HS2 and Euston: Tenth report of Session 2023-2024

The High Speed Two (HS2) programme aimed to construct a new high speed, highcapacity railway between London, the West Midlands and the north of England. On 4 October 2023, the Prime Minister announced that Phase 1 would continue but that all other phases would be cancelled in response to increasing costs on the programme. This Committee has been reporting its concerns on how High Speed 2 (HS2) has been managed for over a decade, but recent events have left us more concerned about the HS2 programme than ever before. The cancellation of the latter stages of the HS2 programme and operating just Phase 1, from London to the West Midlands will achieve poor value for money for the taxpayer, as the Department for Transport (the Department) acknowledged to us. The Department told us it was still better to complete Phase 1, given the approximately £11 billion of remediation costs (in 2019 prices) that would be incurred if they cancelled the whole programme. Even before the cancellation of Phases 2a, 2b and East, the costs of HS2 continued to escalate, with HS2 Ltd’s estimated costs for Phase 1 now as high as £57 billion against a budget of £44.6 billion (in 2019 prices). HS2 Ltd estimates that inflation since 2019 will add a further £8 billion to £10 billion to the cost, making a total in current prices of up to £67 billion. Poor cost management indicates a failure of governance and oversight across both HS2 Ltd and the Department. This is of great concern given the scale of the challenge they face in resetting the programme to complete Phase 1 and manage the closedown of the other phases, for example in disposing of land and property no longer needed. We are also highly sceptical that the Department will be able to attract private investment on the scale and speed required to make the London terminus station a success. Alongside managing changes to the HS2 programme, including the impact on Northern Powerhouse Rail, the Department also has work to do to confirm exactly how the £36 billion redirected from HS2 will be used over the next two decades, and how it will manage this long-term portfolio of projects. Crucially, the Department does not yet understand how HS2 will operate as a functioning railway following recent changes. It is vital the Department now gets to grips with the programme to complete Phase 1 within the estimated range of 2029 to 2033, with HS2 Ltd aiming for 2030, and maximises what value it can for the taxpayer.