The company building the high-speed rail line between London and Birmingham is investigating claims that one of its labour suppliers on the project charged overinflated rates for staff.
HS2 Ltd launched an investigation into a subcontractor providing workers to build the West Midlands section of the line, which has been beset with delays and cost overruns, amid allegations about its billing practices.
It said Danny Sullivan Group remained suspended from new contracts while the investigation continued.
The Department for Transport (DfT) said it would ensure any claims of wrongdoing in HS2’s supply chain were thoroughly investigated.
HS2’s investigation, which began earlier this year, was first reported by the i website. According to the claims, whistleblowers alleged that self-employed staff were being wrongly billed as salaried employees, leading to overpayments.
A spokesperson for Danny Sullivan Group has said it takes the allegations “extremely seriously” and is co-operating fully with the investigation.
HS2 also looked into a second firm, which had its suspension lifted “following a period of remediation” and remains under enhanced monitoring.
The two firms being looked at were providing workers to Balfour Beatty Vinci (BBV), one of HS2’s main contractors.
“HS2 Ltd treats all whistleblower allegations seriously and we are aware of the claims made in relation to labour suppliers on part of the route,” said a spokesperson for the company.
“An investigation was launched earlier this year into a number of different allegations and our contractor BBV has implemented additional monitoring and controls.”
A DfT spokesperson said the government and HS2 “take all whistleblower allegations extremely seriously and have a zero-tolerance attitude towards fraud, bribery and corruption”.
The HS2 project was announced in 2009 with the aim of improving rail links between the north and south of England, and boosting the economy. The project was given the go-ahead in 2012.
However, costs have since ballooned even as the ambitions for the high-speed network have been scaled back. It was originally intended to include a second phase of two rail branches to Leeds and Manchester, but the former leg was dropped in 2021 while the then Conservative government axed the latter in 2023, announcing the rail line would terminate at Birmingham.
Parliament’s spending watchdog, the Public Accounts Committee (PAC), said in February that it was a “casebook example of how not to run a major project”.
In November 2023, the government estimated the cost at £45bn to £54bn, with HS2 Ltd projecting a £54bn- £66bn bill. Both figures are based on 2019 prices. Subsequent rapid inflation means the total bill is approaching £80bn, according to the PAC.
However, there have been reports that the total cost could end up at £100bn.
The government ended speculation over the eventual southern terminus by confirming that the service would indeed reach central London, rather than stopping at Old Oak Common in the capital’s north-western suburbs, but the PAC said the DfT still did not have a plan for the work at Euston.
According to HS2 Ltd, 75% of the tunnelling on the London-to-Birmingham line has been completed.
Separately, in September, the mayors of Greater Manchester and the West Midlands revealed plans for a new rail line linking their regions that would rely on private investment and cost less than the scrapped second phase of HS2.
