The cost of finishing HS2 between Birmingham Curzon Street and Old Oak Common has soared to £81 bn (at 2019 prices) and the work will not be completed until 2036 at the earliest with 2039 being more likely.. That’s the information given to ministers in a report from the new head of HS2 Ltd, Mark Wild from his preliminary assessment of the scheme after taking over the job as chief executive in December. Wild’s appointment, announced in May last year was delayed because of commitments to his previous employer and this has added to the delay and uncertainty over the scheme. Now he has got to work, his findings are a shock to ministers.
Given that inflation since 2019 is at least 25 per cent – and more in the construction business – This means that the cost of this 135 mile section will be at least £100bn. This is thought not to include the cost of the trains, Euston station and or signalling.
When presented with these figures, HS2 Ltd responded that preliminary reports were being undertaken but no definite information had yet been produced. A spokesman said: “Mark Wild, our Chief Executive, has been clear that HS2 faces serious cost and schedule challenges. He is now undertaking a comprehensive review which will report to government in due course and lead to a full reset of the company and project’.
However, Rail understands that its Freedom of Information request and enquiries to the press office to confirm these figures immediately triggered a widespread leak enquiry which involved the Treasury as well as the Department for Transport. The revelation of the costs of the project have put further pressure on the Department’s Permanent Secretary Bernadette Kelly who has already announced she is leaving this summer after eight years in the post. When Kelly faced questions at the Commons Transport Committee in November last year, she was unable to set out the cost of the scheme, nor say when it would be finished. At the time she said: ‘We are still working through… exactly what phase 1 and completing delivery of that is going to cost. We are also working through exactly what the benefits of phase 1 will be, based on this Government’s plans for scope.’ This is thought to have infuriated ministers who have been appalled to discover the lack of proper oversight of what is Europe’s biggest infrastructure project. The lack of clear information has meant that decisions over numerous aspects of the scheme cannot be made.
In 2018 Wild took over the task of finishing Crossrail soon after it was revealed that it would not be completed by the promised date of December that year. He carried out a similar assessment of the scheme in early 2019 and refused to be held to a finishing date until he was confident it could be achieved. Eventually the scheme was opened more than three years late in May 2022 and £3bn – or around 20 per cent – overbudget, but HS2 is in a far worse state. At the root of the problem is that it has had no clear financial oversight from the outset as contracts have been let on a cost plus basis which essentially means that contractors are not restricted to a clear budget. His report is an attempt to establish the likely ultimate cost to allow ministers to proceed with much needed decisions on how to complete the scheme.
Various options are being considered, including postponing key aspects of the work, such as the construction of the Interchange station near Birmingham airport where construction work is not due to start until next year. A decision over what to do about the scheme north of Birmingham also has to be made quickly because of the need to complete land purchases before the time limit on the legislation runs out next year, but there is no budget available as the Treasury is extremely reluctant to allocate more funds to the project.
The future of the tunnel boring machines at Old Oak Common, which are due to bore the tunnels through to Euston is also being considered. The machines are in place ready to go, but there is no currently no available funding to pay for their progress towards Euston. There is enormous frustration both in the Department and in HS2 Ltd about the lack of clear direction for the future of the project.
Full cancellation of the whole project is not reckoned to be a possibility because of the enormous amount of work that has been already undertaken and the sheer embarrassment of leaving