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Cancelled HS2 Phase 2 to cost £100m

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Closing down Phase Two of HS2 will take three years to complete at a cost of up to £100 million, a latest National Audit Office report revealed.

HS2 artist impression.
Credit: HS2.

Last year, former prime minister Rishi Sunak scrapped construction of the northern phase of HS2 connecting Birmingham and Manchester. 

Although no substantive construction work began on the Northern Phase before it was cancelled, HS2 Ltd began early enabling works including investigative boreholes and moving utilities such as gas pipes.

The company expects to complete remediation works for the phase by summer 2027 at an estimated cost of £100 million.

The report states: “HS2 Ltd needs to efficiently and safely decommission and close down Phase Two construction sites.

Moreover, as of March 2024, the HS2 programme spent £592 million buying land and around 1,000 properties on the Phase 2 route that the Department for Transport (DfT) will no longer need.

According to the report, DfT and HS2 Ltd are developing an approach for potentially disposing of an initial set of land and property, the full programme expected to take several years to complete.

In terms of the cancellation’s effect on Phase one of HS2, the report states: “The government’s decision to cancel Phase Two created uncertainties in a range of complex areas, [which] include what infrastructure and rolling stock are required for Phase One and how HS2 trains will connect to the existing West Coast Main Line

“With Phase One construction underway, DfT needed to decide quickly what works would need to be stopped or changed to avoid unnecessary costs.”

The report goes on to address the significant cost increases of the project, identifying several factors leading to the rise, citing the impact of budget and schedule being set too early and delays and external factors such as COVID-19.

It states: “In September 2023, HS2 Ltd estimated that the forecast cost of main civil construction work alone had increased by £6 billion (2019 prices) since 2020. 

“Although these works are on schedule, HS2 Ltd has not driven the cost performance it expected through its contracts, and contractual incentives to control costs and improve productivity have not worked as intended.

“An important element of this plan is for HS2 Ltd to renegotiate its four main construction contracts to better incentivise cost control and achieve greater certainty on costs.”

The report concludes that despite the reduced scope of HS2,  it remains an “extremely large and complex endeavour”, which DfT and HS2 Ltd need to reset successfully to avoid repeating past failures and maximise its value.

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