HS2 costs continue to rise

Oct 29, 2020
Author: Paul Wormald
Paul is a partner at our Doncaster office. Paul specialises in advising small businesses and businesses in the transport & logistics sector. Paul also specialises in providing cloud accounting services to our clients.

HS2 costs continue to rise

The cost of the high-speed railway HS2 has increased again just two months after construction officially began. The main reason for this is because more asbestos than expected has been discovered. This news became apparent to the government in the first six-monthly update from HS2 to Parliament. Ministers have said that the project will need an additional £800m on top of the revised budget of £98bn that was announced earlier this year. This budget was increased because the previous one became unrealistic. Ministers have also said that this budget increase of £800m does not include the impact of COVID-19. They have admitted this is likely to increase costs further still.

The Department for Transport has said they expect the first stretch of the railway between London and Birmingham to be completed within its target budget of £40bn. The government has decided to set aside an additional £5.3bn in case any unknown costs appear during phase 1 of the project. The reason for this is because large construction projects like HS2 are often full of risks and unknown factors which are only discovered during the construction process. 


When will HS2 be finished?

The current schedule states that phase 1 of the railway between London and Birmingham will not be completed until 2029 at the earliest. Phase 2 will link Birmingham to Manchester and Leeds and this may not be completed until 2040.

The debate regarding whether the eastern leg of Phase 2 will ever be built has prompted comment from Transport for the North who claim that the cost of Northern Powerhouse Rail may be an additional £13bn if the HS2 eastern leg wasn’t built with the two projects sharing around 50 rules of common infrastructure.

Calls were also made by the body for infill electrification schemes to be commissioned to ensure that the skills required for these two projects were not lost to the rail industry.

Local government leaders in areas on the route of the eastern leg have also called for a commitment from central government to the full completion of the project citing the need for investment in the eastern half of the country to help regions recover from the Covid-19 pandemic. They estimate that around 150,000 new jobs would be created as a result of Phase 2b being delivered in full.

Paul Wormald Transport and Logistics Partner at Hawsons commented: These are tricky times for those responsible for assessing and commissioning major infrastructure projects such as HS2. The Covid-19 pandemic has seen rail passenger numbers plummet over recent months. Add in the possibility that these may not recover to pre-pandemic numbers in the short to medium term as a result of people choosing and being able to work from home, and the case for spending such vast sums of public money on a new rail system could look questionable.

However, for the long term benefit of the whole of the UK HS2 should be completed in full, and investment in the classic rail network should be maintained also. To fail to take HS2 beyond Birmingham or to only take phase 2 to the north west, would risk adding an east-west economic divide to the widely perceived north/south divide that we have today. For rail infrastructure businesses to be able to invest, recruit, and train staff with certainty, central government needs to re-affirm its commitment to the full HS2 project.


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Paul Wormald

Partner, Doncaster