Oral evidence: Department for Transport: Implementation of Brexit, HC 1657

Oral evidence, 24 October 2018.

Witnesses

Bernadette Kelly and Lucy Chadwick.

Chair

Welcome to the Public Accounts Committee on Wednesday 24 October 2018. We are here today to have a good catch-up session with the Department for Transport on a range of issues, including progress on HS2, the cancellation of Crossrail and other what I might call—in a flippant way—sundry items for the Department in the light of the fact that it is also dealing with major issues around Brexit. We will also be considering the National Audit Office’s report from July looking at your progress on that. Thank you for the update letters that you have sent since then. Before we go into that, I want to check on the rail review and how progress is going on that. What timetable are you expecting for that to be delivered? The Secretary of State mentioned it the other day.

Bernadette Kelly

Keith Williams has now embarked on the work. He is starting to get out and about talking to stakeholders about the work. There is a team sitting underneath him that is making sure that the work programme is all set out, and he is fully supported in that. That is all happening. I believe that we have said that we are working towards conclusions next October or autumn. I will check the exact wording, but that is the timeframe for the conclusions to come from that work.

Chair

To Ministers at that point?

Bernadette Kelly

No. What we are looking to do is have some Government conclusions on the basis of Keith’s work and the independent review that he is doing, within that timeframe. We are considering whether anything—and if so, what—should be published as interim or position papers. So it is possible, and I would say likely, that we will choose to do some of that, or that Keith Williams will choose to put information that there to help inform his work as it proceeds.

Chair

I have to say that it is quite refreshing to hear that you are seeking feedback from people during the process rather than waiting until it is done and dusted.

Bernadette Kelly

No, he is an absolutely key part. We know that this review is extraordinarily important as a way of building public confidence in the future of the railway and in its performance, and I think Keith is absolutely seized of the fact that that will only be possible if he has a full engagement with people about his work before reaching conclusions.

Chair

Earlier this week, the Secretary of State said that he was not ruling anything out, but then proceeded to rule out nationalisation. Can you clarify what he meant by that?

Bernadette Kelly

I am sure that if the Secretary of State has not ruled anything out, I should not rule anything out either.

Chair

I rather walked into that one, didn’t I? In terms of nationalisation, does that mean that there is any prevention of the Department taking over any franchises were they to go wrong, as has happened in the past?

Bernadette Kelly

We have obviously had to step in in the case of LNER because it was not possible for VTEC to continue. It has always been a feature of the franchising system that the Department can step in as the operator of last resort.

Chair

So nothing has changed on that?

Bernadette Kelly

That remains the system that we currently have in play.

Chair

We will leave it there for now. I must introduce you formally, of course, before we move on to the next session. Please welcome Bernadette Kelly, who is the permanent secretary at the Department for Transport, and Lucy Chadwick. Is this your first time in front of the Committee, Ms Chadwick?

Lucy Chadwick

I think in front of this formation, yes, but I have been to the PAC before.

Chair

Forgive me; it has been a while. Lucy Chadwick is the director general for—

Lucy Chadwick

International, security and environment—“international” covers maritime, aviation and much of our Brexit co-ordination work.

Chair

Every director general has a bigger job than they did when I first started doing this. I am sure it makes you earn your money, doesn’t it? Anyway, Ms Chadwick is at the Department for Transport as well. We will move on to a progress update on High Speed 2.

Caroline Flint

Hi, and good afternoon. In our 2017 report, we drew out a couple of points of concern. One was the financial controls of HS2. Do you think that HS2 Ltd’s financial controls have improved, and how?

Bernadette Kelly

When I appeared before you with Mr Thurston, at that point we were looking specifically at the unauthorised redundancy scheme that HS2 Ltd had run. It was clear, and I was clear with the Committee at the time, that we were not satisfied that HS2 Ltd had appropriate controls in process to ensure that there was no repeat of such unauthorised schemes. Both I and Mr Thurston were very clear that such controls would be put in place, and they have now been. I am satisfied that those financial controls are in a much stronger position than they were, and I think that all of the actions—sorry, I had a list somewhere in my pack—that we committed to and that the Committee recommended have now been implemented. That is a matter relating to the internal financial controls within the company. What was not—and is still not—at question are the overall controls on the programme’s budget.

Caroline Flint

We will come to that.

Bernadette Kelly

I am sure you are going to come to that, but I just wanted to make clear that I think the conversation and the recommendations that HS2 Ltd and the Department have responded to were related to those specific elements of control framework.

Caroline Flint

Just before I come on to the overall project spend and how that is going, one aspect of our last report was the relationship between the Department and HS2 Ltd. I notice that in your letter to the Committee on the 23 October you say that both parties have looked at how they can have a more “honest and trust based relationship”. That is a quote straight from your letter. How has that manifested itself?

Bernadette Kelly

We have done two things. You always need two things to be in place in order for a relationship between a Department and a critical delivery partner, working at arm’s length, to be successful. First, you need the controls, the frameworks and the accountabilities to be crystal clear. I think I set out in my letter something of how we have revised the framework document and the development agreement so there can be no doubt what the company has authorisation to do on its own account and where it has to seek authorisation from HMG in order to act. We have clarified and revised and updated all that, but I do think an ongoing relationship of trust is vital as well, and a lot of that is built through the senior management relationships we have with the company and the framework we have put around that. We now have a strengthened client board and we have a shareholder board. Those are specifically intended to ensure that the senior dialogue we have with both the executive and the chair is transparent and as open and honest as it needs to be for us to be confident of progress.

Caroline Flint

In terms of representation of the Department on those boards, who is the person from the Department who goes along to them?

Bernadette Kelly

For the client board, it will be my director general responsible for High Speed 2. That is Clive Maxwell. For the shareholder board, it is Clive Maxwell and I believe Nick Joyce as well, who heads up my shareholding team and is my director general for resources and strategy.

Caroline Flint

And they have the authority—and with that the clout—to speak for the Department and therefore have real conversations at both board levels to represent the views of the Department?

Bernadette Kelly

They certainly have the authority and the clout. Clearly, there is also a regular dialogue with Ministers and with the Secretary of State, and those are also a part of the regular meetings and conversations that happen with the leadership of HS2 Ltd.

Caroline Flint

Going to the overall project spend, the overall funding is, I think, £55.7 billion for all three phases.

Bernadette Kelly

Yes.

Caroline Flint

We are aware that in July this year the Department announced a delay till June 2019 of the notice to proceed for construction of phase 1, which is London to Birmingham. The Department has also confirmed a delay to the legislation for phase 2. That might suggest there are some issues here, but there have also been reports about underestimating, for example, the cost of land values in relation to the overall budget plan. How confident are you that the scheme is going to come in on budget?

Bernadette Kelly

There are a number of slightly separate points I might want to pick up there. Overall, we are very clear that we are determined that HS2 Ltd will bring this project in within the overall funding envelope of £55.7 billion, which you described. I would be very happy to walk through the controls and the systems and the oversight that we have in place to ensure that that is indeed delivered. You referred to the notice to proceed delay. The notice to proceed is a very important point in the delivery of this project. It is a really major milestone for HS2 Ltd. There is a lot of work that needs to be done to ensure that we are fully ready to issue that notice to proceed, and there is a lot of work that HS2 Ltd needs to do as well to satisfy us in Government that we can issue that. It will be accompanied by a new full business case and affordability assessment. We still intend to do that in June 2019, but we thought it was extremely important that that work is done thoroughly and properly at this stage. It does not impact on the overall timetable for the delivery of the project, which has not changed. The same is true of the timetable for the phase 2 hybrid Bill. Those are shifts to the timetable within the overall programme but do not affect the end dates that we have currently committed to.

