Exclusive: Taxpayers to front extra £4bn for recent HS2 delays

Recent delays to HS2 have increased costs for taxpayers by up to nearly £4bn, according to a government document detailing the value of mega-projects in the UK.

The Office for Value for Money, a cost-saving unit set up by Rachel Reeves, found deferrals over the last two years would increase costs on Phase 1 from London to Birmingham by between £2.3bn and £3.7bn at today’s prices.

Included in that figure is £1.8bn towards construction, much of which is at HS2’s Central London terminus at Euston, the completion of which is still reliant on attracting private investment.

The Office for Value for Money found that for every £1 of civil work deferred, total costs increased by £1.25, bringing the £1.8bn figure to £2.3bn.

HS2 has reached a critical juncture as it presses ahead with a “fundamental reset” aimed at reining in spiralling costs and long-running delays. 

The latest set of estimates point to the burden taken on by taxpayers for the delays plaguing major infrastructure projects in the UK.

HS2 a ‘shambolic mess’

Transport Secretary Heidi Alexander dubbed the UK’s largest infrastructure project a “shambolic mess” last month after a report by its new chief executive outlined years of mismanagement under the Conservative government. 

The cost of building HS2 has risen by more than £37bn since 2012, with some estimates now placing the total higher than £100bn. A revised figure is set to be revealed by ministers following the conclusion of the reset.

HS2’s exorbitant bill has fallen alongside a significant reduction in the project’s final scope, including the cancellation of the Phase 2 northern leg to Manchester in October 2023.

In its review, the Office for Value for Money also noted the expense of delays to decision making, with a £20m per day run rate for Phase 2 prior to its cancellation.

A DfT spokesperson said: “The Transport Secretary has acted swiftly to put urgent measures in place to bring delivery under control and HS2 is now undergoing a full reset, which will include developing an updated cost estimate for the whole programme.

“The Spending Review settlement supports the reset and will enable HS2 to drive forward active construction works.”