HS2 Costs Soar Past £43 Billion as Contractors Prepare for Scrutiny

The High Speed 2 (HS2) project has now surpassed an astonishing £43 billion in expenditure, with contractors bracing for significant criticism over escalating budget increases. The Department for Transport has revealed that £43.6 billion has been spent to date, a substantial rise from previous figures, as the government commits to a renewed effort to control costs and streamline the construction programme.

Key Takeaways

Over £43 billion has been spent on HS2, with the latest figures showing a significant increase.
The government is undertaking a “reset” of the project to control costs and improve productivity.
Reducing the top speed of trains is being considered as a potential cost-saving measure.
Revised cost and schedule estimates are expected by the summer recess.

Escalating Expenditure and Government Response

The Department for Transport’s latest six-month update indicates that £43.6 billion has been spent on the HS2 scheme as of the end of last month. This figure rises to £46.2 billion when accounting for the £2.6 billion spent on the now-abandoned Phase 2 of the project. The majority of the expenditure, £30.9 billion, has been allocated to civil engineering works, with an additional £2.9 billion directed towards station construction.

HS2 chief executive Mark Wild, who assumed leadership in 2024, has been actively engaged in renegotiating construction contracts with firms in an effort to curb rising costs. Transport secretary Heidi Alexander has previously voiced concerns about “uncontrolled costs and extremely poor productivity and performance from the supply chain.”

Efforts to Reset and Reduce Costs

In response to the ongoing budget challenges, the government is implementing a “reset” of the project. This initiative includes reshaping HS2 Ltd and continuing dialogue with suppliers to review contracts. Recommendations from an independent review are also being implemented to ensure the railway is delivered safely and at the lowest feasible cost.

One significant proposal under consideration is reducing the top speed of the trains. Currently designed to operate at 360 kph (224 mph), this specification is higher than any existing railway in the UK or globally. The current approach necessitates the construction of HS2 tracks before train testing can commence, potentially increasing costs and delaying completion. An alternative would involve testing trains abroad on existing high-speed tracks.

Mr. Wild’s initial assessment suggests that reducing train speeds could save “low billions” and expedite the railway’s entry into service by mitigating risks associated with programme delivery and testing. A final decision on this matter, along with revised cost and schedule estimates, is expected from Mr. Wild before Parliament’s summer recess in mid-July.

Future Outlook

The government will review the outcomes of these assessments and supplier engagements before publishing the new cost and schedule estimates, pending full assurance and approval. While acknowledging that these measures will not rectify past failures, they are intended to establish a realistic and controlled pathway for completing the remaining work on the HS2 project.