Posted 16th November 2015 | 12 Comments

Construction costs of HS2 are 'set to rise'

HS2 Ltd is refusing to comment on claims that the cost of the High Speed project is set to rise from £50 billion to £70 billion or more.

A report in the Independent claims that the earlier cost was calculated at 2011 values, and that the apparent rise is partly due to the fall in the value of 'real' money in the years ahead.

The speculation comes less than two weeks before the government's Spending Review, but the Chancellor George Osborne has already announced that several departments, including Transport, must cut their 'day-to-day' costs by 8 per cent annually over the next four years.

However, the Chancellor also pledged that major capital investment in transport was not affected, saying: "We will spend £100 billion on our infrastructure over the Parliament -- updating our roads and railways; investing in flood defences to protect our homes and businesses; and delivering superfast broadband across the country."

The latest report does not mention that HS2 budget totals include substantial contingency allowances, which the Treasury insists on. The earlier £50bn total included some £17 billion as a contingency margin, and also some £7 billion for the trains themselves.

A spokesman for the pressure group Stop HS2 claimed the latest figures proved that the project was a white elephant, but the Department for Transport has continued to maintain that the economy will benefit by £2 for every pound invested. However, a Stop HS2 spokesman said: "A responsible chancellor would be asking serious questions about whether it is really worth it, but instead Mr Osborne is cooking the books to invent benefits which simply aren’t there to make HS2 look more palatable."

HS2 Ltd said only that it 'cannot comment on speculation' ahead of the Spending Review.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • David Cook, Broadstone, Dorset

    The problem with costs is that the slower the project, the higher the costs. Which plays into the hands of the anti brigade. We only have to look at the disruption to services when lines are upgraded/electrified/routinely maintained which make completion of HS2 (and in time, HS3) more vital than ever, best to get stuck in as soon as possible. The trains are overcrowded now, the roads are at virtual gridlock, so we cannot get new railway lines quickly enough. The cost to the economy of an old and slow transport system which is vulnerable to disruption every time something relatively minor goes wrong and compounds at bottlenecks never seems to make the press. Except of course when people are persuaded to claim for delayed trains. That is the real injustice of HS2, it's almost like a conspiracy to keep our transport system in the last century in some sort of loop of doom.

  • Graham, Basingstoke

    All that is happening is that they are converting the 2011 prices to 2026 prices (hence the increase).

    However, there are people who want this railway and there will be people who think that they don't want it now but by 2026 they will.

    It is worth noting that between 2011 and 2026 (15 years) passenger numbers were predicted to grow by about 45% in the HS2 model, however between 2011 and 2015 (4 years) rail growth has risen by 22% (or half the total predicted) with no signs of slowing down.

    Given the "alternatives" to HS2 only aimed to meet the HS2 predictions what happens once growth goes beyond that point if HS2 isn't built?

  • jack jaye, sutton

    ...And this is 'News'? better add another 30m on to this utter waste of money
    to build a railway nobody but the Government wants

  • Steve, Kuwait City

    Well before CNS Tentatively Rolls over to sleep, might it also be considered that there are many huge assumptions going on here being banded about to desperately fudge the finances; firstly, that inflation will stay at 1%, secondly that the project wont collapse in a heap half way through due to the enormous amount of tendering and sub-tendering that will take place and the corresponding sub-contracting and the nightmares of responsibility-fudging and thirdly, that the government will use the same argument in attempting to justify a project that will be (in my humble estimations) around 115 billion by the time its over.."Oh well, we were quoting at 2015 prices". Fine, sweet dreams, but set your alarm for when this mess is finally complete in 2038.

  • Tony Pearce, Reading

    I believe that the first part of the project has now 'gone out to Tender'. Businesses are not going to bid 'silly money', but will bid a very calculated bid that makes them some profit. It will be interesting to see if their tenders are anywhere near the 'estimates' that HS2 has had upto now. Recently I was involved with a Church re-building project. We did our sums, had professionals do their estimates, and then went out to tender. The 3 Tenders that came back were all over 80% more than our estimates which shocked us.

  • Graham, Basingstoke

    One of the reasons for the big overspend on electrification is due to not knowing where everything was. This meant that the GWML lost its signals a few times which then had to be fixed rather than doing the electrification (i.e. additional work to what was planned).

    The risks associated with building a new line are a LOT lower than working on the existing network. Therefore the electrification costs going up a lot is an argument for building a new line (such as HS2) rather than improving the existing network.

  • Adam, Birmingham

    I wonder how much of the cost rises are to route appeasement of locals, the constant anti-HS2 court processes etc...? These will all impact the overall costs. And you expect costs to go up in line with inflation

  • Melvyn Windebank, Canvey Island, Essex

    HS2 is an investment in the future to provide the capacity needed to cope with the growth in rail usage which is now back to almost a century ago but on a far smaller network .

    If StopHS2 were really concerned about the cost of HS2 they would be campaigning against the money being spent on compensation and extra costs of needless tunnels where line could be built on viaducts instead !

    The 50 billion figure contains a massive contingency so what contingency does the 70 billion contain ?

  • Tony Pearce, Reading

    If Terrorism becomes 'normal' in Europe, all High Speed Lines will be seen as 'High Profile' Targets. Presumably Airports will rack up security making check-in times even longer than they are. The next easiest target for terrorists will be the Railways - as it was in Northern Ireland and the Mainland during the troubles. Railways will have to take this new threat extremely seriously. The extra time needed to check-in luggage for HS2 and showing Passports will negate much of the time savings the line is promising.

  • Chris Neville-Smith, Durham, England

    Yawn. I did the maths, and £50bn inflating to £70bn-ish over a period of 22 years is nothing out of the ordinary. It was made clear all along that the figures quoted were 2011 prices, and future inflation was factored into all the business cases.

    Unless there's something the Independent knows about that they haven't told us, this seem to be yet another case of quoting a pre-declared cost and pretending it's something new. It's a little less dishonest than the fabricated extras that the IEA claim exist, but not much.

  • Steve, Kuwait City

    This cannot be allowed to go ahead. We cannot even manage electrification projects without going grossly over budget. This project was unacceptable BEFORE the costs rose, in a country that has enjoyed very low 'inflation' since 2011. The UK government dont give a wooden Euro whether this will benefit the public or not, they just want money poured into the right places so they and their mates can get rich and their sons and daughters can have a cushy job. Stop it NOW.

  • edward brown, kenilworth

    you will find in hansard last week that the cash cost of HS2 since 2009 to end of September 2015 was reported by the minister for transport as being 1.25 billion pounds so far. written answers.