The total cost of HS2’s London-Birmingham section is set to exceed the government’s budget by several billions, according to a leaked report.
A research presented to the HS2 board by Sir Jon Thompson, the project’s deputy chair, said it was “very unlikely” the £40.3bn target would be met.
The document concluded that the government’s contingency plan – which could stretch the budget by an additional £4.3bn – had a 50 per cent chance of working, the Financial Times exclusively reported.
Thompson’s research also pointed out that soaring inflation rates represented a “significant and growing challenge” and that continuing to record costs in 2019 prices meant that none of the figures reflected “what has been or is being paid.”
“In almost every area reviewed significant developments are planned in 2022/23 which impact on the estimates and risk,” the document, which was circulated in June, read.
Nevertheless, the government said it has remained committed “to delivering [HS2] on time and to budget.”
“HS2 is underway, within budget, and supporting 28,000 jobs,” a government spokesperson told City A.M.
“As with all projects of this scale, contracts and scope are routinely considered to ensure they continue to deliver the value for money for taxpayers.”
Set to connect London to both Manchester and Leeds via Birmingham, the project’s total bill was at £33bn when commissioned a decade ago.
But last year Boris Johnson’s government was forced to scrap the eastern leg – connecting Birmingham and Leeds – to save up money as HS2’s total costs were now set to exceed £100bn.
City A.M. has approached HS2 for additional comment.