The Department for Transport is still facing a “high level of uncertainty” over the costs of HS2 more than a year into the latest reset of the troubled rail project, the National Audit Office has warned.
A new report on the late-running and massively over-budget programme says the department and delivery company HS2 Ltd are “taking reasonable steps” to revise and assure costs.
But the public spending watchdog says that even figures floated by DfT last month, which indicated an £87.7bn-£102.7 price range for the London-to-Birmingham rail line, require more work. HS2 Ltd’s current stated aim is to deliver the programme at £93.2bn.
“These estimates, announced by DfT in May 2026, still have a high level of uncertainty,” the NAO says. “HS2 Ltd is working towards a fully assured and endorsed revised baseline to monitor delivery of the programme. It is aiming for an initial version by autumn 2026 and then a final version by spring 2027.
“HS2 Ltd’s work between now and spring 2027 will include validating assumptions, testing the quality of the underlying data (including with its contractors) and identifying and addressing any gaps or inconsistencies in the work done. It will also focus on how the individual projects integrate together so HS2 Ltd can identify and manage all interdependencies.”
As of March, the reset alone had cost £101m. It is expected to cost a further £52m.
Last month’s DfT announcement on the reset plans included the department’s decision to reduce the planned top speed of HS2 trains between London and Birmingham from 224mph to 199mph. Transport secretary Heidi Alexander said the speed reduction would save between £1bn and £2.5bn over the life of the delivery programme, by reducing testing and commissioning time.
Yesterday’s NAO report says that while the downgrade will avoid the risk that the original planned top speeds – which would have been Europe’s fastest – prove infeasible, there will also be a longer-term reduction in benefits. According to the NAO, slower HS2 train journeys will cause a “longer-term reduction in benefits of around £1.3bn”.
Other financial uncertainties still facing HS2 include the redevelopment of London’s Euston Station, which will eventually be the line’s southern terminus. Last month, DfT was clear that initial HS2 services will only run between Birmingham Curzon Street and Old Oak Common in west London, and may not commence until 2039.
The department said HS2 trains may not run into Euston until “late 2043”. That would be 17 years later than HS2 services were originally expected to start running between central London and Birmingham.
The NAO notes that DfT has now set up a new body, Euston Delivery Company Ltd, to oversee the Euston programme. However, it also notes that a permanent chief executive has yet to be appointed.
The report says the estimated cost to DfT of redeveloping Euston and delivering the new tunnels for HS2 trains that will be required to connect with Old Oak Common is currently £8bn, excluding any private sector contribution from associated development work. The NAO said the Euston project meets most of the government’s requirements for being considered as a “mega project”, but that it is up to ministers to make a final decision.
NAO head Gareth Davies said that despite recent progress, there is still a significant amount of work to do on the reset.
“After facing historic difficulties, including significant cost increases and delays to delivery, HS2 Ltd and DfT are taking a considered approach so far in their latest reset to the HS2 programme,” he said.
“However, these previous issues highlight the importance of DfT and HS2 Ltd getting it right this time to ensure the future success of the programme. Establishing a fully robust estimate of cost and schedule, completing commercial negotiations and getting the right capabilities in place is necessary before they can complete the reset.”
Among its recommendations, the NAO said the department and HS2 Ltd should review the reset timetable in the autumn to assess whether it remains achievable, and “maintain a focus on cost, schedule and commercial management”.
The watchdog also urges DfT and HS2 Ltd to “revisit” governance arrangements as the programme moves into the next stages of work to check they remain fit for purpose.
A DfT spokesperson said: “Following years of mismanagement this government has taken decisive action to reset HS2 and ensure the safe delivery of the line between Birmingham and London at the lowest reasonable cost. The reset is driving faster, more efficient construction on-the-ground, with six major construction milestones reached ahead of schedule last year.
“HS2 is already contributing to the economy, driving £20bn of economic growth in the West Midlands and west London and sustaining 31,000 jobs across the country.
“Once delivered we expect seats on all peak services from Euston to all destinations to increase by 45%, capacity to free up on the West Coast Main Line, and the reliability of services to improve.”