Government spending watchdog: “impossible to estimate” final HS2 costs

AN INDEPENDENT report by the National Audit Office (NAO) heaped further pressure on the Department for Transport and HS2 Ltd in late-January, saying it is “impossible to estimate with certainty” how much it will eventually cost.

The spending watchdog is critical of the Government’s management of the project, saying the “risk and complexity of HS2 were underestimated from the start”.

The report warns again that the full opening of Phase 1 between Euston and Birmingham could be delayed by up to a decade, with a partial opening estimated in 2029-33 and full service starting between 2031 and 2036.

Phase 2a is expected in 2030/31 (previously 2027) and the opening Phase 2b goes back from 2033 to 2036-40.

Costs of Phase 1 could rise from the budgeted £27billion to £40bn, Phase 2a from £3.5bn to £6.5bn and Phase 2b to from £25.1bn to as much as £41bn, although in the case of the latter, the NAO warns plans are at such an early stage of development it is difficult to estimate the final costs.

Cost savings that HS2 Ltd expected to make have not materialised, with design changes increasing costs significantly. Another cost factor is the transfer of more risk to contractors, who in turn made their proposals more conservative and expensive.

However, the NAO acknowledges HS2 Ltd now has a more realistic idea of Phase 1 costs, but believes Phase 2b is more complex and much less well developed, making it impossible to estimate what the final cost will be.

No ground surveys have yet been undertaken for Phase

2b, making it impossible to assess what issues could be encountered during construction

A spokesperson for the High Speed Rail Group (HSRG) added: “The NAO is right to note that the HS2 project is now significantly progressed in its implementation.

“If the Government want to fulfil its promise of an infrastructure revolution, HS2 must be completed in full, without further dither and delay.”

Many organisations within the rail industry were quick to add their support and demand a quick decision from the Government.

The Railway Industry Association (RIA), which represents manufacturers, suppliers and construction firms, has warned up to 30,000 jobs would be put at risk by cancellation, and other infrastructure projects, such as Northern Powerhouse Rail (NPR), require HS2 to be delivered to realise their full benefits.