Cost of HS2 high-speed rail line rises by £800m

HS2’s costs have risen by another £800m, the government has admitted, barely a month after the official start of construction of the high-speed rail network.

The reshaping of Euston station is likely to cost at least £400m more than planned, while the discovery of more asbestos than expected in demolitions along the line of the route has added around another £400m.

In the first of the bi-annual updates pledged since the entire HS2 project was given a fresh go-ahead by the current government in February, the minister for HS2, Andrew Stephenson, said there were new “cost pressures” emerging.

He said more work was needed to check the Euston costs, which could be cut but had the potential to rise further.

However, Stephenson said that the spiralling budget for Euston and the preparatory works would be accounted for within the £5.3bn contingency that had been delegated for HS2 Ltd, keeping the first phase of works, from London to Birmingham, within an overall £44.6bn budget.

Just over 20% of that sum has now been spent, and another £11.5bn allotted in contracts, most of which were given notice to proceed during lockdown.

The start of high-speed rail services could also be further delayed, Stephenson warned, partly due to the impact of Covid-19, and also a late handover from first contractors preparing the line of route.

He said that while HS2 was predicting it would run first trains from Old Oak Common in London to Birmingham Curzon Street in its target range of 2029 to 2033, there were “some pressures on the earliest date”.

The cost for Phase 2b, to Manchester and other cities north of Birmingham, could also rise, Stephenson hinted, saying that “recent design work suggests some further pressure on the most recent estimates”. The total cost for the line, whose route north is being reviewed, should be within £98bn, he said, although previous government estimates have reached £106bn.

Northern leaders have urged the government to commit to the original north-eastern leg of the high-speed rail route, from Birmingham to Leeds, after speculation that it may be downgraded or never built.

Stephenson said the controversial scheme would also set up a new environmental sustainability board and look for “net gains” in biodiversity. Protesters have camped along the route in Buckinghamshire to protect ancient woodland that is set to be destroyed by HS2.

A Department for Transport spokesman said: “While the project has faced some cost pressures in carrying out preparatory works, the government still expects HS2 Ltd to deliver Phase 1 at the target cost of £40.3bn, below the overall funding envelope of £44.6bn.

“As construction continues, this government remains relentlessly focused on controlling costs, to ensure this ambitious new railway delivers its wealth of benefits at value for money for the taxpayer.”