Government faces heavy HS2 exit fees

THE Government could be forced to pay heavy exit penalties to contractors if it cancels HS2, according to analysis by public sector procurement specialist Tussell.

Pressure is growing on political parties to clarify their positions on HS2, as the cost is escalating rapidly. A Government review of HS2, to be published after the General Election, is expected to give the go-ahead to the project.

However, the Oakervee review also warns that HS2 will cost more than £88 billion, compared to the original project budget of £55 billion. One member of the review team, Lord Berkeley, said that it could go as high as £103 billion.

Tussell said that if HS2 is cancelled by the current or future government, it could have to pay significant compensation to contractors. It said that while £1.3billion worth of HS2 construction contracts that have been awarded so far run of England.the amount spent per quarter has shot up from £79million during the first quarter of 2016 to £495 million.

Additionally, it said that 86 per cent of the spending has so far taken place in the South, the section that runs from London to Birmingham. Only £268 million has been spent on phase 2 of the line, which runs north of Birmingham and is reportedly at most risk of cancellation.

Tussell’s analysis of HS2 procurement to date found that just 10 companies account for 60 per cent of spending so far.

Of the 881 private companies involved with HS2, the biggest winner so far is a joint venture between engineering group Costain and construction giant Skanska, which has £339 million worth of contracts.

In second place is engineering firm Arup with £309million of work, followed by Laing O’rourke and its partner Murphy with £171 million. It noted that the online forum for expecting, new and existing mothers, Mumsnet, had received £11,000 from HS2.