UK government to launch HS2 review as costs spiral

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Louise Haigh, the UK transport secretary, has admitted that the cost of building the High Speed 2 rail line is still spiralling as she announced plans to get the project back under control through a new independent review. 

The headline price tag for creating the new rail line from London to Birmingham keeps on rising despite the scope of the controversial project having been cut in half last year to try to keep a lid on costs. Rishi Sunak, the former Tory prime minister, axed its entire northern stretch from Birmingham to Manchester. 

“It has long been clear that the costs of HS2 have been allowed to spiral out of control, but since becoming transport secretary I have seen up close the scale of failure in project delivery and it is dire,” Haigh said. “I have announced urgent measures to get a grip on HS2’s costs and ensure taxpayers’ money is put to good use.”

While the Department for Transport has estimated the remaining project cost at £45bn to £54bn in 2019 prices, the HS2 management has suggested a higher figure of £49bn to £57bn. 

In January Sir Jon Thompson, chair of HS2, told MPs that accounting for inflation would push that figure up by another £10bn to £67bn. 

Mark Wild, the incoming chief executive of the project — who was previously head of the Elizabeth Line — is expected to come up with an even higher estimate when he does a stocktake of the project. The number is expected to rise again as a result of inflation, previous alterations to the scheme and delays to parts of the project. 

Haigh confirmed she had asked James Stewart, an infrastructure industry veteran, to chair a new Major Transport Projects Governance and Assurance Review. Stewart is former chair of global infrastructure at advisory firm KPMG.

The review — which the Financial Times revealed last month — will investigate the oversight of major transport schemes including HS2. Its focus will be on “the effectiveness of forecasting and reporting of cost, schedule and benefits, as well as actions to deliver cost efficiencies,” the government said on Sunday. 

The review will lead to greater ministerial control of HS2. “The government is reinstating ministerial oversight of the project to ensure great accountability,” the transport department said.

At first, that will involve more regular meetings between ministers and the HS2 management. But in the long term the Stewart review will look at whether the DfT’s “sponsorship and oversight model” needs a wider overhaul to improve delivery. 

Haigh said: “It’s high time we make sure lessons are learnt and the mistakes of HS2 are never repeated again.”

HS2 is not expected to start running trains between Birmingham and Old Oak Common, a station in west London, until between 2029 and 2033, much later than originally planned.  

Haigh is expected to confirm this month that the service will continue for another 4.5 miles to Euston in north London. LBC, a radio station, reported last week that the government wanted to revive the northern leg of HS2 at least from Birmingham to Crewe. 

However, government figures said they had more limited plans to carry out an initial feasibility study into a new line in the region, which would not be high-speed. 

“The government has been clear it is not resurrecting phase 2 of HS2,” the DFT said on Sunday. “The government recognises concerns about connectivity between Birmingham and Manchester but its primary focus now is the safe delivery of HS2 between Birmingham and London at the lowest reasonable cost.”