The cost to deliver HS2 between London and Birmingham could be more than £65 billion in today’s prices – approaching double the cost estimate for the entire project in 2013.
HS2 Limited executive chairman, Sir Jonathan Thompson, told a Transport Committee during a progress report the government’s initial estimate for the whole programme had been too low, even before accounting for soaring materials costs in recent years.
“The cost of delivery is more than the government budgeted, and that is before you begin to account for the extraordinary construction inflation over the last three years or so,” he said.
Sir Jonathan estimated Phase One will cost between £49 billion and £56.6 billion in 2019 prices, at odds with the government’s forecast of £45 billion outlined in its Network North proposal and after the cancellation of construction of the northern phase.
He said following three years of construction cost inflation (27 per cent), including in steel and concrete, between £8 billion and £10 billion should be added to the cost of Phase One.
Sir Jonathan also warned costs could rise further if the government kept asking the company to slow down delivery due to cashflow. “The government themselves have sometimes said, ‘We can’t really afford to fund a schedule, we’ll need you to go slower because we can’t really afford it in cashflow terms’. If we go slower and something has to take place in two or three years’ time, it costs more than it does now,” he said.
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