The cost of the remaining HS2 scheme from North London to Birmingham has risen by a further £3bn, according to the government-owned company responsible for the project.
However, ministers have said the Government ‘disagrees’ with the new £57bn maximum cost.
In a statement to Parliament, transport minister Huw Merriman said the HS2 Ltd Board had advised him that its updated estimate at completion (EAC) for Phase 1 from Euston to Birmingham and works north to Fradley and the Handsacre Junction is between £49bn and £57bn.
Work is underway to take HS2 to a new Curzon Street terminus in Birmingham
Noting that last month’s ‘Network North’ command had quoted a range of £45bn to £54bn, he told MPs This is a very significant upwards revision compared with HS2 Ltd’s previous projections and is a wide range in comparison to the scope of the remaining work.’
He added: ‘The government disagrees with the £49bn to £57bn figure for two reasons. First, it was drawn up by HS2 Ltd before they were notified of the decision to cancel Phase 2. It reflects HS2 Ltd’s understanding of the project in September – that it would be proceeding to Manchester and the East Midlands, and with more expansive plans for Euston.
‘Secondly, DfT makes different assumptions on how much cost risk remains addressable, including different assessments of: how future risks could be actively mitigated: how revised incentives could change the trajectory on the costs of completing the civils and systems work and the size and composition of HS2 Ltd’s own operating costs.’
Mr Merriman said he had asked HS2 Ltd’s executive chair, Sir Jon Thompson, to update its estimate to consider the revised scope of Phase 1 and the cancellation of the wider scheme and to explain and evidence why the upwards revisions have been so significant and their causes and agree an EAC with government ‘by providing an action plan on how HS2 Ltd will deliver the revised scope at the lowest reasonable cost’.
He added that he would update Parliament once that revised estimate has been provided and new cost targets have been provided to HS2 Ltd, ‘including clarity on any changes to the scope or the funding envelope’.
Mr Merriman said delivery remains on track for the initial high-speed services between Old Oak Common and Birmingham Curzon Street by 2029 to 2033 but that an updated delivery-into-service range for services to Euston will be provided 'in due course' – whih suggests no date has been fixed.
As well as curtailing HS2 north of Birmingham, ministers announced last month that it would be scaled back at Euston, with a new ‘development led’ approach to the Euston Quarter, which would ‘attract private funding and unlock the wider land development opportunities the new station offers, while radically reducing its costs to the taxpayer’.