HS2 costs could mount to £106bn, leaked review says

The proposed high-speed track will span much of England in a Y-shaped route, connecting London Euston to Leeds and Manchester via Birmingham with the possibility of extending further north. HS2 would carry passengers on trains travelling above 300km/h.

Under current plans, the first phase of HS2 will open in 2026 with the second phase (connecting Birmingham with northern cities) opening 2032-33. The project was initially allocated £55.7bn in 2015 with the budget rising to £81-88bn in a report by HS2 chair Allan Cook published last year. £8bn has already been spent on the project. The project has attracted concerns about whether it can be built within its planned timeframe and budget, in addition to environmental concerns and accusations of London-centrism. In August 2019, Prime Minister Boris Johnson commissioned a review into HS2 led by Oakervee.

Oakervee’s report, which has been leaked, states that there is “considerable risk” that the cost of the project will almost double from its initial budget to £106bn and an increase of approximately 20 per cent beyond the estimate given by Cook last year. Despite this, the review concludes that the government should “on balance” continue with the project with some caveats.

Oakervee has recommended that the government does further work to assess the impact of HS2 on regional growth, and warns that it is difficult to predict what economic benefits will result from the project: “Transport investment alone will not “rebalance” the UK economy”.

The report notably recommends that work on the second phase of HS2 – from Birmingham to Manchester and Leeds – should be delayed for six months. This would allow for time to investigate whether it is more appropriate to build a combination of conventional and high-speed lines to connect these cities to the London-Birmingham line. The report also suggests that frequency should be reduced from 18 per hour – unmatched by any other high-speed railway – to 14 per hour, and that the private sector could contribute to funding HS2 stations to reduce the probability of reaching the inflated £106bn budget.

Mayor of Manchester Andy Burnham has described the leaked report was “quite worrying” and described the use of conventional lines in the northern section of HS2 as a “second-class option”.

“It’s the same old story. London and the South get whatever it wants, and it’s all about penny-pinching in the North,” he said, speaking on BBC Breakfast. “I would say this to the Prime Minister and the government today: this is your first big test of your commitment to the North of England and we’re watching very closely.”

“In my mind there’s no justification at all for doing one thing between London and Birmingham and doing something different in the North.”

The Transport Secretary Grant Shapps has said that any decision on HS2 needs to be evidence-based, telling Sky News: “I asked Doug Oakervee to do that report and said to him “give me the facts, give me the data, give us the information so we can make a proper informed decision.”

Earlier this month deputy chair of the review, Lord Berkeley, laid out several concerns in a dissenting report, accusing his colleagues of having a bias towards accepting HS2’s evidence and ignoring unfavourable evidence. He claimed that the cost of the project could rise to at least £108bn, that it would have a serious environmental impact, and that money would be better spent on improving rail connections in the North of England.

The Prime Minister will decide in the next few weeks whether to proceed with the project. He faces calls to block the project across party lines, and a group of more than a dozen Tory MPs are expected to meet Johnson this week to object to the project.

However, more than 40 senior business leaders in the rail and construction sector have signed a joint letter to the Prime Minister expressing "deep alarm" at the "devastating impact" of any curtailment of HS2.

Writing under the auspices of the Railway Industry Association and the High Speed Rail Group, they warn of "the detrimental effect cancellation would have on UK Plc more widely in terms of jobs, manufacturing, investment and export potential." 

The letter continues: "To date, we have very much welcomed the Government’s commitment to increased infrastructure spending and investment. However, by putting a project of such national importance at risk, future infrastructure plans will also be threatened, as will the Government’s desire to level up the UK economy."