HS2 spends an extra £500m as minister admits ‘concern’ at growing costs

The minister responsible for HS2 has raised concerns about the rate at which costs on the project are growing.

In his six month report to parliament yesterday, Andrew Stephenson said HS2 had used up an additional £500m of its £5.6bn contingency fund since his last update.

He said: “HS2 Ltd has drawn £1.3bn of its £5.6bn delegated contingency, meaning £4.3bn remains. Contingency drawn to date reflects an increase of £500m.

“HS2 is reporting £1.7bn of potential future cost pressures that are currently presenting across the programme. This reflects an increase in potential further cost pressures of £400m since my last update.”

He said this meant in the past six months the combined increase in actual and potential additional costs was £900m.

Stephenson added: “While these pressures are manageable within the target cost given the remaining contingency, I am nonetheless concerned at the rate of their increase. I expect HS2 to maintain its focus on delivery to the target cost.”

The update also revealed where the additional costs might be.

It includes an estimate of £800m for extra civils costs, stemming from additional design costs and slower than expected progress in some areas. This increase is £200m more than the figure forecast in October.

It also includes a potential £400m more being spent on the HS2 station at Euston.

Stephenson said: “The move to a smaller, less complex 10-platform single-stage delivery strategy at Euston is now the basis for ongoing design work and other activities.

“The department anticipates that this will assist in addressing the cost pressure at Euston.”

Other potential cost hikes include £200m for changes to Network Rail infrastructure at Euston and Old Oak Common as well as a further £300m in aggregate costs across the whole scheme.