The cost of HS2 could hit £66bn, according to management estimate

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The cost of building Britain’s High Speed 2 railway has been estimated at up to £66bn, which is a £9bn increase on a previous calculation, in a paper produced this year by the troubled project’s management.

A Department for Transport report on Tuesday will cite an HS2 board paper from June which put cost of the project at between £54bn and £66bn in 2019 prices, according to people familiar with the document. 

That marks a big increase from November last year, when the government revealed HS2’s official estimate of the cost of the rail line between London and Birmingham had risen to between £49bn and £57bn in 2019 prices. 

If inflation is taken into account, the latest estimate of up to £66bn would be close to £80bn in today’s prices. 

Last year’s official estimate of between £49bn and £57bn came despite the then Conservative government slashing the scheme in half by axing the northern leg of HS2 from Birmingham to Manchester, in a desperate attempt to save money. 

The government will dispute the estimate of up to £66bn, saying it is not endorsed by the transport department, according to officials.

One official said the figure was not a formal HS2 calculation but rather an informal estimate based on raw data. But the latest estimate highlights how the cost of Britain’s flagship transport project appears to be out of control.

Mark Wild, HS2’s new chief executive, is carrying out a review of the scheme’s price tag. 

He is expected to take at least four or five months to complete the work. “I wouldn’t be surprised if Mark comes up with a figure north of £80bn once he’s got to grips with the rising costs and inflation and all the rest,” said one industry figure. 

In October the then transport secretary Louise Haigh announced Wild would be “assessing the current position on cost, schedule and culture, and providing an action plan to deliver the remaining work as cost effectively as possible, including at a realistic budget and schedule”.

Wild will also seek to renegotiate some of the contracts which officials suggested have left HS2 “over a barrel”. 

His review is likely to coincide with the publication of the Treasury’s three-year spending review in June, at which point HS2 is likely to be re-costed to take account of inflation. 

HS2 has been plagued by delays and cost overruns ever since it was given the go-ahead by ministers more than a decade ago, with management blaming issues including cost-plus contracts, an increase in tunnelling and complications with ground conditions. 

The price tag for the line between London and northern England was put at £33bn when it was approved in 2012.

The DFT and HS2 were approached for comment.