with Parliament to help ensure the smooth passage of the Bill through the Select Committee stages, in support of our strategic aim of securing Royal Assent as soon as possible. We need to do this while keeping the HS2 programme on time and budget, without diminishing the benefits of the project.

The stakeholders affected by the Bill range from major national or statutory organisations to individual property owners. Many will have the right to be heard by the Select Committees; all are entitled to be treated in a fair, professional and transparent manner. We are working to understand different stakeholders’ views on the project and, where reasonably practicable, address the concerns they raise. By working with stakeholders directly, we can reduce the need for petition, to the benefit of all parties.

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HS2 Plus – greater benefit, soonerWe plan to further consider the recommendations in the HS2 Plus report. This includes exploring options for improving connections with Continental Europe, including pedestrian connections between Euston and St Pancras following the removal of the HS1-HS2 link from the hybrid Bill. Working closely with the rail industry and the community, we want to consider a plan for Euston that better connects the station to the local area, explores the possibility for housing, retail and commercial over-site development, and redevelops the station in a way that maximises its aesthetic and regenerative potential. We will present proposals on these matters to the DfT later in 2014.

Property help and compensation measuresThe Government has consulted widely on compensation and other arrangements for property owners affected by the Phase One proposals. The Secretary of State for Transport has issued safeguarding directions for the route and, in April 2014, a new package of compensation and other measures for home owner-occupiers was unveiled. By creating a package of measures to suit different situations, we intend to give people the options they need to make decisions that suit their circumstances, which will help to ensure that they receive a fair deal. The proposed compensation schemes will be run by HS2 as an agent for DfT.

For an indication of how we will set standards for our performance in these areas in future, please see Section 6.8.

“ It is up to all of us in the Government, local authorities, HS2 Ltd and businesses to make the most of this unique opportunity.” HS2 Growth Taskforce Report

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Planning for constructionDuring the passage of the bill, we will be planning to prepare for the construction period, during which some land would be acquired and some early works contracts let. Preparatory and enabling works are expected to begin in 2015; major construction would commence around 2017, depending on the date of Royal Assent, and take around eight years. The most complex construction activity would be at Euston, where works would be likely to continue throughout the whole period. However, at most places along the route, construction would take place over a shorter period.

We continue to plan for the long-term success of the project by preparing for its construction phase. We are embarking on a comprehensive market engagement exercise to develop our procurement strategy. The aim is to ensure that it maximises opportunities for efficient and equitable delivery, building on an extensive supplier market assessment. We are preparing for how Phase One will be managed, controlled and delivered, looking at design, construction and systems integration. We are incorporating lessons learned and best practice from other major infrastructure projects, including Crossrail and the 2012 Olympics.

Ground investigation (GI) work and utilities protection and diversionary work are key to the early construction programme. GI ensures that the railway can be built safely, economically and efficiently – for example, by confirming the best methods for excavating tunnels and the most appropriate foundations for bridges, viaducts and stations.

The GI work for Phase One – scheduled for early 2015 – represents the largest-ever proposed investigation for a single scheme in the UK. The GI will take place along the route of Phase One and also outside the line of route and stations – for example, at the sites of proposed depots or highway or utility diversions. Work will take place at approximately 15,000 individual locations, spread across 800 different landowners.

A large number of utilities protection and diversionary works will be required over the next eight years. We are finalising plans to manage and deliver the diversions. We are liaising with the utilities companies, which will undertake the design and execution of some of the works themselves. Responsibility for procurement and oversight of the survey, and for design activities undertaken by utility companies and other project partners, will rest with HS2 Ltd.

The ground investigation project for Phase One is the largest ever proposed for a single scheme in the UK.

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3.3 Phase TwoIn June 2013, the Secretary of State’s remit letter asked HS2 Ltd to undertake a public consultation on the proposed route for Phase Two. This consultation closed in January 2014. The responses have been independently analysed and the results are being fed into the engineering and environmental design of the route. We will continue to refine the proposed route and prepare advice to inform the Secretary of State’s decision on the preferred route, with Phase Two ultimately due to open to passengers in 2033.

