The future of Britain’s high-speed railway project is again shrouded in uncertainty, with Downing Street apparently considering axing the route north of Birmingham to Manchester amid concern over escalating costs. So why exactly is HS2 so expensive?
How much has the final bill gone up by?
When it was first given the go-ahead by the government in 2012, the whole network was supposed to cost £32.7bn, including a north-eastern leg going to Leeds. Exact figures now are hard to pin down but the latest published Department for Transport update said the cost could reach £71bn, at 2019 prices – without any north-eastern leg.
Given the official commitment to a spur to the east Midlands, and general inflation since 2019, a current estimated cost of about £100bn at 2023 prices seems reasonable. And that’s before you buy trains. Others believe it could be much higher.
Do other countries do it cheaper?
Apparently so. France’s latest 203-mile (327km) stretch of high-speed track to be constructed from Bordeaux across the country’s south – just under double the length of London-Birmingham – is expected to come in at €14bn (£12.1bn). A UK government-commissioned study from 2018 found high-speed rail internationally was generally achieved for about £32m a kilometre, on a range of £11m-£79m a kilometre. Phase one of HS2 looks like coming in at about £250m/km.
Wow – what’s Britain’s costly secret?
The HS2 mega bill includes things such as planning processes, property prices, compensation and environmental mitigations on a small island – especially when track and stations are built into the heart of big cities, as well as through well-heeled marginal constituencies. MPs hold hearings into every part of the route and public consultations are held with local communities. While many environmental campaigners have opposed the line regardless, HS2 argues that it is – rightly – held to high, and costly, standards by those along its route. But things such as tunnels through the Chilterns, large cuttings to hide tracks, and vent shafts disguised as farms all add up.
Could it have been cheaper?
Some argue that HS2 was “gold-plated”, in both its target speed and specifications, such as use of concrete slabs rather than ballast on the tracks. Potentially, a cheaper version could have been designed originally, but supporters argue that capacity, value for money and durability would have been affected. Concrete slabs should, for example, mean far fewer closures for maintenance in the long term – if anyone is still accounting for the long term. But the 2012 quote now appears absurdly optimistic.
What about inflation?
Construction inflation rates – fuelled by shocks including Brexit, Covid and the invasion of Ukraine – are even higher than the general headline rates. Inflation in building materials was running as high as 26% last summer, while labour costs went up sharply after Brexit and Covid. The Ukraine war affected the supply of steel reinforcement bars for concrete, putting up prices 30% in a month.
Any other critical factors at play?
HS2’s early chair David Higgins warned that political delay could be the biggest factor in escalating costs. Even before the latest clouds of doubt from Rishi Sunak, ministers admitted that the two-year construction pause would add cost in the long term, while they sought to shave off short-term budgets. Without certainty of long-term work, contractors’ prices also rise.
Ripped-up designs for Euston lost an immediate £100m. The estimated price of the station has escalated from £2.6bn to at least £4.8bn because of “botched decisions”, according to an National Audit Office report. Repeated changes to the wider line could be expected to have similar ramifications.
But HS2 has not always dispelled the sense it is free with public money, from making excessive redundancy payments, to eye-watering salaries. Higgins appointed a CEO on £750k a year – by some margin the highest-paid public servant in Britain – and even though his successor, Mark Thurston, took a pay cut to about £600k, he remained the UK’s top-earning official.
