Hunt suggests HS2 costs ‘out of control’ but says no decision made on cuts

It comes after The Independent revealed ministers are considering scrapping the Birmingham to Manchester leg in a bid to save £35 billion

Chancellor Jeremy Hunt said HS2’s costs were overrunning (Jordan Pettitt/PA) (PA Wire)

The Chancellor has admitted the costs involved with building HS2 are “getting totally out of control” as he refused to rule out that the project could be scaled back or cancelled.

Jeremy Hunt said the government had not yet made a decision on the future of the high-speed rail route following reports that he and prime minister Rishi Sunak are weighing up making drastic cuts due to the project’s ballooning bill.

It comes after <em>The Independent</em> revealed ministers are considering scrapping the Birmingham to Manchester leg in a bid to save £35 billion, despite £2.3 billion having already been ploughed into stage two of the national line.

Mr Sunak said he would not “speculate” on the suggestion that more cuts could be made to HS2 – with the Leeds terminus scrapped in 2021 – when quizzed by journalists after a speech on net zero in Downing Street on Wednesday.

Mr Hunt, who is currently on the west coast of the US on government business, also declined to be drawn on the matter during an interview with LBC’s Tonight With Andrew Marr programme on Thursday.

Asked if he could commit to the Manchester leg of HS2 being built, Mr Hunt said: “I’m not going to comment on discussions that are happening at the moment because, as Chancellor, you would expect me to be having discussions with the prime minister when major infrastructure projects overrun in their costs.

“And that is what we are facing with HS2.”

But proposals to axe the second phase of HS2, which The Independent revealed were given the codename “Project Redwood”, have piled pressure on Mr Sunak and Mr Hunt to commit to delivering the project in full.

The plans could now be reconsidered following furious reaction from northern mayors, leaders and Tory MPs. A source close to the discussions said the pair had got “cold feet” after the furious reaction – with northern mayors, business leaders and Tory MPs warning that it would cost the party votes at the general election.

The Independent revealed ministers are considering stopping HS2 at Birmingham due to ballooning costs (HS2/PA) (PA Media)

Told MPs in so-called “red wall” constituencies — seats the Tories took in Labour’s traditional heartlands across the north of England and parts of the Midlands at the 2019 election — were upset at the speculation, with the Chancellor saying he understood their concerns.

But he added: “They will also be worried if we have an infrastructure project where the costs are getting totally out of control.

“And that is why you would expect me as Chancellor to be having discussions.

“But let me say to you now, we haven’t made any decisions on this.

“We are looking at all the options. But we do need to find a way of delivering infrastructure projects that doesn’t cost taxpayers billions and billions of pounds.”

The planned railway is intended to link London, the Midlands and the North of England but has been plagued by delays and rising costs, with calls from Tory MPs for the entire project to be scrapped.

A budget of £55.7 billion for the whole of HS2 was set in 2015.

But the target cost, excluding the eastern leg of Phase 2b from the West Midlands to the East Midlands, has ballooned to between £53 billion and £71 billion in 2019 prices.

Ministers have already moved to pause parts of the project and even axed sections in the north.

The eastern leg to Leeds was binned two years ago and it was confirmed in March that construction between Birmingham and Crewe would be delayed by two years and that services may not enter central London until the 2040s.

Transport Secretary Mark Harper announced that work at Euston would be paused for two years as costs were forecast to reach £4.8 billion compared with an initial budget of £2.6 billion.

The pause means Old Oak Common, in the capital’s western suburbs, will be the railway’s only London station when services to and from Birmingham Curzon Street begin between 2029 and 2033.

Passengers travelling into central London will need to take Elizabeth line services to continue their journey into the heart of the capital.

The HS2 route (HS2)

George Osborne, a predecessor of Mr Hunt in the Treasury and a proponent of the so-called Northern Powerhouse while in government, said the government would be doing the “easy thing” if it stops HS2 at Birmingham.

The former Tory chancellor told an episode of Political Currency, a podcast he co-hosts with former Labour minister Ed Balls, that any trimming of the line by the prime minister would be a “big blow” to the levelling-up agenda.

Mr Osborne said there was a “big internal row” in the party about whether the Manchester route should be junked.

“I think it’ll be hard to claim you’re going to take the kind of difficult decisions for the long term if you cancel the long-term plan to build a high speed rail line that has had the support of administrations, both Labour and Conservative, over the last 15 years and go for the easy thing of caving into the lobbies who don’t want it built,” he added.

He said similar rows over budgets had occurred with other major projects, including the Channel Tunnel, the M25 and the Elizabeth line — which Mr Osborne said he was often encouraged to ditch as costs soared — but that the consensus changed after they were delivered.

“There are always problems with these projects, they are huge,” Mr Osborne said. “But when they are done, people say ‘Can you imagine a world without them?’.”

Labour has accused the Tories of a “great rail betrayal” following speculation that the Manchester leg could fail to materialise.

But party leader Sir Keir Starmer this week declined to commit to building HS2 in full if Mr Sunak does abandon the North West route, despite its national policy forum document — expected to form the backbone of its election manifesto — saying the party would do so.