Cost of HS2 Phase 1 could top 66 billion

The cost of building Phase 1 of HS2 between London and Birmingham could now be as much as £66.6 billion, when inflation is taken into account.

In 2012 the government had estimated that the whole network, including the lines to Manchester and Leeds which have now been scrapped, would cost £32.7 billion at 2012 prices.

It added at the time that the benefit cost ratio for HS2 was between £1.80 and £2.50 for every £1 spent. The BCR had been revised downwards slightly due to the economic climate but ‘remains convincing’.

The latest figure for the cost of Phase 1 alone has been revealed by HS2 executive chair Sir Jon Thompson, who has been giving evidence to the Commons Transport Committee today.

He said: ‘The costs of delivery are more than the government budgeted, and that is before you begin to account for the extraordinary construction inflation over the last three years or so. We now estimate that Phase 1 will cost between £49 billion and £56.6 billion before inflation, so that's at a 2019 price, against the government's budget of £45 billion.’

Inflation since 2019 could boost the final expenditure between Old Oak Common in west London and Birmingham Curzon Street to £66.6 billion.

The future of the London section from Old Oak Common to Euston is still unclear. It was paused for at least two years in late 2023, when the government said it would be seeking private section investment.

Sir Jon said: ‘On Old Oak Common I think we have made excellent progress. We are now beyond 50 per cent complete, made slightly more complicated by the outstanding decision on tunnelling from Old Oak Common South towards Euston.’

He added: ‘It is the Government’s long-standing policy that infrastructure estimates are only updated at Spending Review points, that’s my understanding of it.

‘So that’s why we’re still working to 2019 prices and the whole conversation is about 2019, which to be frank with you is an administrative burden of some significance in the organisation.

‘The cost estimate and the budget that was set in the first place were too low, in my opinion.

‘There have been some changes to the scope, there definitely has been some poor delivery on our part, and fourthly, there’s inflation.

‘It’s worth remembering that between 2010 when prime minister Gordon Brown launched HS2 and 2019 when the current budget was set, the scope of HS2 has been changed significantly by a whole series of ministers.’

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