HS2 to Birmingham true cost likely to be £67bn

Aaron Morby 1 year ago
Share

The cost of building HS2 between London and Birmingham has ballooned to nearly £67bn at today’s prices.

Colne Valley viaduct
Colne Valley viaduct

The new estimate provided by HS2 chief Sir Jon Thompson is nearly double what the entire project was expected to cost in 2013.

Then the whole project, including the planned phase two routes to both Manchester and Leeds, had an original price tag of £37.5bn.

Giving evidence to the Transport Select Committee, Sir Jon confirmed that HS2 Ltd’s latest estimate for the London to Birmingham stretch is between £49bn and £56.6bn in 2019 prices.

This is at odds with the government’s present expectation, set out in its recent Network North plan, which said the truncated project would be delivered at £45bn.

He estimated after three years of industry-wide rampant cost inflation in steel and concrete in particular around £8bn-£10bn should be added to the estimate for an indication of the true cost at today’s prices.

Sir Jon also told the committee that he could not guarantee costs would not rise further while contractors were incentivised through cost-plus contracts to spend money.

He said that HS2 was currently trying to renegotiate terms with contractors and for the first time had put in place proper management control systems to keep tabs on individual contracts.

Sir Jon explained there were four chief reasons for the massive overrun.

“The first is that the cost estimate and budget set in the first place was too low, in my opinion.

“Second there has been some changes to scope. Thirdly there has definitely been some poor delivery and fourthly there has been cost inflation.”

He added that a ‘hostile project environment’ with Covid and local planning challenges had also contributed to problems but to a much lesser extent.

Covid cost up to £600m extra, slow planning also hit the project, with one local consent taking over two years to then be turned down.

“And then lastly Government itself said ‘we can’t really afford to fund the schedule; we will need you to go slower because we can’t afford it in cash flow terms’.”

“Obviously if you wait to do something in three year’s time, it is going to cost more than now,” he explained.

 

Latest news

Deck falls off huge scissor lift at Winvic site

Two men seriously injured as platform plunges to the ground
18 hours ago

Bouygues seals deal for £119m Cardiff college campus

Construction to start in June on two new buildings
20 hours ago

Bid race starts for £15bn schools framework refresh

DfE throws framework open to more contractors
1 day ago

Berkeley’s £600m Borough Triangle project approved

Controversial scheme features two towers of 38 and 44-storeys
2 days ago

London Mayor calls in blocked 600-bed student scheme

Refused 20-storey London PBSA block may still be built
1 day ago

HG to build 500-bed London Stratford student scheme

Work will start later this year subject to gateway 2 safety approval
2 days ago

Arrest after pedestrian death on construction site

Tragedy during site preparation works for new Wigan car park
1 day ago

British Steel threatens closure of Scunthorpe blast furnaces

Chinese owners say sectional steel and rail supplies will be maintained
2 days ago

Planning green light for Sheffield warehouse site

Existing factories to be demolished in new scheme for Rula Developments
1 day ago

New rail property company to unlock land for 40,000 homes

First four sites released in Newcastle, Cambridge, Manchester, and Nottingham
2 days ago

Drainage specialist Subscan files administration notice

Specialist employing 131 people files court notice
2 days ago

Four win Network Rail £300m engineering design deal

Eastern region deal will include design for Northern Powerhouse Rail
2 days ago

Funding go-ahead for Banwell bypass after fresh cost hike

Galliford Try contract rises £14m to £64m after final design change
2 days ago

Graham wins Southport £75m Marine Lakes Centre

Firm replaces Kier which parted ways with backer Sefton Council
2 days ago

Chancellor unveils extra £2bn capital spend a year

Construction promised a defence dividend in military base and homes upgrade work
3 days ago

McLaren confirms subcontractor team on £135m warehouse job

Work starts on TN2 Gateway site in Kent.
3 days ago

Vistry profits slump after site costs reporting debacle

House builder launches internal whistle-blowing service in business culture review
3 days ago

Severfield chief to step down

Alan Dunsmore to leave structural steel group by end of June
3 days ago

Funding hurdle remains as Lower Thames Crossing gains consent

Government claims £9bn project may start in 2026 as private finance options explored
4 days ago

Mace wins £600m Euston Tower overhaul

1970s tower's foundations and core to be retained as floor plates extended
4 days ago

Summer start for main works on London green tower

Axa sanctions start at 50 Fenchurch Street 36-storey office block
3 days ago

Japan’s leading flats builder JVs with L&G for UK push

Partners plan to build over 1,000 rental homes in London
3 days ago

Wates submits plan for 1,000 homes Harrow council scheme

Former civic centre Poets' Corner site kicks off housing partnership
3 days ago

Morgan Sindall upgrades forecast for next 12 months

Overbury fit-out arm gets off to a flying start in 2025
4 days ago

Restructure underway at Henry Boot Construction

New management team restructures business after drop in turnover
4 days ago

Government pledges £2bn stop-gap funding for 18,000 homes

Funding avoids cliff-edge in social housing delivery before new grant programme agreed
4 days ago

Just two major new roads schemes to start this year

National Highways sets out one-year interim spending plan after RIS3 delay
4 days ago

Plans go in for £400m GRAHAM Manchester site

Demolition and enabling works underway with main construction set to start next year
4 days ago

Building safety levy rate set at up to £10,000 a home in London

Levy introduction pushed back a year to Autumn 2026 - list of new rates
5 days ago

BAM wins £100m revamp of Broadgate Tower in London

Front of tower 3-storey extension to use cross laminate time and re-used steel
5 days ago

Contractor services