HS2 cost soars to £66.6bn, company chairman admits

The executive chair of HS2 Ltd said the cost has almost doubled from an initial estimate under Gordon Brown’s government that it would cost just £37.5bn

Building HS2 between London and Birmingham alone will cost as much as £66.6bn, almost twice the original estimate for the entire project, according to Sir Jon Thompson, the executive chair of HS2 Ltd.

Sir Jon admitted on Wednesday that the cost has soared from an initial estimate under Gordon Brown’s government that it would cost just £37.5bn (in 2009 prices). That was under the original plans for the project, which included connections to Leeds and Manchester that have since been scrapped.

On Wednesday, Sir Jon said the estimated cost for Phase 1, from London to Birmingham, is between £49bn and £56.6bn at 2019 prices. But adjusting the range for current prices involves “adding somewhere between £8bn and £10bn”, he told a committee of MPs.

Rishi Sunak used his party conference speech last year to cancel HS2 north of Birmingham (PA)

Sir Jon said reasons for the cost increase include original budgets being too low, changes to the scope of the project, poor delivery and inflation. He went on: “It is the government’s long-standing policy that infrastructure estimates are only updated at spending review points, that’s my understanding of it.” (Spending reviews see the Treasury periodically looking at the efficacy of past expenditure and setting future limits).

“So that’s why we’re still working to 2019 prices and the whole conversation [is] about 2019 – which is, to be frank with you, an administrative burden of some significance in the organisation.”

Labour blamed the prime minister for “allowing costs to soar and public money to go down the drain”.

Shadow transport secretary Louise Haigh said: “This is a direct result of Rishi Sunak’s weak leadership and mismanagement of HS2.

“This is a government with no direction, no plan and no regard for taxpayers’ money.”

It comes four months after The Independent first revealed there had been talks between Rishi Sunak and Jeremy Hunt to scrap the second phase of the high-speed rail project.

The prime minister later confirmed that the section connecting Birmingham to Manchester would be scrapped, prompting outrage from Northern business chiefs and political leaders. Mr Sunak promised the government would reinvest £36bn from the high-speed rail project in a series of road and rail schemes across the country.

Sir Jon also confirmed that HS2 trains now running between Birmingham and Manchester will be slower than trains currently being operated by Avanti on the line. Since HS2’s northern leg was scrapped, the high-speed trains running from London will continue their journey to the North, but more slowly, so they can use the existing lines. Extraordinarily, because of a lesser ability to tilt at the bends on the line, the HS2 trains will actually be slower than the Pendolinos currently running on the tracks.

They will also feature fewer seats, he confirmed.

Plans to scrap HS2 in the North, revealed by The Independent , sparked a backlash, with critics saying it will further entrench the North-South divide (PA)

Sir Jon went on to tell MPs there are four reasons why the cost of HS2 is more than the initial estimate. “The cost estimate in the first place, and the budget that was set in the first place were too low in my opinion,” he said. “There have been some changes to the scope … there definitely has been some poor delivery on our point … and fourthly, there’s inflation.”

Sir Jon added: “It’s worth remembering that between 2010 when prime minister Gordon Brown launched HS2 and 2019 when the current budget was set, the scope of HS2 has been changed significantly by a whole series of ministers.”

A spokesman for the Department for Transport said: “This Government is bearing down on the cost of HS2 and reviewing the scope of Phase One to deliver the line at the lowest reasonable price for taxpayers.

“We have already taken decisive action by cancelling Phase Two of HS2, reinvesting every penny of the £36bn saved in local transport projects that will benefit more people in more places, more quickly.”