Ministers were today accused of 'misleading' taxpayers about the true cost of HS2 by excluding inflation from their figures - which could add another £10billion to the price tag.
Transport Secretary Heidi Alexander told the Commons yesterday that the severely delayed and over-budget high-speed rail project will now cost up to £102.7billion. But buried in the small print of official documents it states that this does not include projected inflation, it emerged today.
Once HS2's internal inflation forecasts are included, taxpayers are in fact on the hook for more than £112billion to deliver the project. The documents state: 'The provisional cash estimate based on the lower and upper bound for the overall cost of the HS2 programme is £94.3billion - £112.4billion in cash terms, including projected inflation forecast using HS2 Ltd's bespoke inflation indices.'
Ms Alexander told MPs that the cost range was between £87.7billion and £102.7billion. Tory shadow transport minister Greg Smith, the MP for Mid Buckinghamshire, said: 'It seems there is no limit to the amount of cash ministers are willing to put taxpayers on the hook for to prop up this unwanted and unaffordable monster. The real price tag for high-speed rail project HS2 could be £112billion - £10billion more than ministers announced - when internal inflation projections are included. It was obvious from the start it would blow the budgets, but £112billion to get to Birmingham from London a few minutes quicker is the very definition of insanity.'
John O'Connell, chief executive of the TaxPayers' Alliance, said: 'Taxpayers will be livid that they appear to have been misled about the true cost of HS2, with the full inflation-adjusted figures seemingly buried deep in the small print. A potential £112billion price tag is a staggering indictment of political vanity, bureaucratic incompetence and years of catastrophic mismanagement. Ministers should finally come clean about the real cost of HS2 and explain why taxpayers are still being forced to bankroll this never-ending white elephant.'
Ms Alexander told MPs yesterday, when she outlined the project's sixth reset in 13 years, that £2.5billion in savings will be made by reducing HS2 trains' top speed from the planned 224mph to 199mph. But Mark Wild, who became the project's CEO in December 2024, told MPs on the Commons transport committee this morning that no further savings could be made on construction because this was already in the advanced stages.
Asked by Labour MP Dr Scott Arthur why he couldn't 'get around the table' with contractors and negotiate prices down, he said: 'It's a fair question. But it's really in the engineering. We've got nearly 90 per cent of the design complete. That design is for the higher speeds…the civil engineering, the track, we're better just getting that done to the spec.'
He went on to describe the latest cost increases as 'terrible news', acknowledging that the project's budget 'doubled in five years'. When HS2 was given the go-ahead in February 2020, the budget for the line from London to Birmingham was set at £44.6billion. HS2's original route was supposed to connect London with Leeds and Manchester, but the two northern legs were axed amid spiralling costs and delays.
The high-speed line will only run between London and Birmingham after previous Tory governments ditched two northern legs that were due to run on to Manchester and Leeds amid rocketing costs. The original estimated price in 2011 was around £32billion, including both northern legs. The first trains had been due to start running this year but now won't until as late as 2039. Even then, this may only be between Birmingham and Old Oak Common, a hub in north-West London. Trains could take until 2043 to run into London Euston.
HS2 has already burnt through more than £45billion since 2019 and is only half complete. Mr Wild told MPs he was 'very confident' that the project could be delivered within the latest estimated price tag and that he hoped it would be at 'the front end of the ranges'.
Rail minister Lord Hendy told the committee that 'anybody listening to this would be rightly horrified' and that taxpayers should be 'furious'. He told MPs officials had 'lost control' of the project in its early stages and that it was over-specced, causing costs to soar. He said the project had some 'exceptional features' that 'with hindsight you wouldn't replicate'. He added: 'This is a disastrous place to be with the project at this stage.'
The Department for Transport was contacted for comment.