Our plan is to explore the recommendations in the HS2 Plus report on Phase Two. Working with the DfT and Network Rail, we will examine the potential refinements to the proposals for the route. We will advise the Secretary of State on:

yy the section of the route between the West Midlands and Crewe, and the feasibility of accelerating its construction to allow completion by 2027, subject to the outcome of consultation; and

yy the feasibility of building a hub station at Crewe, including the benefits that could be delivered to the region and the cost implications for the project.

We will also advise the Secretary of State on rail connectivity in the Midlands and North, including proposals on connectivity between city centres, east-west routes and local connections. This work will inform and support the Secretary of State’s decisions and announcements to be made on the Phase Two preferred route.

We will continue to develop our long-term dialogue with stakeholders and the public on our plans for the HS2 route. We will ensure that the proposals are clearly explained and that stakeholders are able to provide input to ensure that the final design reached is the optimal solution.

In 2013 the Secretary of State asked HS2 Ltd to undertake strategic work on the longer-term options to serve Scotland and the North East. This request was further clarified and HS2 Ltd was asked to consider high speed options, upgrades to existing infrastructure, or a combination, looking at both the East and West Coast rail corridors. A draft report on the broad options is expected to be issued to the Secretary of State by Summer 2014.

Risk management

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4.1 Risk management policyOur risk management policy outlines our commitment to putting in place a programme-wide risk management culture, and adopting best practice in the identification, evaluation and effective management of risk. It also ensures that we comply with HM Treasury’s guidance on Management of Risk: Principles and Concepts.

Risk management will help us to deliver the project in many ways, including by:

yy supporting individuals and teams to identify and manage risks relevant to their objectives;

yy minimising threats to the programme’s cost, schedule, quality and reputation, and maximising opportunities to deliver on time and within funding;

yy improving decision making; and

yy informing budget allocation, procurement and contract structuring, as well as helping us to manage our contingency.

Organisation and resources

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5.1 People and organisational development

Our organisational structure is changing to support the three core activities: Phase One hybrid Bill delivery, Phase One construction and Phase Two development. Headcount is planned to grow over the next 12 months as we enter the pre-construction phase and as new roles are required to support the hybrid Bill through the Parliamentary process.

In the past year, to meet the requirements of delivering the project, we recruited over 150 permanent employees across a wide range of disciplines, to fill roles in construction, engineering, environment, community and stakeholder liaison, land and property, economic analysis, project and programme management and support functions. This brought the total staffing level to 607.

We have developed plans for our workforce to ensure our existing talent and experience continues to be retained:

yy We launched a management development programme in March 2014;

yy A professional development policy is in place and continuous support is provided through training; and

yy In a September 2013 staff engagement survey, 95% of respondents felt able to say: ‘I have the skills I need to do my job effectively’.

95% of respondents said: “I have the skills I need to do my job effectively.” Reported in September 2013 staff survey

Tracking our performance

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6.1 Monitoring internal performanceIn the interests of transparency, we will report against our strategic themes; in the interim, we will record our performance in seven key areas:

yy Health and safety

yy Organisation and people

yy Quality

yy Time

yy Costs and financial control

yy Communication and engagement

yy Property

This section gives examples of how we record and review our internal aims and processes.

6.2 Health and safetyWe want to establish world-class ways of working that set the standard for the rest of industry. That means exemplary health and safety performance and preventing everyone involved in or affected by the project from coming to any harm.

We are committed to having an externally certified occupational health and safety management system compliant with BS OHSAS 18001. Following an accreditation audit, HS2 Ltd has been certified compliant. Our incident reporting system includes ‘near miss’ reporting and all incidents are categorised in terms of severity; the Board receives a monthly report. The Executive Committee meets monthly to provide direction and review progress.

Our health and safety performance, including the performance of all directly appointed organisations, is reported as an accident frequency rate (number of reportable incidents under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) per 100,000 hours worked). As of March 2014, there had been no RIDDOR reportable accidents in over 3.1 million hours worked.

Hazard profiling is used to predict the hazards facing the organisation and its staff over a period of time so that risk assessments and management controls can be put in place. This includes assessing risks arising from consultation events, hazards associated with environmental surveys, and staff well-being. Forthcoming challenges are likely to include hazards arising from ground investigation surveys, and ensuring that property acquired and managed on behalf of the Secretary of State is safe and secure.

