The High Speed 2 programme is one of the single most expensive taxpayer funded projects in the UK. This committee and our predecessor committees have been watching the costs for some years and been critical about the lack of transparency over costs and some of the decisions taken by management. The increase in costs have dented public confidence, but the project does appear to be in a better place following the reset last year. Significant concerns remain however, around key parts of the programme that if unaddressed will lead to further costs and disruption. With construction of Phase one underway and plans for Phase 2a approved by Parliament, the current estimated cost of completing High Speed 2 is between £72–98 billion (2019), an increase from the original budget of £55.7 billion (2015 prices) in 2015. While HS2 Ltd consider these estimates to be realistic, uncertainty remains, particularly when a substantial amount of the Phase One programme is still to be procured and HS2 Ltd is already reporting cost pressures of £0.8 billion from activities such as delayed enabling works and Euston station. HS2 Ltd is also unable to quantify the final cost of the impacts from the COVID-19 pandemic but estimates the cost to be between £300 million and £400 million at the end of 2020. If these costs are validated, they will need to be covered by the government-retained contingency of £4.3 billion.
Having warned in May 2020 that the Department and HS2 Ltd’s lack of transparency about the scale of the issues facing the programme risked undermining public confidence, we are encouraged that HS2 Ltd is now able to provide us with a clearer account than we have heard previously of what it has spent so far and what it expects to spend during the rest of Phase One. However, we are increasingly alarmed by the lack of progress in developing Euston station. Despite Euston being a key part of Phase One, the Department is yet to make key decisions on the design and approach to construction. Government also still needs to decide how Phase 2b – the northern sections of the route – will integrate with other parts of the railway and transport system. Both Euston and Phase 2b are complex and risky parts of the programme, but they are critical to the delivery of the promised benefits from High Speed 2. Urgent action is needed if the whole programme is to be delivered on time.
HS2 Ltd and the Department also need to do more to address the concerns of people, communities and businesses near the route, and to make sure that the benefits they have been promised are delivered. The volume of complaints about disruption and environmental damage from construction is rising and is expected to increase as the programme progresses. HS2 Ltd has an opportunity to get on the front foot and engage with communities earlier and more successfully than it has done so far. Government has promised a range of benefits in addition to building the new railway, including providing local jobs. Yet the Department and HS2 Ltd are unable to tell us how they will ensure these are delivered. We expect the Department and HS2 Ltd to have established a strategy to monitor and evaluate the benefits of the programme when we next revisit High Speed 2.