UK ministers considered abandoning HS2 amid spiralling costs

Ministers were so worried about criticism of the rising cost of High Speed 2 that they commissioned an internal review into whether it would be better value for money to abandon the scheme.

HS2 management was ordered earlier this year to examine the “cost-benefit analysis of decommissioning” the entire scheme, into which £40bn of taxpayer money has already been sunk, according to people close to the situation.

The findings, to be revealed on Tuesday, were that the cost of cancelling the London to Birmingham line would be equal to or more expensive than carrying on and would deliver fewer benefits than completing the railway.

Heidi Alexander, transport secretary, will update parliament about a “reset” of the project by HS2 chief executive Mark Wild, and will admit that the railway will be delayed until beyond the mid-2030s and that the budget could surge to more than £100bn.

Wild had concluded that the “collective assessment of the current legal position” if HS2 was scrapped was that the land would have to be fully remediated.

“This would include demolishing all built assets and returning land to the same condition as prior to construction to allow it to be potentially sold back to its original owners where appropriate,” he wrote in a letter to Jo Shanmugalingam, permanent secretary at the Department for Transport.

So far, HS2 has built 100mn cubic metres of earthworks — equivalent in volume to 1,000 Royal Albert Halls. It has also started work on 45 viaducts and 132 bridges with 46 miles of tunnelling excavated. Tunnels would have to be filled in and viaducts demolished.

“There is little evidence that removing these assets would cost much less than creating them,” he concluded in the letter seen by the FT.

“The costs of full remediation of assets to current legal requirements would in some situations exceed the cost of the build of those assets.”

Officials had rejected an FT freedom of information request on March 23 asking for information about internal work “concerning the potential decommissioning of the partially built railway”.

The cost of the scheme has soared since it was launched under the last Labour government in 2010.

The last official estimate for the project was about £80bn in 2024 prices. Alexander is expected to set out a revised range of cost estimates for HS2, ranging from under £90bn to £100bn.

Alexander will say that a couple of billion pounds can be shaved off the final cost of the scheme by reducing the top speed of the trains from 360km/hour to 320km/hour.

But there remains uncertainty around the final cost, not least because there is still no agreed plan for redeveloping London’s Euston station.

The route was originally meant to be a Y-shaped line from London to Birmingham and then up to Leeds in the east and Manchester in the west.

The most recent plan has been a route between Birmingham and Old Oak Common to the west of London when the project first opens in the mid to late 2030s.

The fact that ministers asked for a cost-benefit review of scrapping HS2 points to jitters at the highest level of government about whether HS2 has turned into a white elephant.

One government aide said Alexander was determined to turn the project around. “In the face of the appalling mess we were left, any responsible government should rightly consider all options. But cancelling HS2 at this stage could cost at least as much as finishing it, while delivering none of the long-promised benefits for the Midlands and capacity on the rail network across the country,” they said.

Tony Travers, infrastructure expert at the London School of Economics, said: “The argument that ‘so much money has been spent, we must spend more money’ wins every time. Among many tragic consequences of HS2, the most profound is that it will put the Treasury off funding smaller and more rational projects for decades.”