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The post-pandemic shift to homeworking has caused significant delays to UK national infrastructure projects including HS2, the head of the body that advises government on their delivery said on Tuesday.
Nick Smallwood, chief executive of the Infrastructure and Projects Authority, told MPs that the change in working habits, alongside inflationary pressures, was one of the main reasons why it issued a “red rating” for the first phase of the high-speed rail link last year.
The rating from the IPA, which is part of HM Treasury, indicated that it considered the project unachievable.
“I’ve seen a significant extension of design duration on projects as a result of hybrid working,” Smallwood told the House of Commons Treasury committee.
“Where you had designers in one office all working collaboratively together, the durations were pretty normal. What we’ve seen post pandemic is a nine to 12-month extension of those durations,” he said.
“It’s slowing down all infrastructure projects. They’re all impacted in the design phase if those designers don’t work directly in the office,” Smallwood added.
He suggested this had compounded the severe inflationary pressures that have made it harder to deliver projects, with material costs jumping by as much as 26 per cent in one year.
His comments will inflame a running debate over the impact of new working practices as chancellor Jeremy Hunt prepares to announce a new drive to raise productivity across the public sector and wider economy in next week’s Autumn Statement.
Although some chief executives and government ministers have been pressing staff who were working remotely to return to the office, economic evidence so far suggests that hybrid work practices make little difference to productivity while having a marked positive effect on workers’ wellbeing.
The Treasury committee also heard evidence that will support Hunt’s resolve to remove barriers in the planning system that have held back big infrastructure projects, such as upgrading the UK’s electricity grid to accommodate greener power.
Sir John Armitt, chair of the National Infrastructure Commission, a government advisory board, said there was “a recognition” that the planning system for nationally significant projects was not working as well as it had when introduced.
He cited a fivefold increase in judicial reviews of planning decisions since 2010 and a 60 per cent rise in the time taken to obtain approvals.
On HS2, Smallwood said phase one of the line — which will run from London to Birmingham — was still “flashing red”, and that there were continued concerns over costs.
The IPA said HS2 Ltd, the taxpayer-funded body overseeing the rail project, had from the outset underestimated the scale of the design work required. It added that the body was now seeing a number of contractor claims that were not in the monthly reports it submitted to officials.
The second leg of the rail link — from Birmingham to Manchester — was axed by the government last month after the cost of phase one soared by a fifth in less than six months. It is now estimated at £54bn in 2019 prices, with inflation expected to add another £10bn.
HS2 Ltd was contacted for comment.