The government has clashed with HS2 Ltd over a “very significant upward revision” to the estimated cost of the high-speed rail programme.
Transport Minister Huw Merriman challenged new figures from the publicly-owned rail company, which put the cost of the first phase, from London to the West Midlands, at between £49bn and £57bn at 2019 prices.
The current funding allocation for the first phase of HS2 is £44.6 billion at 2019 prices.
HS2 blamed rising costs on changes to the scope of the programme, delays in planning consents and supply chain pressures in the wake of the pandemic and the war in Ukraine.
But Merriman said his department had calculated an estimated cost of the first phase of £45bn to £54bn, using the same HS2 data but different assumptions about how much of the remaining cost risk remained affordable.
“[HS2’s cost prediction] it is a very significant upward revision compared to HS2 Ltd’s previous projections and is a wide range compared to the scope of work remaining,” he said in a written statement to Parliament.
Merriman said he rejects the new estimate for HS2 because it was drawn up before the decision to scrap the second part of the plan, which would have seen the high-speed link extended to Manchester and the East Midlands.
He also said the Department for Transport had made “different assumptions” about, for example, how future risks could be mitigated and how revised incentives could affect the costs of completing civil and systems work.
Merriman said he had asked HS2 chairman Sir Jon Thompson to update HS2’s cost estimate and provide an action plan setting out how the scheme would be delivered under its revised scope at reasonable cost lower
An HS2 spokesman said the project was “of unprecedented scale and complexity”.
“Cost increases were caused by multiple factors, including delays in planning and environmental consents, program scope changes and supply chain pressures linked to the pandemic and the war in Ukraine” , he said.
“In hindsight, the estimates made before full construction by the government and HS2 Ltd were too optimistic and the delivery performance did not fully match expectations.”
Under the leadership of Sir Jon Thompson, HS2 was committed to learning the lessons of recent years and controlling costs, he added.
On Tuesday (November 14), the chief executive of the Infrastructure and Projects Authority (IPA) defended his organization against claims it should scrutinize cost estimates provided by HS2 further.
Responding to suggestions the company had hidden the scale of cost pressures, Harriett Baldwin, chair of the treasury select committee, said it was the IPA’s job to “get to the bottom” of the estimated figures.
But the head of the IPA, Nick Smallwood, said: “We only have the material and the data available for HS2, and we had the same data that the department got, so we did our analysis on that data”.
The authority declared HS2 “unachievable” in July, citing major problems with the project’s definition, timetable and budget.
When asked if the figures provided by HS2 had been audited by the IPA, Smallwood said: “I wouldn’t use the word audit, I would say we reviewed that data.”
He told the committee that he had said shortly after he was appointed in 2019 that the HS2 project was probably over-designed and over-specified, but as the project was already underway there would have been cost penalties in changing it, so that the advice was given. to continue.
His experience with first-of-its-kind projects is that they almost always lead to overspending because costs are difficult to estimate, he said.
