It’s not possible here to give a comprehensive recap of HS2’s winding road from gleaming futuristic ambition to nightmarish money pit, but we can at least run through the broadest outlines. When it was first announced 16 years ago, the plan was to release capacity on existing commuter lines, drastically reduce journey times, boost the northern economy through better connections to the capital, and shift passengers away from cars and flights.
But – as Nils Pratley sets out in this column - Peter Mandelson later revealed that the cost estimates even then were “almost entirely speculative”. In the years since, costs have risen and risen, and the completion date has fallen further and further back. (Gwyn Topham has a useful timeline here.) In 2021, the north-eastern leg of the line that was to run to Leeds was scrapped; and in 2023, Rishi Sunak scrapped the western leg due to run from Birmingham to Manchester, reallocating some money to regional transport schemes but undermining the case that HS2 would be good value as an investment.
Now, amid widespread consensus that the government’s timeline and budget for what remains of the project were unrealistic, transport secretary Heidi Alexander (pictured above) has announced that the current schedule is undeliverable. She also said that when the line does open, it may initially have to run at slower speeds than expected to prevent further delays.
But there are still major questions about what happens next, with Alexander saying that she would give an update on costs and deadlines before the end of the year. “This was supposed to be the complete reset moment: here’s the new date, here’s the cost, and we’re going to stick to it,” Kiran Stacey said. “But they aren’t quite there yet.”
Why has the project been delayed again?
Alexander’s announcement yesterday is not really news to anyone watching HS2 closely: “The industry was fully expecting another delay,” Kiran said. In that sense, the announcement does not represent a change so much as a recognition of reality. In 2023, the Infrastructure and Projects Authority said that “Successful delivery of the project appears to be unachievable”.
Last year, the new chief executive of HS2 Ltd, Mark Wild, told MPs that to have any hope of breaking the cycle of overspending, it would take until at least 2026 to set out a new “baseline programme”, ensuring that parts of the work are efficiently synchronised. The National Audit Office similarly concluded that it was now necessary to “take the time needed to properly reset” in order to “deliver value for money from the programme”. There is also a need to rewrite contracts so that contractors are incentivised to work more quickly.
Another part of the problem has been that successive prime ministers – and, as you will recall, we’ve had quite a few of them – have had their own visions of how HS2 should work. “This is a big shiny thing prime ministers want to put their imprint on,” Kiran said. “Meanwhile, the Treasury has always thought it’s a waste of money. So it has always been vulnerable to political change.”
Why has the cost gone up?
When HS2 was first announced, the cost was expected to be about £37.5bn, in 2009 prices. The most recent estimate put the price at £80bn in 2024 prices; now the government says that a more realistic figure at current prices is £100bn. And remember that that is for a much less ambitious route than was originally planned.
That astonishing shift is partly due to factors beyond the government’s control, and partly due to straightforward mismanagement. “The inflation of the last few years has just made everything harder,” Kiran said. “Sourcing materials is more expensive. But there have also been things that were clearly handled poorly.”
Alexander yesterday sought to blame much of that on mismanagement by previous Conservative governments, saying that billions have been wasted in “constant scope changes, ineffective contracts and bad management”. One striking example is the decision to commission two sets of designs for a new station at Euston, at a cost of more than £250m, only to then scrap them both. And under Boris Johnson, the government continued to sign contracts despite being advised by an independent review not to.
In his evidence to MPs last year, Wild said that construction started “way too early”, without the necessary design and planning approvals in place.
Projects like this are always expensive, of course – but the UK does appear to be particularly bad at them. Labour says this is partly because of onerous planning processes. In 2018, a government study found that high speed rail generally cost about £32m a kilometre around the world; even then, phase one of HS2 was budgeted to come in at about £250m per kilometre. It has roughly doubled since then.
What are the arguments for pressing on?
Almost nobody thinks the current plan is ideal: advocates of HS2 tend to think the project would be far more worthwhile if the northern legs of the line remained intact. But even now, they say, the extent of the work already done means that it would be foolish to simply give up. As delayed as the project is, 75% of tunnelling is complete, and work has started on two-thirds of viaducts and half of bridges.
In a piece for the New Statesman from October, Jonn Elledge notes an industry report saying that building HS2 all the way to London and Crewe would comfortably recoup the costs of doing so, “without considering the value of all the extra journeys, homes or other developments the new line will allow”. As the London business group BusinessLDN argued in an open letter about the last leg of the journey to Euston: “Given costs already incurred, and with existing infrastructure and site teams in place, there will never be a cheaper time to build this tunnel than now.”
The government, meanwhile, says that even without the northern leg, HS2 will create new economic opportunity in the West Midlands, and bolster economic growth.
What are the arguments for abandoning it now?
To HS2’s critics, much of this represents a sunk cost fallacy, Kiran said: “If it’s not working, and not worth the money, you scrap it whether you’ve already spent billions or not.”
Guardian columnist Simon Jenkins, a firm opponent of HS2, makes the case that despite the money already spent, the funds that could be released by abandoning the project – £25.3bn over the rest of this parliament, up to a quarter of the government’s investment budget – could be better spent elsewhere. “The whole of Whitehall now knows HS2 makes no sense,” he writes. “Hospitals could have soared in number, schools multiplied, prisons renewed. I cannot believe [Rachel] Reeves really thinks Britain needs them less than it needs a new railway to Birmingham.”
“Value for money has always been at the heart of the problem,” Kiran said. “One government economist told me that it would be much more cost-effective to fix every pothole in the country.”
What will the government do?
There is little prospect of Labour abandoning HS2 now. “One thing counting in its favour is that it fits the government’s narrative about big infrastructure projects,” Kiran said. “So they’re fully committed. If anything, one day they’d love to re-announce phase two” – and though that would not be likely to happen until the second term of a Labour government, it might at least restore something of the scheme’s original ambition.
In lieu of any economic benefit that voters will feel before the next election, Labour needs to at least be able to show that it has got a grip on the ballooning costs. To that end, it has now appointed former Transport for London commissioner Mike Brown as the new chair of HS2, hoping he can help repeat the trick he performed on the Elizabeth line of bringing it in on schedule and on budget. “But this is far from the first reset,” Kiran said. “So I wouldn’t blame readers for being a little bit sceptical.”
