Contributing Writer rail@bauermedia.co.uk
CANCELLING High Speed 2’s second phase between Birmingham and Manchester could cost over £800 million, according to HS2 Ltd Chairman Sir Jon Thompson.
Giving evidence to the House of Commons Transport Select Committee on January 10, Thompson said the company had already spent £728m on early works for Phase 2a (Birmingham-Crewe), and now expected to spend £92m-£107m on closing down 41 early works compounds and restoring land at the 1,184 investigatory boreholes along the 2a route. Previous estimates had put the cost of building Phase 2a at £5bn-£7bn in 2019 prices.
HS2 Ltd had been set to fund signalling renewals on Network Rail’s tracks approaching Crewe. But Thompson said that Phase 2a’s cancellation (by the Prime Minister last October, RAIL 994) meant the costs of this work would now revert to NR.
For Phase 1 between London and Birmingham, Thompson said current costs were around £60bn-£65bn in 2023-24 prices. He noted that the Department for Transport has to work in 2019 prices, which gives Phase 1 costs at £49bn-£56.6bn, with a budget of £45bn.
Thompson explained the increase was due to four factors: initial estimates and budgets being set too low, scope changes, poor delivery from HS2, and inflation.
Nevertheless, he said the first phase should open “more towards the front than the back” of 2030 to 2033, although that would be using Old Oak Common to serve London rather than Euston.
For construction work, inflation over the past three years has been 27%, he said, with steel prices rising by 47% and concrete by 48%.
For scope changes, Thompson could not put a figure on the increased costs that came from putting more of Phase 1 in tunnels. But he revealed that tunnels cost twice as much as cuttings, and that green tunnels (where contractors dig a cutting, install concrete tunnel segments and then cover everything) cost three times that of a cutting.
Three further but smaller factors served to increase HS2 costs, he added. They were the hostile environment in which HS2 had been working (COVID cost the company £500m-£600m), delays in receiving planning consents, and government decisions to delay work to cut cashflow.
He noted that main works contractors for Phase 1 were on ‘cost-plus’ contracts, which gave them an incentive to spend money. He said HS2 was going to attempt to renegotiate those contracts, but he could give the committee no guarantees that he would be able to get the cost down.
Meanwhile, HS2 is advising the DfT not to reopen the rolling stock contract with Alstom and Hitachi following the decision to axe Phase 2.
“That is for a range of reasons, but primarily because whichever party opens an existing contract is generally the one that loses significantly,” said Thomps
