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Tue, 27 October 2020

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HS2 costs could soar by another 20% to £106bn, warns official review

HS2 costs could soar by another 20% to £106bn, warns official review
2 min read

The cost of HS2 could soar to £106bn, according to a government-comissioned review into the project.

The unpublished report, seen by the Financial Times, warns there is "considerable risk" the rail project could see its costs rise a further 20% beyond the estimated £81-88bn figure set out last year.

Initially, the high-speed rail project was meant to cost around £56bn, until an internal "stock take" review by chairman Allan Cook in September found spiralling costs would lead to a £30bn overspend.

But the latest government-ordered report, led by former HS2 chairman Doug Oakervee, found the total spend on the project could hit £106bn and see years of delays beyond the original deadline.

Mr Oakervee said "on balance" the Government should continue with the first phase of the project, which will link London's Euston Station and Birmingham, but called for a six-month pause on the second phase from the West Midlands to Manchester and Leeds to review whether other rail services could complete the route instead.

His review also warned that "significant progress" was needed to ensure the first phase of construction of the line to Birmingham, set to begin in the spring, would go ahead on time.

And he warned "further work" was needed to examine the potential for regional growth from the project, saying it was "hard" to estimate the potential economic benefits would come from its completion.

He wrote: "The review has not seen convincing evidence that HS2 Ltd, especially the phase one construction team, have the level of control and management of the construction normally associated with major projects."

The lukewarm report comes amid growing anger among some new Tory MPs over the project, with a group of around 15 MPs set to meet Boris Johnson in the coming days to set out their concerns.

Mr Johnson is expected to make a decision soon on the future of the project after he slammed the "spiralling costs" during his leadership campaign.

But the Prime Minister, who vowed during the election campaign to fix UK's "lopsided" economy, has raised concerns about scrapping the project, saying: "I worry about cancelling a big national project of that scale without anything else to replace it."

Responding to the report, a spokesperson for the Department for Transport, said: "A draft of the Oakervee Report was deliver shortly before Christmas. The Transport Secretary, Chancellor and Prime Minister will take a final decision on HS2 shortly."


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