Caroline Flint

I appreciate that you want to make sure a thorough job is done of assessing where they are, but are you worried that any of these delays could push up costs? Obviously, the investors and others in this might see more risk involved, and that in itself might have a negative uplift to the overall cost.

Bernadette Kelly

We are looking equally at schedule and cost all the time; you cannot look at one in isolation from the other. Actually, delays can also have the effect of reducing costs if they de-risk timetables, so when you look at a programme of this complexity and scale the interaction between schedule and cost is not always straightforward. I would say, though, that at the moment we are very committed to both maintaining the schedule and ensuring this project remains within the existing cost envelope. It is inevitable that in a project of this sort there will always be cost pressures, but it is the job of HS2 Ltd—

Chair

Of course you would say that, and I am not suggesting that you do not believe that. You have your two people on the board, but often problems happen with these projects and they come back to you with a begging bowl. How are you really going to keep a grip on that money?

Bernadette Kelly

It comes down to our whole framework of governance and oversight. In the first instance, we set a very clear total funding envelope for the project and we then charge HS2 Ltd to remain within that envelope. Of course, that includes a contingency, as you would expect for a project of this scale.

Chair

But where is the sanction if they do go over?

Bernadette Kelly

That is not an option that we are prepared to contemplate. What we are doing instead is focusing on the framework document, which governs the assurance of three lines of defence that the company has, including full independent assurance of its delivery of the programme and our own client board and shareholder boards being fully sighted on the programme, such that we can ensure that the necessary steps have been taken to bring the project in within the funding envelope.

Caroline Flint

I have another question but it is on HS3. I think Sir Geoffrey wants to come in on this.

Sir Geoffrey Clifton-Brown

On the timetable, Ms Kelly, as you know I sat on the HS2 phase 1 Committee for months and months, examining this in huge detail. The engineering projects that you have to do in Camden—widening the route at Paddington station, the tunnel connecting it to Old Oak Common, and works around the two stations—are some of the largest engineering projects in Europe. It seemed to me that, even without the delayed start, the timetable was already pretty tight, so I am not sure how you can sit there and be so confident that the finish timetable is still “on track”—excuse the pun.

Bernadette Kelly

I don’t disagree—this is an enormously complex project to deliver. You are absolutely right that the fact it is city centre to city centre—into a number of cities, of course—makes it uniquely complex and challenging project in its engineering. I very much agree with that broad assessment. I do not accept that we are talking about a delay to the schedule at the moment. What we are doing is managing pivotal milestones and the right way to ensure the work is done at this early stage in the project as thoroughly as it can be, because in that way we set the project up better for success in the future. It would probably be an unwise permanent secretary anywhere who offers complete guarantees about what might happen 10 years down the line. What I can tell you is that we are holding HS2 Ltd firmly to their cost envelope and the schedule we have set for the project.

Caroline Flint

I still cannot quite understand how delays do not lead to a risk to delivery. Secondly, presumably work is being done in advance of the notice to proceed, and that is incurring costs. So whatever the good reasons are, I am trying to understand how it does not enhance risk to delivery and increase cost.

Bernadette Kelly

What is happening is, within the overall programme, some milestones will move and fall in different times. That may not necessarily be critical for the overall delivery of the programme—or it may be that, in some cases, that is using up some of the contingency built into the schedule as well as the cost envelope. But at the moment I do not consider the decision to issue the notice to proceed in July 2019 carries significant risk for the end date of the project. As far as work being done at the moment is concerned, you are absolutely right that work is going on. Anyone wandering around Euston will see evidence of early work, and similarly work is now under way in Birmingham to prepare for this. HS2 Ltd has set out the designs for the stations around Birmingham and Solihull. So work is going on. There is not a sort of moment of hiatus or pause while we do the work for the notice to proceed. There are a number of things that the company is getting on with and which it is authorised by the Department to do, including incurring costs in order to keep the overall project on time.

Caroline Flint

How much would you say HS3 or Northern Powerhouse Rail is a priority for the Department?

Bernadette Kelly

I think we have been clear that Northern Powerhouse Rail is something that the Government are absolutely committed to doing. I think it was in the Government’s manifesto. We have set out since the work that we are doing to support the development of Northern Powerhouse Rail.

Caroline Flint

This project is much more of an east-west connection of the north of England, including my own region, Yorkshire and the Humber, and the north-west and the north-east. Some say that it would be cheaper per mile, with less new track, and quicker to deliver than HS2. Is there any work going on the Department to compare cost and delivery, and also impact of HS3 against the second phase of HS2?

Bernadette Kelly

The work is going on at the moment to develop the full business case and the strategic case for Northern Powerhouse Rail and Transport for the North is working with partners in the north to do that. It is obviously a very significant way behind, in terms of its development, than HS2 at this point, but that work to really get a clear sense of the strategic case and the business case is under way as we speak. For HS2, we have a BCR in the strategic business case of 2.3—that is £2.30 benefit for every £1 spend. That is the BCR we have for the project. What we are now trying to do, as I am sure the Committee is aware, is to ensure that HS2 is being delivered in a way that supports and enables the future development of Northern Powerhouse Rail. We have allocated £300 million to HS2 Ltd that is focused on future-proofing junctions and stations in a way that will make Northern Powerhouse Rail easier to deliver. It is increasingly becoming clear that we almost need to see these as a sort of staged series of choices for investment, rather than completely separate things.

Caroline Flint

But if the north of England said the HS3 east-west connections were of more importance to business and communities across the north than phase 2 of HS2, could you see either HS3 being given priority over that second phase or HS3 having to be delivered at the same time as HS2?

Bernadette Kelly

What the north of England is actually saying at the moment is that it fully supports HS2. I think it was the week before last—

Caroline Flint

They are also asking that HS3 should be delivered at the same time as HS2.

Bernadette Kelly

I think in terms of the development of the project that would be extraordinarily difficult, simply because it is some way back in terms of its strategic case, development, design and all the things that need to be done in order for Northern Powerhouse Rail ultimately to be delivered. The north has been very clear in its continued support for High Speed 2, because it sees it as a vital stepping stone in building regular connectivity—

Caroline Flint

But would you acknowledge that the plan that is coming from Transport for the North for HS3 is supported by businesses and councils across the north of England and that for the north to realise £100 billion-worth of investment, HS3 needs to come into play, and it cannot wait until HS2 is finished?

Bernadette Kelly

We are not putting the development of Northern Powerhouse Rail on hold until we have built HS2, including HS2b. We are developing the plan for Northern Powerhouse Rail with the north now in real time alongside the work now being done to build HS2.

Chair

Before I move on to Sir Geoffrey Clifton-Brown, I want to welcome warmly to the Committee the Speaker of the House of Representatives of Belize and the President of the Senate of Belize, who are here today to watch our work. I did not manage to meet them beforehand, but they are very welcome. I call Sir Geoffrey Clifton-Brown.

