HS2 Costs Balloon After Downgrade
The high-speed rail project HS2 has revealed over £2 billion in costs associated with Rishi Sunak's decision to downgrade the line. This includes £1.1 billion written off from the scrapped "phase two" that aimed to connect Birmingham to Manchester, and a further £1 billion in accounting charges due to the project's reduced scope.
Sunak's decision to cancel the second leg of HS2 and scale back plans for London Euston station in October 2022 sparked dismay in Manchester, a city that was set to benefit from the new rapid link. The project, originally planned as a Y-shaped line linking London with Manchester and Yorkshire, has been progressively scaled back.
The government claims the decision will save £36 billion, with Sunak pledging to reinvest in other rail projects, including Network North, to improve links between northern cities. However, the government's spending watchdog has noted that the decision is likely to mean higher fares on the west coast mainline from London to Manchester to discourage train travel.
HS2 attributed £850 million of asset write-downs to the cancellation of the Birmingham to Manchester route, meaning the company is "no longer expected to gain an economic benefit from the preparatory work required to build these phases." This figure does not include the cost of purchasing land and property, which the company hopes to sell later.
The company also reported a loss of £1.07 billion from the cancelled phase two leg, including design, preparation of legislation, enabling works, and environmental projects. An additional £95 million in costs will arise from winding down the project.
In theory, some taxpayer costs could be recouped by redirecting funds to other areas of the rail network, or if a future private or public body revives the Birmingham to Manchester line or the original larger plan for Euston station.
The annual report also disclosed that HS2's former chief executive, Mark Thurston, was paid £652,569 for his final year, including a £34,345 bonus. Thurston resigned in 2023 after six years.
"We are required to declare spending on the project that HS2 Ltd is no longer expected to gain any economic benefit from. In this case, losses relate entirely to work delivered on the northern phase of HS2, which was cancelled by the previous government, and the former design of the high-speed station at Euston."
"Cancelling the second leg of HS2 was a difficult decision, but it was the right one. The £36bn saved will make more of a difference as road and rail improvements for communities up and down the country. Or at least would have done, because Labour have now thrown the entire transport pipeline into chaos. Vital transport upgrades look like they'll be collateral in their mission to trash our legacy.