HS2 ‘likely’ to exceed mammoth budget unless urgent savings found

The cost of the HS2 high-speed train line between London and Birmingham is “likely” to blow its £40.3bn budget unless cost savings are found quickly, MPs have been warned.

Almost £30bn has been spent or allocated on “phase one” of the route despite the first trains not being due to run until the end of the decade at the earliest, new Transport Secretary Mark Harper has revealed.

Costs are up £200m since March and are now £1.9bn higher than initially expected, due to “high levels of inflation”.

A total of £105.6m was wasted when the Department for Transport ordered the HS2 station at Euston to be cut from 11 platforms to 10 in a bid to save on construction costs.

The 11th platform had been planned as a “spare” to prevent chaos if two consecutive trains arrived late.

The decision to ditch the plans for a “smaller, simpler 10 platform station design” could mean trains will be forced to terminate at Old Oak Common, potentially leaving passengers stranded and reliant on a yet-to-be-built link with the Elizabeth line to get into central London.

Rail expert Gareth Dennis said the final bill for the redesign of Euston station would cost about £300m more than planned as, in addition to the wasted £105.6m, a further £200m was being spent on the new station designs.

Mr Harper, in a six-monthly update to Parliament last week, said phase one “remains within its overall budget” of £44.6bn, which includes a £5.6bn contingency - of which £1.5bn has already been spent.

But he added: “HS2 Ltd has indicated that, if unmitigated, the final delivery cost is likely to exceed its target cost of £40.3 billion based upon its forecast of future spending.”

As a result, the DfT has ordered HS2 to make extra savings – on top of £800m already found.

Key pressures included £1.1bn from low productivity and additional designs, £400m due to the changes at Euston station and £300m to change the Network Rail infrastructure at Euston and Old Oak Common.

Covid was also a factor, while tackling eco protesters had cost almost £150m.

Mr Harper said “peak construction” would start on HS2 next year. The first trains between Old Oak Common and Birmingham due to start running between 2029 and 2033, though there are “some pressures” on this schedule.

Work is taking place at more than 350 sites along the route. A second tunnel boring machine, heading west towards central London, was launched from South Ruislip last week.

HS2 chief executive Mark Thurston and the DfT’s director general for HS2, Clive Maxwell, will be grilled by the Commons transport committee on Wednesday.

Last month the Financial Times, which obtained leaked board documents, reported that the cost of HS2’s first phase could run “many billions” over budget.

Sources said HS2 was “on a mission” to identify efficiencies and savings.

The phase two extension to Crewe is due to open between 2030 and 2034. Approval for the “phase 2b” western leg, taking HS2 further north to Manchester, is progressing through Parliament. Services are due to start running on this section between 2035 and 2041.

The total cost of the line between London and Manchester is estimated to be £53bn to £71bn, at 2019 prices.

A Department for Transport spokesperson said: “The delivery of HS2’s Euston station – as with any major infrastructure project – is constantly re-assessed to ensure we are delivering the most efficient and cost-effective design.

“The new design will be delivered quicker than previous plans, reducing costs to the taxpayer and disruption for local residents.”