The Financial Times has today reported that Allan Cook, the new chairman of HS2 Ltd, has written to the Department for Transport saying that the project cannot be delivered within the official £55.7bn budget.
As part of his review of the project, Cook has told permanent secretary at the Department for Transport Bernadette Kelly that following his initial findings, the project is more likely to cost between £70bn and £85bn. When HS2 was first announced in 2010, the budget was £32.6bn, and the project has been significantly downgraded since then with links to the channel tunnel via HS1 at St Pancras and Heathrow Airport both dropped.
According to the FT, the increase costs is down to a number of factors which HS2 Ltd should have known well before now, with a source saying the reasons are a “combination of poor ground conditions found during the surveying work, the costs of engineering a railway to a very high specification, and the further additional costs of it being designed to run at even higher speeds than other comparable rail projects”.
During the Hybrid Bill process which started in 2013, HS2 Ltd received repeated criticism for not having conducted ground surveys which would have informed both the designs and costs. More remarkably, HS2 Ltd did not commence conducting thorough ground surveys along phase one of the route in many places until late 2018, with surveys still taking place now in many areas.
Whilst preparatory work is happening in many places, actual construction on phase one of the HS2 line has not. This was meant to start in November 2018, but the final go-ahead known as ‘notice to proceed’ was delayed until June 2019, and then again until December 2019 as HS2 Ltd cannot demonstrate the necessary capabilities to let the final contracts. To pass ‘notice to proceed’, HS2 Ltd have to demonstrate: management capability, affordability of contracts and robustness of the revised business case.
Stop HS2 Campaign Manager Joe Rukin responded:
“A potential £30bn cost hike will be of no surprise to anyone who has witnessed this project lurch from one disaster to another, and whilst we are now talking about yet another cost over-run, this one is about what the whole thing was meant to cost back in 2010. We had been telling HS2 Ltd for years ground conditions would hike up the costs, but they chose not to do those surveys until the project had been passed. Worse than that, it seems that only after a decade of planning are they realising that building a railway for ultra-high speed trains costs more than building one for normal trains.”
“It is beyond all credibility to imagine that a potential £30bn cost over-run has just appeared from nowhere in the eight months since Allan Cook took over. It is absolutely clear that people must have known about this and that the public and parliamentarians have been deliberately misled to try and force this boondoggle upon us. This project has to be abandoned immediately, and we believe it is time to call the police in to see if fraud by abuse of position has taken place. At the very least a full scale independent inquiry must now be called. It is no good for HS2 to simply be reviewed by this chairman, or as Boris Johnson has suggested its former chairman. HS2 must be properly and thoroughly investigated.”
Penny Gaines, chair of Stop HS2, said
“This ought to be shocking, but in fact is almost expected from a Department for Transport run by Chris Grayling. HS2 have spent the last year apparently asking contractors and suppliers to keep their costs down to avoid exceeding the funding envelope of £55.7 bn. In reality, HS2 Ltd and the DfT have always known that the funding envelope was too small, and had been apparently hoping that they can keep it quiet until it was too late. HS2 really is an exorbitantly expensive white elephant and we call on the next Prime Minister to cancel it as soon as possible.”
“On Monday, rail Minister Nus Ghani deliberately stood in front of parliament and said the budget for HS2 was £55.7bn, even though she must have known it could not be delivered for that price. MPs were misled, as they have always been. We call on the next prime minister to immediately stop all enabling works while he sets up a full impartial independent inquiry into HS2.”