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HS2 forced to settle with Spanish train maker after row over £2.8bn contract

·2 min read
HS2
HS2

Ministers are refusing to disclose how much a row over a HS2 contract has cost taxpayers after striking an out of court settlement with a spurned Spanish train manufacturer.

Madrid-listed Talgo agreed a “mutual resolution” with the Government following a lawsuit against the state-funded line when it failed to win a £2.8bn contract to build 54 trains. The Department for Transport is refusing to reveal the terms of the deal or to say how much the dispute cost it in legal fees.

Talgo kicked off legal proceedings in March after failing to make it through to the next round of bidding in January.

The company was one of five train makers initially shortlisted for work on the line from London to the North ofg England, and had planned to build the trains at a new factory in Longannet, Scotland. The remaining bidders are Siemens, Spain’s CAF, a consortium of Hitachi and Bombardier and French firm Alstom.

Opposition to HS2 has been growing in recent months. Critics argue that the pandemic is triggering a long-term drop in demand for rail travel as remote working takes off, and that this weakens arguments for expanding capacity with the new route.

Meanwhile, fears are growing that HS2’s costs are already out of control. The official Government estimate for building HS2 in its entirety is £98bn. HS2 has suffered cost rises of £1.7bn over the last year.

Frustration in Chesham and Amersham played a key role in the Liberal Democrats winning a by-election against the Conservatives earlier this month.

Dame Meg Hillier, a Labour MP and chairman of the Public Accounts Committee, said that she is in talks with the Department for Transport over clearer reporting of HS2's finances.

Authorities have been forced to pay out millions of pounds in taxpayer cash following a number of bungled procurement processes.

In 2019, the Department for Transport paid £33m to French-listed Getlink, the owner of the Channel Tunnel, to settle a legal dispute over “secretive” no-deal Brexit ferry contracts.

Separately, Sadiq Khan, the London mayor and chairman of Transport for London, struck a deal to pay more than £10m to a consortium of builders following long-running legal row over a flagship road tunnel under the Thames.

A spokesman for HS2 said: “Following the mutual resolution of proceedings between High Speed Two (HS2) Limited and Patentes Talgo S.L, HS2 is grateful for Talgo's participation in the rolling stock procurement and wishes Talgo all the best with its future endeavours, both in the UK and internationally.

“HS2 looks forward to announcing its contract award decision for Britain’s new high speed trains in due course."