HS2: Scrapping troubled rail link could cost £12bn, say reports

Boris Johnson has ordered an “emergency summit” over the future of the troubled HS2 rail project, as industry figures warned that scrapping the plans could cost as much as £12bn.

The government is under increasing pressure to provide leadership over the future of the high-speed-rail infrastructure plans after a leaked review indicated that costs could reach £106bn, while the National Audit Office said the project was now a decade behind schedule.

When the plans were first unveiled by Gordon Brown’s Labour government in 2010, the original budget was £34bn.

About £9bn has already been spent, and industry insiders told The Observer that extra costs of between £3bn and £4bn would be incurred immediately if the project is scrapped.

It is thought the prime minister could decide on the future of the project this week, with The Sun reporting that Mr Johnson has scheduled a meeting with the chancellor, Sajid Javid, and the transport secretary, Grant Shapps, telling them: “Let’s get this settled.”

The first phase of the plan will implement a faster rail link between London and the west midlands, and was originally due to be completed by 2026.

The second phase, building onward lines from Birmingham to Manchester and Leeds, was originally due to be operational by 2032-3, but may now not be running until 2040 – if it goes ahead at all.

Spiralling costs, as well as the various local impacts of the rail link, have caused major divisions within the Conservative Party. A group of 14 MPs called the HS2 Review Group claimed this week that the line has “no benefit” and will have a “devastating impact” on their constituencies.

Meanwhile, 80 Conservative MPs have reportedly demanded a meeting with Mr Johnson to urge him to press ahead with the work.

The review of the project, which was leaked to the Financial Times, also called for work on the second phase of the project to be paused for six months while further explorations of how existing rail links in the north of England could be used by some high-speed trains.

The mayor of the West Midlands, Andy Street, told The Observer that if the project were to be entirely scrapped, it would be “Narnia-land” to believe that major costs would not be incurred.

He warned that billions had already been invested by businesses, in the belief the project was going ahead, and said cancelling HS2 could further damage Britain’s international reputation.

Mr Street said: “We went into paralysis while we sorted out how we were going to sort out Brexit. We are just coming through that, making our great statements about Global Britain open to the world, and what’s the next thing we do? We lose our nerve on probably the best demonstration of our self-confidence.”

Cancellation costs would include enormous site clearances, new ecological surveys, contract terminations, dismantling construction sites, and necessary land improvements, while existing compensation schemes, and land and property purchases would continue, potentially opening the door to an avalanche of legal action.

On Sunday morning, the Brexit secretary, Stephen Barclay, said his “gut instinct” was that HS2 would go ahead.

Speaking on BBC1’s The Andrew Marr Show, Mr Barclay said that the government had given a “clear commitment to level up all parts of the United Kingdom ... HS2 plays an important part in that”.

A spokesperson for HS2 Ltd told The Observer: “Phase one of HS2 is the only shovel-ready major transport project in the UK. It has taken 10 years of expert design and development, parliamentary scrutiny and public consultation to get to this point. No other major projects are within at least five years of being where HS2 is today, and upgrades to the existing network cannot deliver the same benefits.

“The UK construction sector, the companies working on the project, and those relocating to cities along the route, and the civic leaders in the Midlands and north eager to benefit from the investment HS2 will bring to their regions are all united in support for HS2 being built as soon as possible.”