Ministers ‘knew HS2 was way over budget’
It is already under review – now the future of HS2 has come under further pressure after a leaked letter suggested ministers have long been aware that it has bust its budget.
Until recently, ministers and HS2 bosses have insisted the project would be completed for £55.7 billion.
But documents suggest that at least three years ago both the Government and HS2 knew that wasn’t the case.
In May 2016, then Chancellor George Osborne received a letter from Patrick McLoughlin, the Transport Secretary at the time, in which he admitted that the first stretch of the railway was already a billion pounds over budget.
Two months earlier legislation for the first stretch of the line between London and Birmingham was approved by MPs.
A Department for Transport (DfT) spokesman said HS2 is Europe’s biggest construction programme and “like all major, complex projects, delivery plans evolve over time”.
Last week, a Government-commissioned review into whether the scheme should continue was launched amid growing fears it cannot be built to its current budget, with Boris Johnson saying could rise to £100bn.
The BBC reported it also obtained a December 2016 DfT briefing note labelled “confidential” which states that “a significant gap to target price will remain” for HS2 even with planned savings.
Concern over how much the project could cost has risen since the documents were produced, with a recent Financial Times report stating that HS2 Ltd chairman Allan Cook wrote to the DfT, warning the final bill could reach as much as £85bn.
Despite this, Transport Minister Nusrat Ghani told the Commons last month that “there is only one budget for HS2, and it is £55.7 billion”.
The feared price hike is believed to be due to various factors including engineering costs, poor ground conditions, under-estimating the cost to purchase land and property, and the expense of running trains at up to 225mph, which is faster than comparable projects.
In November last year, HS2 Ltd’s chief executive Mark Thurston denied the project was over budget but acknowledged officials were “in talks” with contractors about reducing costs.
Penny Gaines, chair of Stop HS2, said: “It is vital that the current review of HS2 looks at the extent to which Parliament has been lied to and that former employees of HS2 who have signed gagging orders are able to speak about the issues freely, both to the review and elsewhere.”
An HS2 Ltd spokesman said “regular updates” have been provided on the scheme.
He went on: “Since 2016, we have moved a long way as a project and organisation. We have now appointed a set of world-leading civil engineering contractors which enables us to have greater confidence about cost and construction schedules, as well as making changes to our management team.
“Our CEO has spoken publicly for some time about the cost pressures facing the project and we are working closely with our contractors to bear down on cost before major works commence.”
Phase One of HS2 is planned to run between London and Birmingham from December 2026, while a second phase through Staffordshire to Crewe is due to open in 2027, followed by Phase 2b from Crewe to Manchester, and Birmingham to Leeds.