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6.3 Organisation and peopleRegular workforce planning is undertaken to identify necessary recruitment and our future skills needs. We continue to enhance our range of learning and development opportunities, and build on our graduate and apprentice programmes. We will also continue our work to extend this across the HS2 supply chain.

As is standard across the public sector, records of diversity of our staff and those applying to posts with us are maintained and monitored. Commonly used indicators, such as staff turnover and sickness absence, are reported to the Board periodically.

Through our performance review process, we create, identify and support opportunities for staff to learn and develop. We will work to ensure equality of opportunity in all learning and development activity.

We will ensure that objectives are set for all staff, to include both deliverables and behavioural targets, and that reviews are carried out at mid-year and end year. HS2 Ltd operates a performance management system within which objectives are set, performance is reviewed, staff development needs are identified and appropriate training provided.

6.4 QualityWe assure the quality of our systems and processes through a management system that meets the requirements of ISO 9001. The system describes our assurance processes, which are fully documented and auditable. Our Programme Assurance Strategy describes how HS2 Ltd will progressively improve assurance.

We report on performance, progress against milestones and financial progress on a monthly basis. The Audit and Risk Management Committee summarises quarterly audit results and reports them to the Executive. These reports are the primary mechanism checking the programme’s progress; they also help to develop controls where necessary.

These audits also provide assurance that the organisation is conforming to the planned arrangements, as outlined within the HS2 Ltd management system, and that the specified planned arrangements are suitable. We have developed a programme of internal audits approved by our Board’s Audit Committee. Results of audits and effective management action plans to address any shortcomings identified are reviewed by the Audit Committee.

We will subject our work to peer review by experts in relevant technical fields. As with all key Government infrastructure projects, our work is also subject to technical process review to regular reviews by the Cabinet Office’s Major Projects Authority and HM Treasury’s Major Project Review Group.

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6.5 TimeWe track our delivery to schedule against detailed project plans. Our Board will monitor our performance against key project milestones, most of which are set for us by the Government.

6.6 Costs and financial controlOverall, scheme costs are monitored on a monthly basis. The process for cost control and access to project contingencies is formally agreed with the Department for Transport.

We undertake normal in-year budget monitoring and track monthly our forecast overall spend against the revised Spending Review allocation of funding for the development phase.

The Government’s aim is that suppliers should be paid within 30 working days. Our performance during 2013/14 was that 94% were paid within 30 working days.

For further financial information, see Section 7.

6.7 Communication and engagementWe measure our performance in responding to general correspondence within 20 working days, in line with DfT’s internal target, and to statutory requests under the Freedom of Information Act (FoI), Data Protection Act or Environmental Information Regulations (EIR) within the relevant statutory limits of 20 days (plus, in some cases, a permitted extension of 20 days for more complex requests).

Our performance on answering FoI/EIR in 2013/14 within 20 days was 74% and within 40 days, 99%. For general correspondence, we aim to respond within 20 days on 90% of occasions and our overall performance in 2013/14 has been around 93%.

We continue to enhance our learning and development opportunities and build on our graduate and apprentice programmes

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6.8 Property

Exceptional Hardship Scheme We act as an agent for the DfT in providing the secretariat for the Exceptional Hardship Scheme (EHS); the final decision on applications under the current scheme is made by the Secretary of State for Transport. We will acknowledge 100% of all cases within 20 working days and we will measure the time we take to deal with applications against our internal target. The EHS guidance sets an aim of three months from application to decision, which is followed by a further period to complete the purchase.

Properties purchased under Blight Notice proceduresWe also act as an agent in the process for considering and carrying out property purchases under statutory Blight Notice procedures. We work with the DfT to agree equivalent performance measures as those for the EHS.

Acquisition and management of propertyOnce a significant number of properties are being managed, a key indicator will be that all our properties have an estate management plan in place. We will record 100% of all properties on the Government’s ePIMS database within 10 working days of completing and registering a property acquisition or disposal.

For the new compensation schemes unveiled by the Secretary of State in April 2014, we will report against KPIs as prescribed by DfT.

