BRITAIN’S flagship high speed rail project linking the capital to the Midlands and the North may never reach central London, HOAR can reveal today.
Blighted by soaring inflation, HS2 bosses are weighing up a scaling back of the project — including delaying its Euston terminus to 2038 or scrapping it altogether.
HS2 bosses are weighing up delaying its Euston terminus to 2038 or scrapping it entirely
The Department for Transport warned of ‘tough decisions’ for HS2 in the coming weeks
Ministers last year ordered a cost-cutting review of HS2 — a project that has been ravaged by rising construction prices — amid secret fears the first London to Birmingham phase alone could cost £60billion.
A two to five-year delay to the entire project is being considered, with fresh fears the Birmingham to Crewe and Manchester legs will also be scrapped.
High speed trains would instead run from a new hub at Old Oak Common in West London’s suburbs rather than HS2 going all the way into the city centre with a new tunnel.
Commuters would have to use the Elizabeth Line to complete their journeys into central London on the Underground in a bid to try save billions of pounds for the project.
Last week, the Department for Transport warned of “tough decisions” for the scheme in the coming weeks.
It came after emergency talks with the directors of HS2 Limited on how to keep the project remotely on budget.
MPs warned the total cost of going all the way to Manchester will hit almost £100billion — even before inflation began to soar.
HS2 bosses have privately admitted soaring construction costs mean they will miss their £44billion phase one budget by “many billions” — with a quarter of the contingency funds already spent.
Insiders say subcontractors in their droves have warned HS2 Limited that they cannot fulfil their contracts due to rising costs of concrete, steel and labour without going bust.
Even adjusted for inflation, the cost of HS2 phase one will likely hit more than £50billion.
But sources say that is likely to be more than £60billion by the time the first train runs as construction industry inflation is even higher than the price rises affecting families.
The Old Oak Green to Birmingham service is meant to begin in 2033, but sources at HS2 cast “extreme doubt” on that target being hit. They also said delaying Euston would have a knock on effect on the rest of the project.
One ex-HS2 employee said: “There are a number of options for getting the costs down and none of them are very nice.
“Either you scrap Euston, or you have to slow down the whole project and hope inflation comes down.”
A report by the Policy Exchange think-tank found cancelling all sections of HS2 where main construction has not started would save around £3billion a year by 2027/8, and £44billion or more in total.
Its author, the former No10 transport adviser Andrew Gilligan wrote: “HS2 now costs more to build than the value of the benefits it will deliver.
“The official benefit cost ratio shows that for every £1 spent on the scheme, the country gets back benefits worth only 90p. Shortening the scheme improves its value for money.”
Last October, the Department for Transport admitted that despite £105million having been spent on drawing up plans for the Euston terminus, those designs could not be used after the number of platforms was cut from 11 to ten.
A new scaled-back design is currently out for public consultation. But plans for the tunnel from Euston to Old Oak Common are still up in the air.
Even adjusted for inflation, the cost of HS2 phase one will likely hit more than £50billion
Official sources involved in HS2 say selling land bought around Euston instead of building a station could produce “billions” to reinvest.
Earlier this month, Permanent Secretary of the Department of Transport Bernadette Kelly told MPs a decision on HS2 costs would be taken “over the next few weeks”.
She told the Transport Committee: “It is likely there will be some quite tough decisions that need to be taken then, including around the phasing and delivery of all our capital programmes, including HS2.”
And Rail Minister Huw Merriman revealed there were cuts coming to train projects across the network, warning of “far too many projects for the funding envelope”.
He added: “There will be projects that colleagues may have been told would be going ahead but which actually have not been proceeded with and will not go ahead.
“My job is going to have to be to give the bad news.”
Last year Transport Secretary Mark Harper insisted phase one of the project was still within the £44.6billion budget.
Over £18.3billion has already been spent, with an additional £1billion used buying up land.
A further £10.6billion has already been promised in contracts — meaning the cost of cancelling is £30billion.
In October, ministers ordered HS2 to draw up how it will bring “projected costs back in line with the target cost”.
Some £1.9billion of contingency funds have already been drawn down, leaving just £4billion in the emergency kitty with more than a decade and half for the project still to run.
Asked if the Euston leg was under threat, a Department for Transport spokesman said: “The government remains committed to delivering HS2 to Manchester, as confirmed in the Autumn Statement.
“As well as supporting tens of thousands of jobs, the project will connect regions across the UK, improve capacity on our railways and provide a greener option of travel.”
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