Transport secretary rejects £66bn HS2 cost estimate

The transport secretary has dismissed suggestions that HS2 is set to cost the public purse up to £66bn.

An estimate made by officials at HS2 Ltd in June that the entire line would cost between £54bn and £66bn was neither “accurate or reliable”, Heidi Alexander said in a written statement to parliament.

This is because HS2 Ltd did not take into account the cost reductions due to private funding for Euston Station.

In the Labour government’s first six-monthly update to parliament on HS2, Alexander said that the June update had been rejected by the HS2 board and Department for Transport (DfT).

The minister said she had now ordered HS2 to rework the estimate to drive down costs.

The minister warned: “It is important that we take definitive action now and act with common purpose across government, HS2 Ltd and its supply chain to get HS2 delivered cost effectively.”

The June figure was a rise on the £49bn to £57bn estimate made in November 2023.

Alexander admitted that project cost increases had been driven by factors including Covid and high inflation. But she also criticised elements of the project management. “There have also been significant delivery issues, including cost underestimation with large increases in design costs and lower-than-planned productivity,” she said.

Alexander remained coy on a timeline for completing the redevelopment of Euston station, and the stretch of HS2 from Birmingham to Handsacre Junction.

But she said the first services between Birmingham Curzon Street and Old Oak Common were still scheduled to start running some time between 2029 and 2033.

The minister also revealed there were now more than 31,000 people and 3,300 UK firms working directly on the project.

Earlier this month, Mark Wild – the former boss of Crossrail – started his tenure as the new HS2 chief executive, following his appointment in May.

The DfT has asked Wild to carry out “an assessment of the current position on cost, schedule, capability and culture” at HS2, Alexander said.

“Until Mark Wild concludes this work, the government cannot be confident in the forecast outturn cost of the project,” she said.

Concerns over HS2’s increasing costs also prompted former transport secretary Louise Haigh to schedule in regular meetings with rail minister Lord Hendy and chief secretary to the Treasury Darren Jones, to improve accountability at HS2. Alexander said the first meeting took place in October.

Alexander’s statement followed hours after Sir Jon Thompson announced that he would be stepping down from his position as HS2 chair in the spring.

The DfT said on Tuesday (17 December) that the search for a new chair would begin “shortly”.