Government 'underestimated' HS2 challenges as costs rocket to £100bn

The Government underestimated the complexity and scale of HS2 when setting its budget and planned launch date, according to a damning review from the National Audit Office (NAO).

How HS2's Curzon Street station will look
How HS2's Curzon Street station will look

The cost of the high-speed line - which is currently under review - could rocket to more than £100 billion, while it is expected to be delivered up to five years late.

The NAO report blasted the Government over its handling of HS2, stating its planned opening date for Phase One between London and the West Midlands was "ambitious and set by comparison with other infrastructure programmes".

Department for Transport (DfT) bosses "did not sufficiently consider that HS2 is a much larger and more challenging programme to deliver", it added.

Phase One of the project is expected to continue as planned and launch between 2028 and 2031 but it was suggested Phase Two, which will see the line carve a path through Staffordshire, could be paused for six months.

It comes amid a growing clamour among Tory MPs for the scheme to be scrapped. But business chiefs and West Midlands politicians including Mayor Andy Street say the line is vital to the region's economy.

The NAO, an independent body which scrutinises Government spending, said "significant challenges to completing the programme and delivering value for taxpayers and passengers remain".

It added the "DfT’s latest estimate of the cost of HS2 is between £65 billion and £88 billion (2015 prices)" was between "17 per cent and 58 per cent over available funding. Latest estimates this week put the cost at £106 billion. There was also criticism of planning by HS2 Ltd.

The NAO said: "HS2 Ltd did not account for the level of uncertainty and risk in the programme when estimating the costs of Phase One in April 2017. It used a method for calculating contingency that was not appropriate for a programme at such an early stage of development. The £7 billion of contingency was not enough to address the significant cost increases that emerged.

"By not fully and openly recognising the programme’s risks from the outset, DfT and HS2 Ltd have not adequately managed risks to taxpayer money. They have tried to understand and contain costs but have been unable to bring them within the available funding, or enable passenger services to start by the planned opening date."

Following the findings, Gareth Davies, the head of the NAO, said: “There are important lessons to be learned from HS2, not only for the Department for Transport and HS2 Ltd, but for other major infrastructure programmes.

"To ensure public trust, the Department and HS2 Ltd must be transparent and provide realistic assessments of costs and completion dates as the programme develops, recognising the many risks to the successful delivery of the railway that remain.”

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