Sir Geoffrey Clifton-Brown

Ms Kelly, I apologise. I am trying to do two Committees at once this afternoon and I managed to miss the date anyway, so that was a complete waste of time. I refer to the framework document, which you have drawn up as a sort of clarification of the Government’s rules between your Department and HS2. Ms Flint has already referred to this. Paragraph 3.1 states: “The Department for Transport and HS2 Ltd will have an open, honest, trust-based partnership supported by the principles set out in the Cabinet Office guidance.” How can we trust that when we know that the former CEO, Simon Kirby, sought the Department for Transport’s permission to pay enhanced redundancy payments? He was told quite clearly that he must not do it, but he went ahead and did it, wasting £1.76 million of taxpayers’ money. He is reported to have gone on to a highly paid job at Rolls-Royce, where he is paid three quarters of a million pounds. When an official blatantly disregards advice like that and misuses public money, how can we be sure that any words in a document like this actually mean anything?

Bernadette Kelly

I think you are referring to events that we have since addressed, both within the Department and within the company. Simon Kirby has of course left the company. I don’t think he did seek approval; he was told not to seek approval. My Department’s subsequent investigation into these events showed that he did not act on the clear signal he was given from the Department that we would not support any such approval being sought. Officials within the organisation then proceeded with the scheme none the less.

Chair

We know that. Sir Geoffrey is asking how we can be sure that the words in the document will actually make a difference.

Bernadette Kelly

How can we be sure? We have revised the framework document. HS2 Ltd has put in place a number of steps to strengthen its own internal controls, and it has put all of its staff through an induction training programme to make sure that they fully understand the importance of managing public money. We have a new chief executive, a new chair and a new senior team. We are working extremely closely with them to ensure that the systems are in place to ensure that everyone knows what is expected of them, and also so that we have the relationships of trust and transparency that we need to ensure that HS2 Ltd can successfully deliver this programme—that is an ongoing effort and something that we all have to work at.

Sir Geoffrey Clifton-Brown

I don’t doubt your sincere words. I just want to see what will happen in the future. Paragraph 8 says: “As Accounting Officer the Chief Executive”—which Simon Kirby was—“is personally responsible for safeguarding the public funds”. If the chief executive were to act similarly again, do you think your systems would actually stop it happening?

Bernadette Kelly

I am confident that the chief executive would not breach the control environment. I am absolutely confident that he knows what his responsibilities as an accounting officer are, and that he will observe them extremely seriously. Clearly, if there were to be a breach, suitable action would then be taken, but that is a wholly hypothetical situation. I really think that a lesson has been learned in this process.

Sir Geoffrey Clifton-Brown

I am not doubting your sincere words. If a similar event occurred again, what action would your Department take?

Bernadette Kelly

It would depend on what the event was and what the circumstances were.

Sir Geoffrey Clifton-Brown

A similar action to the sort that I am talking about, where the guidance laid down by your Department was breached and public funds were misused.

Bernadette Kelly

I can only comment on such a circumstance when I have the facts in front of me—it would depend on the severity and the circumstances.

Sir Geoffrey Clifton-Brown

Take the Kirby case—he got away scot-free. What action would be taken in future?

Bernadette Kelly

In those circumstances, we would look at what appropriate sanctions and disciplinary steps were needed in response to any breach. I really find it quite uncomfortable to be invited to speculate on what steps we would take in a situation that hasn’t arisen. We would look at it and we would use the sanctions and the disciplinary mechanisms within our control to ensure that any breach is dealt with appropriately.

Chair

Do you have enough sanctions to sack the chief executive?

Bernadette Kelly

Of course we do—absolutely.

Chair

It could be up to that level?

Bernadette Kelly

Of course. In the event, any holder of a senior public office can be dismissed if they have behaved in a way that justifies that.

Caroline Flint

Were they before? Was that sanction there when Simon Kirby was making this decision?

Bernadette Kelly

Look. We are going back over the facts of the last hearing. It was identified at the time that there were officials within the organisation who acted without authority. Those officials have left the organisation.

Caroline Flint

They weren’t sacked or disciplined?

Bernadette Kelly

One of them resigned and I believe that one of them—I would need to check the exact circumstances because it was a matter for the company—was dismissed. I think that Mr Thurston has previously informed the Committee about the steps that were taken in relation to individuals, but if you wish me to clarify those again, I would be happy to do so.

Sir Geoffrey Clifton-Brown

It is not hypothetical, because we know what Mr Kirby did. Do you think it is right that he should have got away scot-free when he wasted public funds in the way he did? He did not waste them inadvertently; it was completely advertent. He knew exactly what he was doing.

Bernadette Kelly

I am not sure that the second part of your statement is necessarily true, based on the facts as I understand them. Mr Kirby had resigned before this issue came to light.

Sir Geoffrey Clifton-Brown

He knew it was coming.

Bernadette Kelly

As you know, I took legal advice, which I shared with this Committee, on what further action it would be appropriate for the Department to take.

Chair

Thank you. We appreciate your sharing that because, as you can gather, the Committee feels very strongly about this. It was a lot of taxpayers’ money on a very expensive project that went into people’s individual pockets for no public gain at all.

Bernadette Kelly

I completely share the Committee’s unhappiness with the scheme. It should never have happened. It was an unacceptable breach of the control environment. I was very clear about that when I last sat in front of the Committee and I am very happy to be clear about it again.

Chair

We should just flag that the Committee is pursuing this with other sectors of Government where there are arm’s length bodies where interesting things happen—inappropriate, and sometimes financially inappropriate, things. We might be talking to you further about what lessons you have learned.

Bernadette Kelly

I am happy to do that.

Chair

But for today we have a lot to get through, so we will leave that there and move on to Crossrail. When did you know that Crossrail was going to be delayed by a year or more?

Bernadette Kelly

The company formally notified the Mayor and the Secretary of State that they believed a delay was unavoidable—

Chair

Sorry. They formally notified the Mayor and the Secretary of State, but when did you know there was a problem with Crossrail?

Bernadette Kelly

The point of formal notification is relevant, which is why I mention it. They did so, I believe, on 30 August—I am now trying to remember my dates. It was after a board meeting.

Chair

You can always correct it in writing.

Bernadette Kelly

I can write to you. It was 29 or 30 August. We had been challenging the company for some time on the delivery schedule and on costs, so we had been asking questions, but we did not receive notification from the company until that point.

Chair

To be clear, were you worried when you were asking questions about it?

Bernadette Kelly

Yes.

Chair

When did that start? When were you getting worried about delivery?

Bernadette Kelly

We always worry, because worrying is a good thing.

Chair

That’s good for a permanent secretary, yes.

Bernadette Kelly

It’s a good thing for a permanent secretary and it’s a good thing for any public official overseeing large, complex projects.

Chair

But when did you start worrying particularly about the delivery?

Bernadette Kelly

I think the worries had been growing over a period of time.

Chair

From January? From the end of last year?

Bernadette Kelly

Certainly through the spring. From my Department’s perspective, of course, our sensitivity was heightened even further by the timetabling issues we had seen. We had observed in that that sometimes there is optimism bias, leading people with the best intentions to continue to think that things are deliverable when the evidence may be telling them that it is not deliverable. We were asking even more questions on the basis of that experience and that learning.

