HS2 rail link cost estimated to increase again to £57bn
The cost of the HS2 rail link from London to Birmingham has jumped again.
The rail minister, Huw Merriman, said HS2’s management had increased the upper estimate for the project to £57bn in 2019 prices.
The latest estimate comes after Rishi Sunak cancelled part of the second phase of the railway from Birmingham to Manchester, citing the spiralling costs of the project and a post-pandemic fall in rail passenger numbers.
HS2 Ltd, the company building the railway, has now put the cost of building the first stage between £49bn to £57bn.
The Department of Transport said as recently as this summer that the budget was £45bn.
The fresh costs row comes as more than 1,300 workers at Alstom’s train factory in Derby have been told their jobs are at risk because of a lack of new orders. French engineering firm Alstom said the plant had “no confirmed workload beyond the first quarter of 2024”, so it had started consultations over redundancies.
Alstom has been hit by uncertainty over an order for new trains for HS2, after Mr Sunak scrapped the northern leg of the high-speed line. The trains were due to be built in Derby and at a Hitachi factory in Newton Aycliffe, County Durham from 2026.
The rail minister said the Government “disagrees” with the latest cost projections, pointing out that they were drawn up before the decision to scrap the second stage of the project as well as drastically downgrade the station plans for Euston station.
]Mr Merriman said he has asked Sir Jon Thompson, the executive chair of HS2, to update the company’s estimate considering the revised scope of phase one of the project, and to explain why the increases “have been so significant”.
HS2 Ltd blames increased delivery productivity, delays obtaining consent for the work and the impact of the pandemic on supply chains as well as Russia’s invasion of Ukraine for delays and ballooning costs.
The Transport Secretary, Mark Harper, told the parliamentary Transport Select Committee that he was very confident HS2 would come to the centre of the capital rather than stop at Old Oak Common station in north-east London.
He said there had already been “significant interest” from the private sector about transforming the “Euston quarter”, but acknowledged that they would have to look again if no private developers came forward.
Mr Harper said that recent reports that HS2 Ltd had previously withheld accurate cost figures from his department had been previously examined by the National Audit Office which decided there were nothing in the allegations.
He said other allegations were being looked at by HS2. “Obviously because there’s a live investigation, it wouldn’t be right for me to comment on those specifically, except to say if it is found that things have gone on that require a response from the Government, then there will absolutely be one and we will take whatever steps that we need to.”
Mr Harper said the decision to stop the rail line north of Birmingham was taken because of the growing cost uncertainties but also because of how the pandemic had impacted on rail travel.
Ministers questioned whether rail capacity would be reached on the line between Birmingham and Manchester because passenger numbers had not rebounded as had been previously assumed. Full capacity would be reached sooner on lines between Birmingham and London, he said.
“People may not agree with that assessment,” he said, “but that was ours and politics involves taking hard decisions and we made ours.”
HS2 trains would join the existing West Coast mainline fast tracks at Handsacre junction in Staffordshire before continuing their journey on to Manchester and Scotland.
Treasury experts have twice “red-flagged” the cost estimates the Transport Select Committee heard earlier this week. Officials from the Treasury’s Infrastructure and Projects Authority told MPs they believed the true cost of the project had been underestimated from its outset.
