HS2 cost passes £40bn, with £1bn to be spent before a vote takes place.

Written answers in the House of Commons have put the cost of the HS2 rail project at £41.25 billion, with over £1bn due to be spent in the lifetime of the current Parliament, before a vote on even the Hybrid Bill for Stage 1 is due to take place. In an answer a question put by Cheryl Gillan MP, Rail Minister Simon Burns stated on April 15th that the costs for 2013-14 and 2014-15 would be £367m and £443m.

Up until the end of January 2013, the HS2 project had cost £253m, putting the total cost before the next election at £1,063m, before the February-March 2013 costs are added.

Documents released on January 28th, showed the cost of Stage 2 of the line had jumped from £16.4bn to £18.2bn, with £600m of that increase in cost alleged to be related to the ‘handbrake turn’ around the more affluent areas of the Chancellors’ Tatton constituency. The cost of Stage 1 was put at £16.3bn, making the total construction cost £34.5bn. The £2bn jump in costs was then negated by shelving the £1.4bn cost of the spur to Heathrow for now, which keeps construction cost at £33.1bn.

However campaigners have long argued that the Government has been disingenuous when quoting the costs of this rail project, because they have never included the cost of the trains. In response to Mrs Gillan, Mr Burns stated that the capital cost estimate for rolling stock for Phases 1 and 2 is £8.15 billion at 2011 prices, bringing the cost of the project to £41.25 billion. If the Heathrow link were put back, the cost would stand at £42.65bn.

Stop HS2 Campaign Manager Joe Rukin said;

“We have been waiting a long while to get a cost on just how much the trains for HS2 are due to cost, but we are amazed that it is a high as £8.15bn. It’s been totally disingenuous that the Government have been quoting a £33bn cost for HS2, whilst neglecting to mention that trains are an extra. They have simply been trying to con the taxpayer from start to finish.”

“We’ve been saying HS2 will cost £1bn before the next election for three years. Finally we’ve had that confirmed and we very much doubt this is the last time the costs of the project will jump, as it is clear that the consultants contracts are getting out of control. One great example is Atkins, who got an 18 month £13.3m contact last year, but had already spent £14m in just nine months. Besides the fact these overspends seem endemic in the project, there are loads of other things which have been missed. If you look at the maps, there isn’t one single farm bridge, there isn’t one single foot bridge, but surely there will be some. Like trains, how HS2 gets connected to the existing network is another extra which is not in the budget, and it is very clear to everyone concerned that the cost of properly compensating the 300,000 affected householders would significantly increase the bill. It’s time to cancel this project before the costs escalate further.”

Penny Gaines, chair of Stop HS2 said;
“It’s becoming increasingly clear that the public are being misled by the Government over the costs of HS2. It is daft to build a railway line if you have no trains to run on it, but the Department for Transport’s figures suggest they think trains are an optional extra. We think the whole HS2 project is an environmentally damaging optional extra, and should be cancelled immediately.”

6 comments to “HS2 cost passes £40bn, with £1bn to be spent before a vote takes place.”
  1. I have been saying for months now that the present value of the cost of HS2 is £ 39 bn rather than the headline figure of £ 32.4 bn that tends to get quoted.

    There are 2 reasons for the difference :

    1 ) The cost of the trains that was left out of the headline figure , and
    2 ) The headline figure was based on 2011 prices so discounts back the future costs by 2 annual discount factors too much ( ie 7 % ).

    If Mr Burns is saying that the figure is £ 41.25 bn ( without Heathrow spur ) at a 2013 PV then costs are starting to exceed expectations by £ 2.25 bn. If it’s £ 41.25 bn at a 2011 PV then HS2 Ltd have the makings of a crisis on their hands.

    On the day that we heard that the most recent annual deficit was almost unchanged , and therefore the national debt continues to climb at the same rate, this grand project looks like it will cost much more than it was planned to do. Of course the rail lobby and the construction lobby don’t give a monkey’s about that as long as their own interests are served.

  2. The phase 2 sections have more structures and lower average speeds. The total compensation is increasing as Euston is more of a delay than a cost saving. Estimators would require an additional 10 BILLION TO THE 40. ALSO TUNNELLING STILL DANGLED FOR CHILTERNS by PM. 40 billion is light. Only gets to Church Fenton. Scotland is billions away still. Hs2 currently is an expensive way to relieve peak time southern wcml mml and ecml commuter requirements.

  3. it will be 60 billion by the time its done – and it STILL wont make sense and will make services worse for most people. Money well wasted. Bravo

  4. And what about the interest payments? HS2 would be financed with public debt. Interest rates on government debt are currently just over 2%. £40 billion at 2% over 40 years gives a total repayment of £58 billion. And then there’s the interest rate risk. If interest rates rise to 3% the total repayments go up to nearly £59 billion. And if they rise to a more normal 5%, HS2 would end up costing over £92 billion.

  5. I’m surprised the budget for trains is £8bn. In “Economic case for hs2” (2011) (http://highspeedrail.dft.gov.uk/sites/highspeedrail.dft.gov.uk/files/hs2-economic-case.pdf) HS2 ltd allocated around £2.5bn for the trains, so I’m not sure how they have tripled in price in a couple of years. I wonder how many extra commuter trains the country could buy for £8bn. Vast parts of the railway network are still using outdated 1980’s rolling stock which are tediously slow and lack sufficient seating.

    Is the rolling stock costing included in the total benefit/cost ratio for hs2?

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