Chair

But they weren’t answering your questions?

Bernadette Kelly

They were answering our questions, but they were answering our questions in a way that said that they had not concluded that the schedule could not be met.

Chair

That is a very double negative way of saying it. They were confident they could still meet the schedule, in other words?

Bernadette Kelly

They were saying that the schedule was still feasible and the delivery was still possible. I think the level of confidence being expressed in that was starting to diminish over a period of time, as you would expect, but the company reached the conclusion that the schedule could not be met and then notified both the Mayor and my Department after the meeting it had at the end of August.

Chair

Why did it happen? I don’t mean the detailed technical stuff about which signals were communicating with what; why was it that they could not see that this was coming? Do you know that?

Bernadette Kelly

We are all asking questions about whether it would have been possible for this information to have become more visible sooner. One of the reflections we will have on all of this is to ensure that we learn those lessons. I am very keen to do so, as you can imagine, and I have asked exactly those questions within my own Department: what more can we learn from these things to ensure that we understand what is happening? Clearly, there were a number of factors; there are physical things that have now caused the December opening to be impossible, linked to insufficient time to do train signalling testing and the integration of systems testing, and some ongoing challenges around concluding the structure.

Chair

You talk about lots of things, but basically delays were arising that they had not really understood the implications of. Is that right? Can you be more explicit?

Bernadette Kelly

This will be, as I say, subject to a fuller lessons learned, and the National Audit Office may well turn its attention to this and do a thorough piece of work at the appropriate point. I do not want to pre-empt that, but one of the things we know is that the timetable that was allowed for dynamic testing of the trains system was being compressed and compressed, and it became clear—

Chair

But this is a bleedingly obvious sign, if I might say so. We know from every project we have looked at that once you start shrinking the testing period, you are into tricky territory. It is almost like the red signal goes up at that point—maybe I shouldn’t use that phrase, since we are taking about trains. A red flag goes up at that point to say, “There’s a problem.” You were noticing this in “the spring”, which I know is a very wide period of time for the civil service. Did no-one in your Department—

Bernadette Kelly

We were asking questions.

Chair

You said that they were coming back with these very vague answers. Who was going in there and saying, “Come on, be honest”? Did you have someone going in to look at what was practically going on?

Bernadette Kelly

The way the governance operates is that Crossrail Ltd is a separate entity, and it has to provide regular updates to ourselves and Transport for London as joint sponsors on the delivery of the project. Those regular reports to the joint sponsors were suggesting that the project could still be delivered. That is what the reporting was saying. We were using the mechanisms available to us to ask more and more of those questions, to be more and more challenging. Indeed, we invited the chief executive to my own executive committee in, I believe, early June—I would need to check the date—to get an update from him directly, at which we pressed him very hard on the issues around confidence in the delivery schedule, because it is an obvious question to be asking at that point, and we were asking it.

Chair

Although you say “of course it’s an independent body,” it is the taxpayer, through your Department and TfL, that funds it. If someone is building your extension, they are an independent company, but you are funding them to do it.

Bernadette Kelly

Of course.

Chair

So he came to your board in early June. Were you confident with his assurances in early June?

Bernadette Kelly

No. We actually asked a lot of questions, precisely because we wanted to ensure that the company was then addressing those questions really thoroughly and looking very hard at its assumptions around delivery. We were deliberately doing that to ensure that the company was asking the right questions. The board had been doing the same. We had nominated another member of the board to ensure that those questions around systems integration, in particular, were being addressed within the company, and I know that Transport for London, as joint sponsor, was doing all of the same things. Questions were being asked in the appropriate way.

Chair

Do you think you had any impact, then, in that meeting in June? Basically, you had the star chamber moment—you grilled the chief executive and tried to get him to address the issues. Do you feel he went away understanding that there were issues to be addressed, and then got on with it?

Bernadette Kelly

Yes, I do. Yes, I absolutely do.

Chair

But then you still failed to deliver on time.

Bernadette Kelly

The problem is that what we were doing at that stage—

Chair

Was firefighting.

Bernadette Kelly

—was asking the questions about the delivery of the project. What you cannot do at that stage is demand that the delivery just happens, if you see what I mean. Us asking questions does not make it possible for the company to—

Chair

There was obviously a financial impact on TfL, particularly because of the farebox. I know they are having to manage that implication. What other cost implications are there for taxpayers, particularly through the Department for Transport?

Bernadette Kelly

We are still working through those cost implications with Transport for London and with the Mayor.

Chair

Will you be bailing out Transport for London? Who is bailing out who here?

Bernadette Kelly

We have been clear—and I think, actually, the Mayor is also clear—that ultimately, London is the beneficiary of Crossrail, and London will need to find a way of bearing the costs of this delay. We are working with Transport for London to support them in finding an appropriate way of ensuring that this project is successfully delivered, and it is still an extraordinarily important project. Everybody’s interest, ultimately, is still ensuring that it is brought to a successful conclusion as efficiently as possible.

Chair

Crossrail does not just run through London. It goes geographically beyond.

Bernadette Kelly

That is true.

Chair

Are you saying that the Mayor is just saying he’ll pay for the lot? Where is the Department for Transport? Are you not going to chip in any money?

Bernadette Kelly

We have already, as you say, made a very significant contribution to the Crossrail budget.

Chair

Crossrail should be bailing itself out, but clearly there is going to be a problem over the next year.

Bernadette Kelly

We have already funded, as you know, a significant proportion of this project. We have provided some additional funding, which we set out in a written ministerial statement at the end of July. We are now in discussions with Transport for London about how any further costs should be borne. However, I would say that there is an acceptance within TfL that there is an onus on London to ensure that it bears a fair share of these additional costs.

Chair

I know we will come back to this, so I will leave that there.

Sir Geoffrey Clifton-Brown

I went, at Crossrail’s request, on my second visit to Crossrail at the beginning of July. Had I known that you had doubts in June, I would have asked lots more probing questions. At the beginning of July, they maintained to me that the whole thing would be delivered on time and on budget. I think that the misconception, if you like, from the senior leadership of Crossrail arises from the fact that the project engineers have engineering skills, not IT or electronics skills. I suggest that the Department learns some of those lessons—if I am correct—in relation to HS2. It seemed that the engineering phase of Crossrail was brilliantly executed. It was highly complex. It went under the tube, by a very small margin in places. We need to learn those lessons for HS2.

Bernadette Kelly

I strongly agree. We have seen elsewhere that systems integration is often the hardest part of the delivery of these big, complex projects, and that is absolutely at the front of my mind and the Department’s mind when thinking about what we might want to learn from this for HS2 or any other project. Your observation that, in July, the company was convinced that it could deliver to schedule is correct. That was the formal position of the company at that time.

Sir Geoffrey Clifton-Brown

I have one final question, on the lessons to be learned from this. Can we have your assurance, on behalf of the Department, that there will be a culture of honesty in relation to HS2? If the thing is falling behind schedule, will you come to the Committee and Parliament and be completely honest when you first know that there are delays?

Bernadette Kelly

I certainly owe it to the Committee to be completely honest with it—you would not expect anything else of me or any other witness in front of you.

Chair

Honesty to the Committee is great when we call you, but we don’t call you every day, you will be glad to know. Being honest to Parliament, and telling Parliament early when there is a problem, is really important. Businesses are investing, passengers are making plans, and homeowners are involved.

