DfT reveals £22bn budget increase and seven-year delay for HS2

Written by Nicholas Mairs and Richard Johnstone on 4 September 2019 in News
News

Bernadette Kelly writes to NAO to provide departmental support for its inquiry into scheme as transport sec sets out cost hikes

Photo: Grimshaw Architects/PA

The High Speed 2 rail line will open five years later than planned, according to transport secretary Grant Shapps, and its budget will need to increase from £56bn to £78bn.

In a written statement to MPs, published just weeks after he launched an independent probe into whether the high speed rail programme should proceed, Shapps said that Allan Cook, chairman of the delivery company HS2 Ltd, which is owned by the department, “does not believe that the current scheme design can be delivered within the budget of £55.7bn, set in 2015 prices”.

He added: “Instead he estimates that the current scheme requires a total budget - including contingency - in the range of £72 to £78bn, again in 2015 prices.


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“Regarding schedule, the chairman does not believe the current schedule of 2026 for initial services on phase 1 is realistic. In line with lessons from other major transport infrastructure projects, his advice proposes a range of dates for the start of service.”

The opening of the first stage of the line, between London and the West Midlands, is now expected to be between 2028 to 2031, according to Shapps. The opening will be staged, starting with initial services between London Old Oak Common and Birmingham Curzon Street, followed by services to and from London Euston later.

Phase 2a - from West Midlands to Crewe -  could be delivered to the same timetable as phase 1, Shapps said, while 2b - the full high-speed line to Manchester and Leeds - could open between 2035 and 2040.

Shapps said that, based on 2019 prices, the high speed line could end up costing between £81bn and £88bn - against a budget of £62bn.

The government announced last month that former HS2 chairman Douglas Oakervee will examine the “benefits and impacts” as well as the “deliverability and scope” of the scheme before reporting back to ministers in the autumn.

Shapps said then: “The prime minister has been clear that transport infrastructure has the potential to drive economic growth, redistribute opportunity and support towns and cities across the UK.

“But that investments must be subject to continuous assessment of their costs and benefits.”

Shapps said the review will report in the autumn, and HS2 Ltd will continue the current preparatory works for the project in order to ensure it is “ready to proceed without further delay for the main construction stage of phase 1 in the event that the government chooses to continue”, Shapps added.

“HS2 is the single largest project of this government. One important aspect of the panel’s work is to consider whether both the costs, and the benefits, of the scheme have been correctly identified,” he added yesterday.

“HS2’s business case has been founded on increasing capacity on our constrained rail network, improving connectivity, and stimulating economic growth and regeneration. The current budget was established in 2013 and later adjusted to 2015 prices. Since that time, significant concerns have been raised.

"There is no future in obscuring the true costs of a large infrastructure project – as well as the potential benefits.”

He added that DfT permanent secretary Bernadette Kelly had also written to the National Audit Office to offer the department’s support for their inquiry into the project’s cost and schedule pressures and the steps taken in response.

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Nicholas Mairs and Richard Johnstone
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Nicholas Mairs is a news reporter for PoliticsHome, where this story first appeared. He tweets @Nicholas_Mairs

Richard Johnstone is CSW's deputy and online editor and tweets as @CSW_DepEd

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