Costs of Curtailed HS2 Rail Link Still ‘Running Out of Control’

The last remaining section of HS2 – the high-speed rail link from London Old Oak Common to Birmingham – is very poor value for money and the Government appears to have skewed the cost to justify it being completed, MPs say in a critical report today.

The Commons Public Accounts Committee is highly critical of the benefits of high-speed rail after Rishi Sunak cancelled the extensions to Crewe and Manchester and East Midlands airports on the last day of the Tory conference in October.

The report highlights the accelerating costs of providing the last remaining link, the failure so far to find private money to extend the line to London Euston, and the prospect of slower trains to Manchester than the current tilting trains when the new high speed rolling stock has to use the West Coast mainline.

MPs tried to examine how Dame Bernadette Kelly, the permanent secretary and accounting officer at the Department for Transport could justify continuing with the project and are not satisfied with the Government’s explanation.

To justify continuing the project, when ministers knew it was poor value for the taxpayer as a stand-alone line, she wrote off the £23 billion at 2019 prices already spent on the project and included the saving of £11 billion it would cost to compensate contractors and restore the land if it was scrapped as a benefit to continue building the line.

But the report points out that costs are still running out of control with the final bill to complete the line going up to £67 billion at 2023 prices because of the huge hike in inflation that followed the Liz Truss government.

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The report says to save money on the now scrapped extension HS2 will have to build a new connecting link to join the West Coast Line near Litchfield. The place chosen is Handsacre junction which is already described as “a choke point” for freight and passenger trains, suggesting the new HS2 service to Manchester could be held up there.

MPs also tested Rishi Sunak’s announcement promising private finance to build the Old Oak Common link to Euston and replacing the money saved by scrapping on new rail projects in Network North.

They found – five months later – that nothing had been done yet to secure any private finance and the Treasury was still looking at whether higher property values in London could justify asking for private finance. And there is no definitive list of new rail projects and some of the ideas – like the electrification of the line from Chester into North Wales didn’t even have a business case yet.

There is also a warning that if work on the link from Old Oak Common is halted it will cost much more money to restart the project.

Labour’s Dame Meg Hillier MP, chair of the committee, said: “The decision to cancel HS2’s Northern leg was a watershed moment that raises urgent and unanswered questions, laid out in our report. What happens now to the Phase 2 land, some of which has been compulsorily purchased? Can we seriously be actively working towards a situation where our high-speed trains are forced to run slower than existing ones when they hit older track? Most importantly, how can the Government now ensure that HS2 deliver the best possible value for the taxpayer?

“Here we are after over a decade of our warnings on HS2’s management and spiralling costs – locked into the costly completion of a curtailed rump of a project and many unanswered questions and risks still attached to delivery of even this curtailed project.”

A DfT spokesperson to Byline Times: “We disagree with the Committee’s assessment. Their estimated cost figure for Phase One also does not reflect our decision to secure private funding for Euston, or the direction not to proceed beyond the Midlands. 

“Our plans for Euston have already received extensive support from the private sector to invest and will offer a world-class regeneration opportunity, mirroring the successful Kings Cross and Battersea and Nine Elms development programmes.

“The Permanent Secretary has already written to the Committee chair setting out her assessment on value for money, and we have repeatedly made clear we will continue to deliver HS2 at the lowest reasonable cost, in a way that provides value for taxpayers.”