Bernadette Kelly

I understand all that. I don’t think there has been any dishonesty in any of this.

Sir Geoffrey Clifton-Brown

I was not implying that.

Chair

Early notice.

Bernadette Kelly

One reflection from thinking about these sorts of things is that there is always an unavoidable tension when these very large, complex projects are being delivered. You want people leading those projects who are determined to get the job done and are absolutely focused on how to do that. There is great pressure on them—as there should be—to do exactly that. There is then quite a tension on how to manage, on the one hand, the wish to maintain that strong focus on successful delivery, along with creating the right environment and space for real difficulties to be surfaced and dealt with. That is a genuinely big challenge for all of us involved in creating the governance frameworks for these big projects. It is absolutely something that I think very hard about.

Chair

But the culture of honesty point highlighted by Sir Geoffrey is really important, because if you have officials who think it will go belly up, and so they had better run and get another job before problems become apparent, they will get away scot-free but they will leave the problems behind. However, if they are able to be honest and to say that there are problems, and if they have the capability to recognise a potential delay, it is better all round, because other parties can plan for that. How will you make sure that that culture is embedded?

Bernadette Kelly

Absolutely. I am actually doing a piece of work within the Department at the moment that is looking precisely at these lessons from several different projects. To some extent, the Glaister review of the timetabling issues identified a similar “can do” optimism bias that creeps in when everybody, acting in good faith, wants to get the thing done. We have to be very smart and sophisticated in working out how to have that spirit and discipline, because otherwise, frankly, none of this would ever get done. However, we also need systems that allow problems to be surfaced and escalated at the right time and to be addressed at the right time. I absolutely owe it to the Committee and to Parliament to be completely honest, but there may be a distinction to be drawn between creating a system that allows that and not necessarily announcing every single problem as it arises, because that would be impossible.

Chair

No, we recognise that. As you will pick up, our worry is that you were having these discussions in June and even you were not getting the answers, so nobody really knew—even the people in the system. That is mind-bogglingly chaotic.

Bernadette Kelly

We were doing our due diligence in the appropriate way, as a sponsor of this project.

Chair

Yes, but you were not getting the answers. There was not the recognition within Crossrail.

Gareth Snell

Very briefly, Ms Kelly, you said that it was formally on schedule in July. Your exec meeting then met with Crossrail and had scepticisms. You are thinking hard about what lessons can be learned from those, but it is now essentially November. What did the Department for Transport do differently after it had that board meeting and those scepticisms to try to deal with that? Are you still thinking about it?

Bernadette Kelly

There are two different things at stake here. One is the action that we were taking over the summer to continue to get the best information that we could from Crossrail Ltd to ensure that we understood what was happening and what was now deliverable in terms of that project. That was an ongoing process of exercising the governance arrangements that we have and using our joint sponsor levers to challenge the company to ensure that we had the fullest possible picture of progress on the project. There is a wider set of lessons learned that we probably need a bit more time to reflect on—

Gareth Snell

How much more time?

Bernadette Kelly

I am doing a piece of work that I expect to take a few months. What I am trying to do there is distil lessons that we can build into our governance frameworks for the future. It is not about short-term action that we take today or tomorrow; it is about how we tackle some of the profound questions that the Committee is highlighting about the tension that can exist between a real focus on delivery and an appropriate way of surfacing problems and making sure that there is complete transparency.

Gareth Snell

It is disappointing that, essentially, you will end up taking from July almost to next spring to learn lessons, but that is a different matter. I am not talking about—

Bernadette Kelly

It will be quicker—there are separate pieces of work going on within Crossrail at the moment looking at governance, cost and so on.

Gareth Snell

What I wish to understand is this: from the moment you went from formally on schedule to your board meeting and pushing hard at Crossrail because there were concerns about the deliverability of the programme, what short-term actions—I accept that they will have been short term—did you undertake as a Department to mitigate those problems? Simply pressing on with the ongoing processes, as you said, does not change the outcome.

Bernadette Kelly

Sorry, can I properly understand your question? You are asking for what we were doing over the summer to mitigate.

Gareth Snell

No. From the moment that you had the meeting with your board and there were genuine concerns, what did you do differently to mitigate those concerns? All you have said so far is that you carried on with the ongoing processes. If nothing changed, that is fine, but I want to know.

Bernadette Kelly

What I think was happening is that there was a process of dialogue going on between us and TfL, as joint sponsors, and the company, to ensure that the company was able to provide the best possible information about the delivery of that project. That was the process that was going on. It was not that we were not taking any action; it is just that we had a process that was designed—is designed—to ensure that the company was giving us an accurate, up-to-date picture of what was going on in the project. We were using that process to ensure that we had that picture as fully and clearly as we needed.

Lee Rowley

As somebody who sat on project boards for more than a decade before I joined this House, I reject the notion that there is an inherent tension in this that meant that you were unable to pick it up. That is not the case. This is a classic example of a project that did not have either the right focus, the right governance, or the right understanding of what was going on. Either somebody was giving you inaccurate information, you did not structure it to get the correct information, or you had the wrong governance. Which of those three was it? I do not want a long discursive answer; I just want you to tell me which of those three it was.

Bernadette Kelly

The governance that is in place for Crossrail has long been regarded as very good governance—

Lee Rowley

That is irrelevant, because it failed here. Which of those three is it?

Bernadette Kelly

In the end, I do not believe—there is no suggestion—that we were being given deliberately inaccurate information, so I do not accept that. What we did not get until the end of the summer was confirmation from the company that it no longer believed the delivery schedule of December could be met. That is the point at which we got that. Those are the facts, as I—

Lee Rowley

There was a failure to structure your relationship and engagements with the client.

Bernadette Kelly

I am not saying that that was as a consequence of a failure to structure our relationship with our clients—

Lee Rowley

Well it must be. There was a failure, so where is the failure?

Bernadette Kelly

I am saying it is a consequence of what the company was able to deliver.

Lee Rowley

Where is the failure?

Bernadette Kelly

The company, in the end, was not able to maintain the delivery schedule.

Lee Rowley

So the failure was on the part of the company, not on your part.

Bernadette Kelly

The company was not able to maintain the delivery schedule.

Lee Rowley

What about the failure of your QA procedures in understanding that this was a problem in the first place?

Bernadette Kelly

We have, as I say, been very clear—I can set out separately the governance arrangements that are set in place—that ultimately the Crossrail executive team is responsible for delivering. The Crossrail board holds it to account—

Lee Rowley

I’m not looking for a description; I’m looking for an understanding of where the failure was in your process. There is a failure. You have to define to me where that failure emanated from. I am getting nothing from you other than process things. I want to know where you have identified that failure to be.

Bernadette Kelly

It is a delivery failure of Crossrail Ltd.

Lee Rowley

Your QA procedure that failed to pick that up is deficient, therefore.

Bernadette Kelly

It is a delivery failure of Crossrail Ltd.

Lee Rowley

That was the answer to the first question. What about the second question?

Bernadette Kelly

In the end, we work with the information we are given. We test that information, and we ask questions diligently, as we did in this case.

Lee Rowley

So I draw from that statement that you were both deficient in the information you were receiving and deficient in your QA procedures in order to identify that there was a problem. That is the only conclusion I can draw.

