UK to Hold Review of HS2 in a Bid to Arrest Spiraling Costs

(Bloomberg) -- UK Transport Secretary Louise Haigh launched an independent review of the HS2 high-speed railway line project to get a grip on spiraling costs.

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Costs attached to the rail project, which was originally designed to link London to Manchester and Leeds, via Birmingham, had risen to as much as £98 billion ($128 billion) by 2020, up from an initial estimate of £37.5 billion for the entire network.

“It has long been clear that the costs of HS2 have been allowed to spiral out of control, but since becoming Transport Secretary I have seen up close the scale of failure in project delivery — and it’s dire,” Haigh said in a statement on Sunday.

Former Conservative Prime Minister Rishi Sunak dramatically scaled back the HS2 project last year to free up funds for other pre-election transport spending including subsidies for bus fares, which put the link from Old Oak Common to London Euston in serious doubt. He also scrapped the section between Birmingham and Manchester.

In recent weeks, ministers from the new Labour government were once again talking up major infrastructure projects like the extension of HS2 rail link to London Euston. Haigh had signaled the HS2 high-speed railway line will be extended to central London, and the Times newspaper reported ministers are looking at a new rail link between Birmingham and Manchester.

However, in Sunday’s statement the Department for Transport noted that “the government has been clear it is not resurrecting Phase 2 of HS2” that was canceled under the previous administration.

While the government recognizes concerns about connectivity between Birmingham and Manchester, “its primary focus now is the safe delivery of HS2 between Birmingham and London at the lowest reasonable cost, and the Secretary of State has made this objective clear to HS2 Ltd.,” according to the statement.

The review, which will be led by senior infrastructure delivery adviser James Stewart, will present recommendations back to the government this winter. “The government is also reinstating ministerial oversight of the project to ensure greater accountability,” the transport department said.

The department will also ask Mark Wild, the incoming chief executive officer of the HS2 project, to assess the current situation and provide “an action plan to deliver the remaining work as cost effectively as possible, including at a realistic budget and schedule.” Wild, who has decades of experience in transport, was previously the head of the Elizabeth Line.

“Taxpayers have a right to expect HS2 is delivered efficiently and I won’t stand for anything less,” Haigh said.

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