MINISTERS knew three years ago that the costs of HS2 were going to be higher than the official figure of £55.7 billion, according to reports.
It is said that documents seen by the BBC admit that the budget was not enough, although the DfT has continued to maintain that the project is on budget and on target to start opening from 2026.
The revelations will be another blow to the project’s supporters, including Midands Connect, which says scrapping HS2 would be a ‘disaster’ for the region, while the TSSA union said the government is ‘on the wrong track’.
The leaked documents were written in 2016, before MPs had voted in favour of legislation authorising Phase 1 between London and Birmingham. As recently as last month, HS2 minister Nusrat Ghani told MPs: ‘The business case is clearly solid: there is one budget and one timetable—HS2 will continue on track. My right hon. Friend the Member for South Northamptonshire asked me to confirm at the Dispatch Box what the budget and the timetable are. I stand here to state confidently that the budget is £55.7 billion and that the timetable is 2026 and 2033.’
Even so, the leaked details include a record of a letter from transport secretary Patrick McLoughlin to the chancellor George Osborne, which warns that Phase 1 of HS2 was already set to be £1 billion over budget. The letter was sent in May 2016.
An HS2 director has also alleged that the overspend was known to be a lot higher, and that an underestimate of land costs was set to add at least another £2 billion.
More recently, HS2 Ltd has conceded that there are ‘cost pressures’. Chairman Allan Cook has also been reported to have warned the DfT that the total budget could rise by £30 billion.
The Department for Transport said: ‘Like all major, complex projects delivery plans evolve over time. We regularly keep Parliament and members of the public updated on progress.’
The project is now facing its toughest test so far because Boris Johnson has ordered a review of HS2, and a decision on a ‘go or no go’ basis is due by the end of the year.
Meanwhile the Northern Powerhouse think tank NPP is attempting to avert a negative decision by launching its own review of the scheme, which can be expected to include an assessment of how scrapping HS2 would affect the north of England.
Transport secretary Grant Shapps is due to make a statement to the Commons about the current state of play next week.