HS2: costs and controversies
What is HS2?
High Speed 2 – more commonly known as HS2 – was conceived in 2009 as a scheme to build a high-speed railway between London and the north of England, providing a catalyst for regional economic regeneration and growth.
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Cook A, HS2 Chairman’s Stocktake, HS2 Ltd, 3 September 2019, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/850408/hs2-chairmans-stocktake.pdf
Construction was originally planned in phases: ‘Phase 1’, between London and Birmingham; ‘Phase 2a’, between Birmingham and Crewe; and ‘Phase 2b’, between Crewe and Manchester.
The scheme has been become controversial due to delays, cost increases and, more recently, decisions from central government to scrap sections of the line. In November 2021, a separate arm of the line originally proposed to link Birmingham and Leeds was removed from the plan. 2 Department for Transport, Integrated Rail Plan for the North and Midlands, CP 490, The Stationery Office, 2021, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1062161/integrated-rail-plan-for-the-north-and-midlan… Then in October 2023 Rishi Sunak used his party conference speech – in Manchester – to announce that the government was also cancelling the Birmingham to Manchester leg.
How much will HS2 cost?
The Gordon Brown Labour government initially estimated that HS2 would cost £37.5bn (in 2009 prices) but the expected cost has since increased dramatically.
Between 2011 and 2013, the cost of HS2 rose by £12.6bn in cash terms: including £7.5bn for rolling stock not previously costed and an additional £5.1bn on construction of the line. Estimates from HS2 Ltd., the non-departmental public body set up to manage the project, fell between 2015 and 2017 on the basis of assumed efficiencies, 3 Haylen A and Bennett O, High Speed 2: the business case, costs and spending, House of Commons Library briefing paper CBP 8601, 26 June 2019, https://researchbriefings.files.parliament.uk/documents/CBP-8601/CBP-8601.pdf including reducing the costs of property acquisition, getting contractors to deliver more efficiently, and reducing overhead costs – but these efficiencies were not found.
A 2019 review of the project, conducted by HS2’s chairman, Allan Cook, suggested that the final costs would be between £72.1 and £78.4bn (in 2015 prices) reflecting the “scale and complexity of the programme”, and admitting early estimates were “overly optimistic”. 4 Cook A, HS2 Chairman’s Stocktake, HS2 Ltd, 3 September 2019, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/850408/hs2-chairmans-stocktake.pdf
The Oakervee Review, commissioned by the government in 2019 to inform the Notice to Proceed decision for Phase 1, did not re-examine the estimated cost of the programme, instead relying on findings from an internal ‘Chairman’s Stocktake’ published earlier that year. 5 Oakervee D, Oakervee Review of HS2, 11 February 2020, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/870092/oakervee-review.pdf The review’s deputy chair, Lord Berkeley, published a dissenting report which argued that the final costs of HS2 would be £100–110bn (2015 prices) 6 Lord Berkeley, A Review of High Speed 2: Dissenting Report, 5 January 2020, https://acrobat.adobe.com/link/review?uri=urn%3Aaaid%3Ascds%3AUS%3A8e9c8f87-2650-4aa0-8e0f-0eaf6e709640 based on previous underestimates of the cost of purchasing land, maintenance, redeveloping Euston station, and further contingencies.
The full business case for Phase 1 of HS2, published in April 2020, gave a cost of £35–45bn, framing the estimate as a range to reflect the uncertainty over such a complex programme and driving the total forecast cost up to £108.9bn (2015 prices). 7 Department for Transport, Full Business Case High Speed Rail Phase 1: Moving Britain Ahead, 2020, https://assets.publishing.service.gov.uk/media/5fc51d7b8fa8f54755392863/full-business-case-hs2-phase-one.pdf
The cancellation of the connection to Leeds led to a reduction in forecast cost to £53–71bn (2019 prices), higher than the projections in 2013 despite the significant reduction in scope.
The further abandonment of Phase 2 limits the total estimated spend to £35-45bn (2019 prices) on Phase 1, plus the £2.2bn sunk costs already incurred on the cancelled stages.
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