Construction costs of HS2 are 'set to rise'

HS2 Ltd is refusing to comment on claims that the cost of the High Speed project is set to rise from £50 billion to £70 billion or more.

A report in the Independent claims that the earlier cost was calculated at 2011 values, and that the apparent rise is partly due to the fall in the value of 'real' money in the years ahead.

The speculation comes less than two weeks before the government's Spending Review, but the Chancellor George Osborne has already announced that several departments, including Transport, must cut their 'day-to-day' costs by 8 per cent annually over the next four years.

However, the Chancellor also pledged that major capital investment in transport was not affected, saying: "We will spend £100 billion on our infrastructure over the Parliament -- updating our roads and railways; investing in flood defences to protect our homes and businesses; and delivering superfast broadband across the country."

The latest report does not mention that HS2 budget totals include substantial contingency allowances, which the Treasury insists on. The earlier £50bn total included some £17 billion as a contingency margin, and also some £7 billion for the trains themselves.

A spokesman for the pressure group Stop HS2 claimed the latest figures proved that the project was a white elephant, but the Department for Transport has continued to maintain that the economy will benefit by £2 for every pound invested. However, a Stop HS2 spokesman said: "A responsible chancellor would be asking serious questions about whether it is really worth it, but instead Mr Osborne is cooking the books to invent benefits which simply aren’t there to make HS2 look more palatable."

HS2 Ltd said only that it 'cannot comment on speculation' ahead of the Spending Review.

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