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HS2 first phase total cost could be ‘many billions’ above estimate – report

A document presented to the project’s board also warned that rising inflation is presenting a ‘significant and growing challenge’, it was claimed.

15 October 2022

The Government has insisted works on its major high speed rail line project are “within budget”, despite a claim that the first phase could run to “many billions” more than estimated.

A report presented to the HS2 board by the project’s deputy chair Sir Jon Thompson said it was “very unlikely” that the £40.3 billion target cost for the London to Birmingham section would be met, the Financial Times reported.

Phase One has a target cost of £40.3 billion, but the Government has previously said the “funding envelope” for it is £44.6 billion, which includes a contingency of £4.3 billion.

The leaked document, dated June this year and seen by the newspaper, is also reported to have concluded there was only a 50% chance the extra contingency budget would be enough to cover the cost.

Sir Jon was appointed as a non-executive director of HS2 Ltd in April 2021, and became deputy chair in March this year.

His review is reported to state that the first phase’s total cost was likely to be “many billions more than the reported estimate”.

The Financial Times said Sir Jon’s report also warned that rising inflation is presenting a “significant and growing challenge” and that continuing to record costs in 2019 prices means none of the figures reflected “what has been or is being paid”.

It added: “In almost every area reviewed significant developments are planned in 2022/23 which impact on the estimates and risk.”

But the Government has said it is committed to delivering the project on time and within its budget.

A spokesman said: “HS2 is under way, within budget, and supporting 28,000 jobs. The Government remains committed to delivering it on time and to budget.

“As with all projects of this scale, contracts and scope are routinely considered to ensure they continue to deliver the value for money for taxpayers.”

The Government sparked anger in November 2021 when it published its Integrated Rail Plan (IRP), which included scrapping HS2’s eastern leg between the East Midlands and Leeds.

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