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Wed June 29 2022

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HS2 remains on budget… but which budget?

17 Mar Transport minister Andrew Stephenson has present his six-monthly report of the HS2 project to parliament with the assurance that it “remains within budget”.

Chalfont St Peter vent shaft for the Chiltern tunnels
Chalfont St Peter vent shaft for the Chiltern tunnels

The current budget for HS2 Phase One (London-Birmingham) stands at £44.6bn. Of this, £14.9bn has been spent, with an additional £800m for land and property provisions. £12.7bn has been contracted but not yet actually spent.

That £44.6bn budget figure is not what the government orHS2 Ltd expects it to cost. It should ‘only’ cost £34.7bn – including systems and trains as well as construction. However £5.6bn has been added for contingencies to give HS2 Ltd a target cost of £40.3bn.

To this £40.3bn target cost the government has added another £4.3bn contingencies of its own, to arrive at a ‘budget’ of £44.6bn.

So were HS2 Phase One to come in at £42.0bn, the government (and the client organisations) would be able to crow that the project had come in £2.6bn under budget - even though it would have actually cost £7.3bn more than it should have.

Those £9.9bn contingencies are there for a reason.

HS2 Ltd has so far drawn £1.3bn of its £5.6bn delegated contingency, including £500m in the past six months, meaning £4.3bn remains.

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HS2 Ltd is reporting £1.7bn of “potential future cost pressures that are currently presenting across the programme”. These include an estimate of £800m for potential additional main works civils costs stemming from additional design costs and slower than expected progress in some areas. That figure has risen from £200m six months ago.

There is also a “pressure” of £400m on the cost estimate for the HS2 Euston station and £200m against HS2 Ltd’s budget for changes to Network Rail infrastructure at Euston and Old Oak Common that are required to facilitate the new HS2 stations.

On Covid-19 costs, HS2 Ltd’s assessment of the likely financial impact of the pandemic on delivering Phase One is estimated within the range of £400m to £700m.

Ongoing protester activity, including the removal of camps and protest-related delays to the programme, has cost nearly £122m so far.

The minister’s full report can be read at

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