Parts of HS2 to be delayed or cut as ministers prepare to reveal rising costs

Parts of HS2 to be delayed or cut as ministers prepare to reveal rising costs

9 Mar    Finance News, News

Ministers are set to delay construction of key sections of the HS2 rail line, with a statement expected imminently outlining the extent of budget overruns amid soaring inflation.

It is understood that parts of the high-speed network between Crewe and Birmingham are likely to be delayed or trimmed, while full running of trains into London Euston may also be held off further.

At least £2bn more will be needed for the first London-Birmingham stretch alone since the last official update in October, well above the contingency sums in the initial £44.6bn funding, casting doubt over prospects for the full network’s delivery.

While the chancellor, Jeremy Hunt, and Downing Street reiterated in January that the government would build the line between London Euston and Manchester, the Department for Transport has been under mounting pressure to find cost savings from HS2 – or let other, non-HS2 rail investment projects lapse.

Ministers have repeated their commitment to a high-level £96bn rail plan drawn up last year, but less is likely to be built for that money than originally anticipated.

HS2 Ltd and the DfT have been working on cost-saving options under two tightly guarded initiatives, entitled Project Silverlight and Operation Blue Diamond. The transport secretary, Mark Harper, is expected to deliver the news in a statement to MPs today.

Although delays have long been acknowledged to have increased the eventual overall cost of infrastructure projects such as HS2, the current economic climate and Treasury pressure is leading ministers to consider deferring parts of the scheme.

The completion of the line into London Euston could be knocked further back until the 2040s, with insiders suggesting that the London terminus is not required until the line to Manchester is open.

Under the last announced schedule, London-Manchester trains will start to run some time between 2035 and 2041, but that timescale could be pushed back yet further, potentially by another four years.

Initially, the line will run to a new Old Oak Common station in west London, despite the widespread demolition and years of preparatory work already conducted around the eventual Euston terminus.

Much of phase 1 of HS2, London to Birmingham, is well under way, with five of 10 tunnelling machines already underground in Warwickshire, London and Buckinghamshire. Half the Chiltern tunnels have been dug and significant work completed on the controversial Colne Valley viaduct, cutting through the regional park west of London.

Senior civil servants and ministers warned the Commons transport select committee in January that “tough decisions” would be needed, potentially putting other rail – or even wider transport projects – on hold if HS2 was backed.

HS2’s original eastern leg to Leeds – officially under review rather than entirely cancelled – is no longer in its budget. An undetermined “high-speed line” from Birmingham to Sheffield remains on the table, but trimmed and subsumed into the government’s £96bn integrated rail plan. That remaining stump of HS2 East, made up of track enhancements and limited stretches of new line, appears to be one of the most vulnerable spending projects.

A key part of the phase 2b works linking Crewe to Manchester, the Golborne link, which would have enabled faster onward trains to Scotland, was axed last year to save up to £3bn.

Earlier this week, Labour repeated pledges to build HS2 and “northern powerhouse” rail in full – but Harper avoided making similar commitments. In a speech to Transport for the North in Newcastle on Monday, he told delegates that the government was sticking to the £96bn rail plan, adding: “Easy promises to get applause at events and conferences like this around the country are not credible if people don’t have plans to pay for them.”

The DfT’s budget was frozen from 2025 in the autumn spending review, meaning a potentially significant cut in real terms.

A DfT spokesperson said: “Spades are already in the ground on the HS2 project and we remain committed to building the line from Euston to Manchester.”

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