Finance

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7.1 Funding overviewThe Phase One cost estimate of £21.4 billion was announced as part of Spending Round 2013 (SR13) (at 2011 price levels, including £5.8 billion contingency and risk at a P95 probability level – i.e., within a scenario with 95% likelihood). It provides a baseline against which costs can be controlled.

Phase Two costs are less mature. However, the SR13 process included agreement on a funding envelope of £21.2 billion at P95 probability level.

The following funding envelope was established for HS2 in SR13:

HS2 funding envelope

Phase One Phase Two

Phase One infrastructure

£21.4bn £21.4bn

Phase Two infrastructure

£21.2bn £21.2bn

Trains £7.5bn £3.0bn £4.5bn

Total £50.1bn £24.4bn £25.7bn Phase One: London to Birmingham Phase Two: Birmingham to Manchester & Leeds Costs are reflected in 2011 prices, excluding VAT, and at P95 contingency level (high confidence that the forecast is adequate)

The HS2 Plus review by David Higgins followed an exhaustive review of the costs of Phase One. It concluded that, overall, the £21.4 billion allocated for Phase One infrastructure, together with the £3 billion allocated for Phase One trains, is sufficient to deliver Phase One.

The current uncertainty over the legislative timetable, plus the inherent risks associated with a project at this stage of development, mean that the contingency remains appropriate.

However, the funding detailed above provides sufficient resources for us to advance the scheme through its next phases. We will maintain a rigorous control of costs, and it is essential for HS2 Ltd and DfT to continue to work together in managing them.

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7.2 Proposed expenditureHS2’s initial expenditure profile was set by the Spending Round 2013. The following expenditure limits apply for the next three years: they include inflation and VAT.

HS2 short-term expenditure2014/15 £m 2015/16 £m 2016/17 £m

Phase One 339.8 791.5 1,618.7

Phase Two 80.2 188.5 267.6

Total 420.0 980.0 1,886.3 Costs are reflected in outturn prices, and at P50 contingency level (balanced level of confidence)

For 2014/15 and 2015/16 the estimated cost is the same at the P50 and P95 probability levels. For 2016/17, an additional contingency of £147 million is held by HM Treasury to provide coverage at the P95 level.

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7.3 2014/15 budgetHS2 Ltd’s budget for 2014/15 is set at £270 million, as derived by the Spending Round 2013. There is a budget of £150 million managed directly by DfT for acquisitions of land and property.

Following the successful delivery of the Phase One hybrid Bill in November 2013, the focus of activity for 2014/15 is expected to be:

yy Hybrid Bill – progress through the petitions response period and House of Commons Select Committee, and development of the required Additional Provisions to the Bill.

yy Technical – development of a scope and specifications workbook, overseeing ecological surveys and acting as the client for ground investigation works.

yy Phase One/Commercial – revisiting the programme in light of the David Higgins’s review, determining main works procurement strategy and construction critical path, formation of the delivery organisation and PMO, preparation of the Phase One Programme Execution Plan to specify the delivery management plan, and progressing critical activities such as Euston planning and ground investigation works.

yy Phase Two – progress the design and environmental works in support of the Secretary of State’s route announcement.

Uncertainty around the timing of the Parliamentary process and the impact of the Higgins review mean that HS2 Ltd has not set a fixed annual budget for 2014/15. Expenditure will be actively managed during the year to allocate budget to priority activities. The defined budget limits for 2014/15 can be summarised as follows:

Expenditure £m

VAT* £m

Total £m

Capital (mainly Phase One** & office assets)

194.7 36.3 231.0

Resource (mainly Phase Two)

35.3 3.7 39.0

Total: HS2 Ltd 230.0 40.0 270.0

DfT Land and Property Capital Acquisitions Budget

150.0 - 150.0

Total: HS2 programme

380.0 40.0 420.0

* HS2 Ltd is registered for VAT with effect from 1 April 2014 and expects to recover input VAT.

** The 2014/15 budget assumes that Phase One costs will be capitalised from 1 April 2014.

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7.4 Cost control and value for moneyFor the project as a whole, budgets have been set at a core cost level, together with contingency to ensure a high degree of confidence that delivery can be achieved within the funding envelope.

