HS2 will provide ‘very poor value for money’ after its northern leg was axed, MPs have warned.
A report by the Commons’ Public Accounts Committee (PAC) said the Department for Transport (DfT) also didn’t know ‘what it expects the final benefits of the programme to be’.
It comes after Prime Minister Rishi Sunak axed the beleaguered high speed rail project’s Birmingham-Manchester leg last year amid spiralling costs and repeated delays.
The Government is ploughing £36billion saved into dozens of other transport projects – called Network North – instead, including filling potholes and improving east-west rail connectivity.
But the PAC report said that the London-Birmingham leg, known as Phase One, going ahead will likely ‘not be value for money because total costs will significantly outweigh benefits.’
The construction site for the HS2 project at Birmingham Curzon Street, pictured last October
It said the potential benefits could be as low as £1.10 for every £1 of public money spent.
MPs behind the study also said they were ‘highly sceptical’ that the DfT will be able to attract the private investment needed for the planned central London terminus at Euston.
Mr Sunak effectively axed this section too as it will only go ahead if private sector money can be raised.
It raises the prospect of the line stopping at Old Oak Common, in the suburbs of north west London, with travellers having to switch to other forms of transport to reach central London when travelling from the Midlands.
HS2 boss Sir Jon Thompson, who has led the project since Mark Thurston stepped down in September 2023, warned last month that the estimated cost for Phase One has soared to as much as £66.6 billion, against a budget of £44.6 billion (in 2019 prices).
Currently the only leg of the HS2 project set to go ahead is the London to Birmingham line
He said reasons for the cost increase include original budgets being too low, changes to scope, lower than expected productivity, weak contractual models and inflation.
The PAC report states: ‘HS2 now offers very poor value for money to the taxpayer and the DfT and HS2 Ltd do not yet know what it expects the final benefits of the programme to be.
‘The Department acknowledges that building just Phase One will not be value for money because total costs will significantly outweigh benefits.’
However, it noted that the DfT insisted that continuing with that section ‘was value for money’, partly due to avoiding £11 billion of costs that would be incurred from cancellation.
The front shield from the 2,000-tonne tunnel boring machine is lifted into the Victoria Road Crossover Box ancillary shaft at the HS2 site near Old Oak Common in London last October
But the report said: ‘There are many uncertainties in this assessment and we were left with little assurance over the calculations.’
It added: ‘We are…highly sceptical that the department will be able to attract private investment on the scale and speed required to make the London terminus station a success.’
Dame Meg Hillier, who chairs the committee, said: ‘HS2 is the biggest ticket item by value on the Government’s books for infrastructure projects.
‘As such, it was crying out for a steady hand at the tiller from the start.
An early visualisation of an HS2 train, in an artist’s impression handout issued by HS2
‘But, here we are after over a decade of our warnings on HS2’s management and spiralling costs, locked into the costly completion of a curtailed rump of a project and many unanswered questions and risks still attached to delivery of even this curtailed project.’
The high-speed rail project was originally supposed to connect London with Birmingham, where it would fork into an ‘eastern’ leg to Leeds and a ‘western leg’ to Manchester. It’s original price tag was less than £40billion.
But the eastern leg was axed in November 2021 before Mr Sunak axed the western leg at Tory party conference in October last year after it became clear the final cost could exceed £100billion.
A spokesperson for HS2 Ltd said: ‘We’ve been clear about our cost challenges, which have been compounded by significant levels of inflation.
The Victoria Road Crossover Box ancillary shaft HS2 site near Old Oak Common last October
‘HS2 Ltd is now under new leadership and implementing changes across the programme aimed at controlling costs and learning the lessons of the past.’
A DfT spokesperson said: ‘We disagree with the Committee’s assessment. Their estimated cost figure for Phase One also does not reflect our decision to secure private funding for Euston, or the direction not to proceed beyond the Midlands.
‘Our plans for Euston have already received extensive support from the private sector to invest and will offer a world class regeneration opportunity, mirroring the successful King’s Cross and Battersea and Nine Elms development programmes.
‘The Permanent Secretary has already written to the Committee chair setting out her assessment on value for money, and we have repeatedly made clear we will continue to deliver HS2 at the lowest reasonable cost, in a way that provides value for taxpayers.’
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