Bernadette Kelly

If that is the conclusion that you draw, then that is the conclusion that you draw.

Chair

Can you tell us how you tested the information that you were getting?

Bernadette Kelly

We tested it through the joint sponsor arrangements that exist. That includes a project representative embedded in the company to help us do that.

Chair

What skills does that project representative have?

Bernadette Kelly

It is a professional consultant with particular expertise in this field. That is how we structured it. It is good practice.

Chair

And that individual was content?

Bernadette Kelly

I cannot comment on an individual.

Chair

Sorry, I appreciate that that question—

Bernadette Kelly

What I can describe is the arrangements that were in place. These are arrangements that as recently as November were looked at by the IPA and were given a very clear endorsement. We had no reason to suppose that the governance and assurance processes that we had in place were in any way inadequate. We will of course be asking, “What could we have learned?”

Chair

You can understand the enormity and our concerns about the creep-over of this sort of thing into HS2, with arm’s length private companies running these big projects because they are experts and then things go badly wrong, with a lack of sight from Government and in this case also TfL. We know that there will be discussions at City Hall about this. We will be looking at this again, just to signal that to you.

Bernadette Kelly

And you will not be asking any questions that I am not asking myself and that we are not asking within the Department, I can assure you.

Chair

Well, I am sure you will come super-prepared then, but as you have heard clearly from Mr Rowley, we on this Committee hear a lot about process and bodies set up here, there and everywhere. We will be wanting to ask you very specific questions about exactly what happened and what you should be doing in future, as well as lessons for other projects across Whitehall.

Bernadette Kelly

Understood.

Chair

You are lucky that it is a busy session. We are going to let you off the hook on that issue at this moment, but do not take that as carte blanche. We need to move on to preparedness for exiting the EU. First, may I ask how ready you are for March 2019?

Bernadette Kelly

Obviously there are a number of different scenarios that we could find ourselves in by March 2019. We are preparing for a deal and a no deal scenario in March 2019. Ms Chadwick and I are happy to talk through the preparations we have for both those scenarios. The NAO in its Report has set out and looked at our preparedness, including for no deal.

Chair

We have that Report, because it was in July, and your update letter.

Bernadette Kelly

I’ve sent you an update.

Chair

That has been very helpful, and we will pick up on bits of that in a moment. Would you welcome any extension to the transition period? Would it make a difference to how you are preparing?

Bernadette Kelly

It is not for me to comment on whether an extension to the transition period is a good idea or not.

Chair

But practically, would it help you if you had longer to do this?

Bernadette Kelly

Assuming we have a deal, a transition period kicks in. If we have a deal, the task for my Department will be around securing the multilateral agreements or, failing that, the bilateral agreements that we want to see in key areas to cover areas of transport, such as air services, road haulage and so forth. The processes will require negotiation, and we will need to ensure that there is enough time for that. In and of themselves, the areas for which my Department is responsible are not areas that would be extraordinarily difficult to negotiate. Indeed, in my areas, we would be building on a historic legacy of bilateral agreements, such as in air services. We would be building on—dusting off, as it were—a historic legacy. We believe it is entirely plausible that it will be possible for us to do the things that are necessary for my Department to do to secure our transport goals.

Chair

Given what has been happening politically in the past few weeks, are you fast-tracking any contingency plans to make sure you are ready, given that we still don’t know whether we will have a deal or not?

Bernadette Kelly

Contingency planning for no deal is obviously a separate set of options. The NAO Report was a fair assessment, by and large, of our overall readiness. We have got 17 work streams.

Chair

We agree with you, so we don’t need to go through the detail of the Report.

Bernadette Kelly

I won’t go into detail, but we continue to progress all those work streams. I can happily update the Committee orally on where we are on those work streams, if that would be helpful. We believe that they are on track. We are on track to deliver the things we are saying we will deliver by 29 March. I don’t underestimate the fact that this is a very challenging and complex programme of work to deliver. Of course, in some areas, we are dependent on conversations with member states and/or the availability of parliamentary time—in other words, things beyond our control. To the extent that we have control, I believe we are doing the things that we need to be doing as a Department to deliver the work streams that we are setting out.

Chair

Is there anything that you can’t deliver by next March because it is just too late? We are hearing that from other Departments.

Bernadette Kelly

We remain confident that it is possible to deliver the work streams set out in the NAO Report by March 2019. Of course, some of them are specifically related to no deal, and some of them are valid whether we are in a no deal or a deal scenario.

Chair

So everything you are planning will be delivered by the end of March 2019?

Lucy Chadwick

Just going back to what Ms Kelly described, some of them are contingencies that require discussions and negotiations with the EU27 and the Commission. Do we stand ready to be able to do those? Yes, we do. Have we been able to start those discussions? Not entirely.

Chair

So it would not be wrong to say that you can’t deliver everything by 29 March. We recognise that there are political issues between you and getting something done. There are things that you can’t do by 29 March because you haven’t got decisions yet.

Lucy Chadwick

There are things that we could do and are still doable within the timescales provided.

Chair

So what’s the deadline for certain of the projects? What would be an important deadline, beyond which you would not be able to be prepared for delivering some of the work you need to do before 29 March?

Bernadette Kelly

The things that are not dependent upon negotiations with other member states include our systems for issuing international driver permits and our systems for delivering road haulage permits—trailer registration, for example. We believe that all those systems will be delivered by 29 March.

Chair

That’s not my question. What are the things that are at risk? Politically, when do you need a decision by to deliver certain things by 29 March and to ensure you do not get into ultra-contingency planning? For example, ro-ro ferries—we are going to come on to ferry ports and infrastructure—are clearly highly dependent on political negotiations. We hear that we might not be voting until the last week of December that we are here. Is that cutting it too fine for you, as a Department, to deliver the contingency arrangements?

Bernadette Kelly

There is other deep contingency planning that we are also looking at as part of our work with colleagues across Government, in terms of civil contingency preparation. Clearly, some things require more time to deliver than others. My colleague, Mr Thompson, has already made it clear that some physical infrastructure around the borders could be delivered within that timeframe. We are working through those plans. I am not in a position to speculate to the Committee at this point about what the go/no-go points are on plans that are still being discussed and have not yet been subject to decisions.

Chair

It is incredible. We have got five months or so to go. The later it goes, the harder it is going to be for you. I think we can all agree with that.

Bernadette Kelly

Yes.

Lucy Chadwick

Yes.

Chair

But you are still sitting in front of us saying that you will be able to deliver on something.

Bernadette Kelly

What I am saying is that we can deliver on the work streams that we have committed to, which are set out in the Report, and over which we have control. What I cannot say to the Committee is that absolutely everything that could need to happen, in terms of contingency preparations, will be in place for 29 March in the event that we leave.

Chair

What are the biggest risks for you?

Bernadette Kelly

Some of the risks we are looking at relate to freight capacity. I might ask my colleague, Ms Chadwick, to say a bit more about that, although obviously we are constrained in what we can say where we are still discussing plans, where decisions have not been taken, and where there are commercial sensitivities.

Chair

Is that why you have asked businesses to sign non-disclosure agreements?