The core budget provides a baseline against which costs can be controlled, and any changes to this baseline must be justified via the change control mechanism.

HS2 Ltd and DfT will work together to:

yy manage project costs and seek opportunities for cost reduction, and

yy look critically at the value for money and affordability of any proposals which potentially add to costs.

yy HS2 Ltd applies the principles of ‘Managing Public Money’ to its activities.

HS2 Ltd and DfT have continued to progress a comprehensive Efficiency Challenge Programme. This is aimed at optimising all opportunities for cost savings within the remit of the scheme provided by the Secretary of State.

HS2 Plus identified a number of potential revisions to the HS2 scheme that require Government consideration. The report notes that the earlier a decision is taken – for instance, on extending the line to a station at Crewe – the more cost savings can be achieved. The report noted that it would be irresponsible at this early stage to reduce the substantial contingency included in the P95 estimates; however, it recognised that the shorter the timescale for the project, and the greater the certainty about the timescale, the lower the costs will be.

Each in-year annual budget is closely controlled within the pre-agreed expenditure limits, with contingency held centrally.

We will work with our audit team through the Internal Audit Programme to ensure that the quality of our financial control systems remains high and supports a rigorous cost control framework.

HS2 is a publicly funded project. However, HS2 Ltd and DfT will consider opportunities for private investment in selected areas, such as station development.

“ HS2 Ltd and DfT have continued to progress an Efficiency Challenge Programme, aimed at optimising all opportunities for cost saving.”

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7.5 Review of performance in 2013/14We have achieved our key deliverables for this period.

HS2 Ltd’s core objectives for 2013/14, and the progress made, are as follows:

yy In October 2013, the High Speed Rail (Preparation) Bill was passed. This allows HS2 Ltd to pursue a number of interim activities, including design contracts, ground investigation and ecological surveys, and making compensation payments to homeowners.

yy In November 2013 the HS2 hybrid Bill was submitted to Parliament on time, seeking powers to build, maintain and operate Phase One of the railway. Accompanying this was an extensive Environmental Statement.

yy On Phase Two of HS2, further scoping and consultation work continued until January 2014, seeking views on the proposed route from the West Midlands to Manchester, Leeds and beyond.

In financial terms, in 2013/14 HS2 was able to deliver its planned activities without calling on its central contingency of £26.2m.

At an operating expenditure level, HS2 returned an underspend of £9.1m (4.2%) against the underlying operating budget of £217.5m.

2013/14 Actual* £’m

2013/14 Budget £’m

Variance £’m

Contracts & services (including project delivery, design, environmental etc)

162.2 168.9 6.7

Staff & related costs 30.7 29.2 (1.5)

Operational & administrative costs

15.5 19.4 3.9

Sub-total operating expenditure

208.4 217.5 9.1

Allowance for further costs

- 26.2 26.2

Total expenditure incl. contingency

208.4 243.7 35.3

“ At an operating expenditure level, HS2 returned an underspend of £9.1m.”

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The table shows the financial performance in 2013/14:

yy Contracts and services covers the work undertaken to complete the hybrid Bill works to deadline including further development of the engineering design and environmental assessments of the HS2 Phase One route as required for the bill. Certain areas such as Euston master-planning were accelerated, while other areas of activity were less than had been budgeted, resulting in an underspend for contracts & services of £6.7m (3.9%).

yy Staff costs were £1.5m (5.1%) overspent resulting from the balance between interim and full time resources being different to that planned. Work continues to recruit the necessary skilled workforce.

yy Operational and administrative costs were £3.9m (20%) below budget, the key deferrals arising from rent and relocation costs of an assumed office move from Eland House, and depreciation on deferred IT/office assets.

High Speed Two (HS2) Limited 2nd Floor, Eland House, Bressenden Place, London SW1E 5DU

T 020 7944 4908 E [email protected]

www.hs2.org.uk

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HS2 Ltd Corporate Plan 2014 to 2017assets.hs2.org.uk/sites/default/files/inserts/HS2 Ltd Corporate...4 Hs2 Ltd Corporate Plan 2014 to 2017 Foreword When the Victorians laid the first