HS2: Delay unlikely but Phase 2 changes imminent

A one year delay to delivery of Phase 1 of HS2  is unlikely to be necessary to lift certainty of the project being completed by 2026 and within its allocated budget, but the Phase 2 outline design will have to change, HS2 Ltd chair David Higgins has said. Detail on how HS2 Ltd will take around £5bn out of the cost of Phase 2 will be laid out next week, he said.

Higgins was speaking in response to a National Audit Office report published today on progress with preparations for the project. The NAO report states that Phase 1 is currently £200m over budget and at risk of missing its 2026 opening date. The Department for Transport has asked HS2 Ltd to revisit the project programme, to bring certainty of delivery back up fom 60% to 80%, and to investigate the impact of a one year extension to the project programme, according to the NAO.

Speaking on the Today programme, Higgins said: "With regard to Phase 1, we are talking about a £200m cost saving to be found out of a budget of £20bn with £7bn of budget contingencies in place. We have been asked to look at the possibilities of a one year delay and yes we've said we'll do that, similar to what was done with Crossrail, but this is at a time when we have not yet appointed civil engineering contracting teams to engage in value engineering help us work out how the project can be delivered at less cost and when we are focused on getting Royal Assent of the HS2 act and procuring over £7bn of construction contracts."

Higgins acknowledged that the Phase 2 project costs are a lot further over budget. At the 2015 spending review, Phase 2 was running £7bn over budget, the NAO says. Around £2bn of cost reductions have already been found, leaving a further £5bn of savings needed. This may come from changes to how the Phase 2 route will serve South Yorkshire.  "We have worked with the NAO on this report and we have been working with authorities in South Yorkshire to work out a better, more cost effective way of building Phase 2 to serve Sheffield, which we will set out next week," Higgins said.

Last month it was reported that a government review had identified savings possible from reduction of HS2's hub connections with Manchester Airport and Sheffield's Meadowhall. The NAO report confirms that government has found around £9bn of savings that could be made from changes to the Phase 2 route. Figures in the North including Manchester's interim mayor Tony Lloyd responded by saying such changes would be "grossly unacceptable". and contrary to the government's Northern Powerhouse agenda.

Higgins said: "HS2 is all about rebalancing the UK's economy between the south and the north of the country. The result of the EU referendum may have added more uncertainty, but one thing it has taught us is not to overlook the north. Phase 2 will remain focused on invigorating economies of the north, which we will set out next week."