Bernadette Kelly

Actually no. We have worked with the industries in the transport sector quite closely in developing our technical notices. That has required us at times to ask them to sign non-disclosure agreements, because while we are in the process of trying to evolve our advice and policy it is important that we have some confidentiality around that. It is absolutely not about trying to prevent good policy making from happening.

Chair

If it is confidential you probably cannot tell me, but what kind of confidential things are so sensitive that a business that is doing its business cannot talk about?

Bernadette Kelly

One of the things where we used non-disclosure agreements to very helpful effect with the industry was in the preparation of our technical notices—in particular the aviation safety technical notice, which is a very long and technical technical notice. Ms Chadwick knows it in far better detail than I do. In order to ensure that we were addressing the right issues and that we were giving the industry the best advice that we could about the things it needs to prepare for in a no deal world, we needed to bring them into our confidence and share drafts with them. So we did that, but obviously we wanted—

Chair

Sharing the draft of a technical agreement that will help the air industry to operate hardly seems a deeply controversial or commercially sensitive issue. It is just practical day-to-day business. If they are going to have views on it, it is the sort of thing that they would be talking about anyway.

Bernadette Kelly

It is practical day-to-day business, you are quite right. Equally, what we wanted to be able to do with all our technical notices was ensure that they were not in the public domain until we had made sure that they were correct—

Chair

Can we be clear, what was the scope of these non-disclosure agreements? Was it just not to release the draft of a technical agreement or did it go wider—not to reveal any of the conversations or information that they have had from the Government in meetings that they have had with you?

Bernadette Kelly

I think the NDA will have used a standard text.

Chair

So a wide text. A broad text.

Bernadette Kelly

I would need to confirm that for the Committee.

Chair

Could you write to us on that?

Bernadette Kelly

I could write to you on that.

Chair

It is interesting that you are the second permanent secretary in a week who has come and defended non-disclosure agreements. This is not something that the Government have routinely done in the past.

Bernadette Kelly

Actually we have used them in my Department, because we often talk to the sector about matters that are commercially sensitive at the point at which we are trying to develop the best possible policy propositions and advice for Ministers. It is not a very unusual thing to ask for those conversations to be—

Chair

We would like to see a text of the non-disclosure agreements that are being signed.

Bernadette Kelly

I am perfectly happy to provide that.

Chair

And one of the normal ones that you do, and the ones you have been doing since Brexit if there is any difference.

Bernadette Kelly

I would be happy to share some sample texts.

Chair

We should be having an open and honest discussion about this. Businesses do not know what is happening, and non-disclosure agreements mean that there cannot be discussion about things. That is the worry—it has been a gag.

Lucy Chadwick

Some of the issues that we are discussing in those technical notices are actually about what we will then go and negotiate and discuss. There does need to be a space in which we can control that. There is a moment at which we want to go into those discussions and negotiations with the Commission and others. We do not want there to be something that comes out in an uncontrolled manner. Even the technical notices set out things that we can expect to go and negotiate. They are not just informative. They have an information role, and were improved as a result of that, but they also set out very clearly, and we worked through, what some of the positions are that we might want to take. We would not want those to leak out in advance.

Chair

My humble suggestion to you is that if Sir Geoffrey and I and the Committee went to meet some of the people who you are talking to anyway, and we had a conversation about what you might need to do in the case of these Brexit scenarios, we would probably come up with the same information that I suspect the Commission is also aware of. I cannot quite see what anyone could not guess or surmise from normal conversations.

Lucy Chadwick

They have certainly not objected. Indeed, I think they—

Chair

Hang on. Is it not a bit of a David and Goliath position, Ms Chadwick? If you go as the representative of Her Majesty’s Government to talk to a medium-sized business, I think it would be hard for them to say, “Well, I won’t sign it,” and then you say, “Well, I’m sorry then—you can’t be in the room.” You are caught, as the third party, in a hard place. You have to sign.

Lucy Chadwick

These non-disclosure agreements are for multilateral conversations as much as bilateral conversations. For those bilateral conversations, it is important for them commercially to believe that they are retained by us in that way as much as by them. So they cover a range.

Chair

Yes, for the bilateral ones I do understand that there might be something for the other side, but for the multilateral ones perhaps not so much.

Lucy Chadwick

We use them in both ways. In terms of signing up to a non-disclosure agreement, it allows us to use them in both ways and they are important to them in that context.

Chair

We will look forward to getting those examples on that. I am going to bring in Lee Rowley now about some of the projects that the Report highlighted.

Lee Rowley

In terms of the 28 projects that you are doing, which are on page 25 of the Report from July, can you confirm which ones are red, which are amber and which are green?

Bernadette Kelly

We talk about 17 work streams.

Lee Rowley

I am asking about the 28 projects, not the 17 work streams.

Lucy Chadwick

In terms of the 28, in our own reporting at this stage, I am sorry—I will have to check. I will give you a statement if you don’t mind, then I’ll fiddle with my pieces of paper and make sure I am talking about the 17 or the 28. My apologies. At the moment we have three that we would rate with a red or an amber/red assessment against them at this stage in terms of where they are. Those are not ones that will be a surprise. We have touched on driving licences and the Post Office contract and what precisely that is and where we are in our discussions around air services agreements. We have not been able to start those bilateral or multilateral discussions yet with either member states or with the Commission. At this stage we have started rail bilateral discussions with our counterparts in France, Belgium and Holland. It is at a very early stage, so we have similarly marked that.

Lee Rowley

Of those three, the two you have just described are effectively stopped due to policy questions: my choice of words rather than yours, but that is effectively the case. And the first one is down to the level of change that is required. The letter that you sent a few days ago indicated a rather rosy view of the Post Office.

Lucy Chadwick

No, it is a statement of where it is. This is an awful lot of work to work through. The Post Office contract is a critical feature of our making sure that individuals can go and access international driving permits. That is a critical step in the signing of that contract and is therefore important. At the moment it has not been signed. It is not necessarily delayed, but it is critical in terms of the delivery of this project. As a result of that, we mark it in that way and make sure we are confidently asking ourselves the right questions.

Lee Rowley

Does it need to be signed in order to hit the target?

Bernadette Kelly

Yes, it does. We need a contract variation in order for the Post Office to put in place the necessary systems. It needs to print IDPs, train staff—

Chair

We will come on to the detail later.

Bernadette Kelly

We expect to sign that contract variation by the end of this month, and I expect that deadline to be met. At that point this work stream will no longer be featured as red because, at the signing of the contract, we will have a higher level of confidence around the delivery by March 2019.

Lee Rowley

You have confirmed to me that the Post Office contract is currently red. The air service agreement and the rail bilateral discussions are amber or are red?

Lucy Chadwick

At the moment those are marked as red.

Lee Rowley

Okay, so 25 are green and three are red.

Lucy Chadwick

I am talking about 17. I said I would come back to you. I am talking about the 17. I am sorry. I couldn’t give you the same level on the 28, but I am very happy to do so after the meeting, if that is okay. My apologies.

Lee Rowley

Perhaps you could write. If you can’t give me the precise information, can you tell me whether any are trending from green to amber or amber to red?

Lucy Chadwick

In terms of the overall programme, if you are asking whether our confidence is increasing or decreasing, I would say our confidence in the programme at the moment is somewhat decreasing because of the dependency on those bilaterals. Given where we are, to go back to your question, Madam Chairman, and the number of months left to go, that increasingly now will become something of a cause for concern for us if we do not start it, so I would describe it as trending upwards.

