HS2 speeding through cash reserved for contingencies
THE first phase of the HS2 project has already used more than a quarter of its contingency funding up to 11 years ahead of its opening.
Mark Harper, the new Transport Secretary, said the London-to-Birmingham leg is likely to overshoot its latest “target cost” and is burning through money reserved for additional costs.
The Government has urged the company running the project, HS2 Ltd, to find savings because it is concerned about a number of unforeseen costs, including more than £100million of design work for a new station at London Euston that can no longer be used.
More than a quarter of HS2 Ltd’s £5.5billion contingency fund for the first leg has been spent, but the project has not yet reached “peak construction” and is not expected to be operational until between 2029 and 2033.
Unexpected construction and land costs have meant “the final delivery cost is likely to exceed its target cost of £40.3billion” Mr Harper said in a written statement to MPs this week.
“As a result, in September, the Department commissioned HS2 Ltd to develop and implement actions to bring projected costs back in line with the target cost.” Greg Smith, a Conservative MP whose Buckingham constituency contains a stretch of the line, said the whole project should be scrapped.
“Incredibly difficult spending choices have to be made,” he told The Sunday Telegraph last night, as he suggested £147 billion could be saved in total if HS2 was paused immediately.
He said: “How can that not be on the table right now as a key saving, given that virtually every opinion poll ever on HS2 shows there isn’t public support for it, that the demand for it is clearly uncertain or not there at all? It has always been a complete white elephant and it needs to be put on the scrapheap so we can pay down the Covid debt and not hit frontline public services. We have seen HS2 go from £38billion when first conceived to well in excess of £100billion today – the highest estimate being £165billion. It will keep spiralling out of control.”
The biannual HS2 update delivered this week also said “significant elements” of a £105 million design job for an 11-platform terminus at Euston can no longer be used because project managers had opted to build a smaller 10-platform building instead. The decision to opt for a “less complex” design has created a “pressure of £0.4billion on the cost estimate” for the HS2 Euston Station, Mr Harper said. But the Department for Transport said the new station “will be delivered quicker than previous plans, reducing costs to the taxpayer and disruption for local residents”.
The last five parliamentary reports on HS2 show that £1.5billion of the contingency fund has now been used, up from £300m in October 2020. The Government said: “Current cost pressures are covered within the existing budget and we continue to identify areas where savings and efficiencies can be made.”