Lee Rowley

That is on a programme level rather than individual contracts.

Lucy Chadwick

Yes, and I would even say some of those individual ones. Because of the nature of those important bilateral discussions, that will continue to be an area of growing concern to us.

Lee Rowley

How many of the projects, the 28—

Lucy Chadwick

I am going to keep talking about the 17 if that’s okay.

Lee Rowley

I am going to keep asking questions about the 28. I expect answers on the 28 or you need to write to me on them. How many of the 28 have seen any form of slippage from the original baseline?

Lucy Chadwick

As the NAO itself saw when it came in and looked at our programme, there are a number of dates that have moved and changed. That is as a result of us actually developing the necessary detailed plans. If you looked at those, they would show a change in date. Many of these we did not regard as a slippage. It is quite a subtle and important difference. We set out some plans here at a very high level, at quite high speed, and we have had to make sure, as we have refined and understood those, that we genuinely understand the real timescales. I would say now that we have a plan that is actually in that state and at this stage we don’t have any that I would regard as significantly slipping.

Lee Rowley

How many of the 28 have run out of contingency?

Lucy Chadwick

That is an important question. I would say they are all fairly hard on—you know, there is not much wiggle room in the delivery of them.

Lee Rowley

How many of the 28 have delivered?

Lucy Chadwick

None at this stage is complete. I’m going to keep on answering on the 17, if you don’t mind.

Chair

Write to us.

Lucy Chadwick

I can give you a bit on the basis of the 17: none is. On the 28, I believe there are some.

Lee Rowley

I would like specific answers to all those questions on the 28, with references to specific numbers, please. Two more questions. First, you referred previously to 17 work streams. The NAO Report refers to 18. Can you confirm that the 18th project is the border transport infrastructure work stream, please?

Lucy Chadwick

My apologies—do you mind just repeating that for me? I was momentarily distracted.

Lee Rowley

Sure. You referred to 17 work streams a moment ago. The NAO Report refers to 18. Can you confirm the one that is apparently missing?

Lucy Chadwick

I don’t know; Bernadette does. There is one that has got compressed, which is associated with some Driver and Vehicle Standards Agency work, isn’t there?

Bernadette Kelly

I believe that is correct. I think we were showing at one point work to relocate DVSA away from ports, as a separate work stream from borders infrastructure. I believe we have now conflated those, but again we can confirm that in writing.

Lee Rowley

Given our discussions on Crossrail a few moments ago, how can I have confidence in a QA and overall programme position, given the issues we see with HS2 and Crossrail?

Lucy Chadwick

We are certainly doing a thorough assurance on all of these. We’re using—

Lee Rowley

Does it follow the same methodology as Crossrail?

Lucy Chadwick

I can only kind of use the lines of defence that are available to us. We are using our Government internal auditors to help us with that. We also use the IPA, in terms of the cross-governmental capability and the Government Digital Service. Those are important to us in terms of independent reviews by them, and we have been making sure that critical streams do not happen just once but are ongoing. I don’t think you can ever say that assurance is entirely perfect, but it actually gives us a great deal of insight and has provided us with some very important corrective insights, which we have taken and acted upon.

Bernadette Kelly

I would also observe that these are work streams that we are delivering directly ourselves, or through our Executive agencies. They are not work streams that we are delivering through an arm’s length or delivery partner. In almost all cases, I think that is certainly true. This an in-house programme of work, which we are overseeing through a portfolio direction board, which Ms Chadwick chairs in-house.

Lee Rowley

Last question. The variable that we cannot influence is time in this discussion; all the other variables can be influenced in an ideal, mythical world that I’m putting in front of you. What variable changes do you need? Do you need more resources? More clarity? More political decisions? What are the things that you need to give me the guarantee that you can hit these by March of next year?

Lucy Chadwick

In terms of the political context—what do we need in terms of those bilaterals—I don’t think that you, as Members of Parliament in the UK, can give me that, but that is important in terms of those bilateral discussions. That is an important context in which to make this deliverable. We continue to be as nimble as we can be about what we are asking of ourselves. I think we have got that now to a sensible hard core, but inevitably there are always choices that we will still have within that context, in terms of what I would call scope. But I think we are satisfied at this stage that we do not need to make any of those choices. So the biggest thing I could get is a context, or a shift in the context, in which to have some of those discussions with other member states and with the Commission.

Chair

You have obviously got a lot to write to us about—

Lucy Chadwick

My apologies: I hadn’t swotted on 28.

Chair

We are now going to move on to Chris Davies—we welcome him to his first Committee sitting—and to some of the issues around the infrastructure challenges that we are facing.

Chris Davies

My first questions really relate to ports. I understand that the Secretary of State mentioned a few months ago that there would be no checks at Dover, but rumours abound from yesterday’s Cabinet meeting that that may have changed. We love rumours in this place. Have you had a meeting with the Secretary of State and can you update us on where we are with checks on the borders?

Bernadette Kelly

I think the point that my Secretary of State would have been referring to is that we will not have checks on the UK side of the border. We cannot know what the French may choose to do on their side of the border. That is a key determinant of what then happens in terms of flows of traffic and freight through the ports. My Secretary of State will not have made any statements about that, because he fully appreciates that it is not within his remit to know how the French will choose to operate on their side.

Chris Davies

Yesterday, the Chinese opened a bridge connecting Hong Kong to Macau. We tend to build motorways in this country that are going to be used as carparks and lorry parks, rather than for connectivity. Do you regret that Kent is going to turn into a major carpark, rather than a motorway?

Bernadette Kelly

Operation Brock is our interim arrangement to deal with potential disruption around the port, which could happen with or without us exiting the EU, as it has done in the past. We are implementing and executing a project to ensure that there are holding areas for road haulage, if needed, while at the same time ensuring that that traffic can continue to flow. The whole purpose of Operation Brock is to maintain the free flow of traffic.

Chris Davies

We understand that you had a trial on the M26 in which you closed it overnight. My erstwhile colleague, the hon. Member for Tonbridge and Malling, was not informed. Was that deliberate?

Bernadette Kelly

What I believe happened there was that Highways England executed some overnight closures to carry out some surveying work. Highways England would regard that as a normal thing for it to do—it does this sort of thing regularly on the strategic road network, where it needs to carry out survey work. On this occasion, I think there could have been better handling of the communication with local stakeholders, including Kent MPs, and we have made that clear to Highways England.

Chair

Are you apologising to the people of Kent and the Kent MPs?

Bernadette Kelly

I think that Highways England will have received a clear message that it is absolutely essential that it communicates in advance where road closures are planned, particularly given the particular sensitivity and profile of work on Operation Brock.

Chris Davies

On what date did you start planning for a no deal situation?

Bernadette Kelly

I think I would struggle to give you a particular date. As a Department, we have been working—just like all Government Departments—on our no deal planning for a period of time. Over the summer, we made sure that that work and preparation is as good as it needs to be. We have stepped that work up. I think we have acted in accordance with the rest of Government in terms of establishing and accelerating our no deal planning, but I would struggle to pick a date off the calendar.

Lucy Chadwick

I can’t remember a point at which we weren’t doing it.

Chair

Presumably from the day after the referendum.