Recommendation 10

HS2 Ltd’s most recent estimate for the cost of Phase 1 is that it will be in the range £49 billion to £57 billion (2019 prices). It cites a range of issues as the cause of increases, including “design performance, delivery productivity, consenting delays, and a difficult operating environment with COVID-19 and the Ukraine War affecting the supply chain.” In particular it also cites the increased cost of ‘Main Work Civils’. The Government disagrees with this forecast because a) it was drawn up by HS2 Ltd before being told of the decision to cancel Phase 2 and b) because the Department makes different assumptions on how much cost risk remains addressable. The Department’s most recently published estimate is a range of £45 billion to £54 billion (2019 prices) for the cost of Phase 1.22 After our evidence session, when giving evidence to the Transport Committee in January 2024, HS2 Ltd estimated that bringing its estimate in 2019 prices up to 2023–24 prices would 14 Q 17 15 Q 25 16 Qq 21, 24 17 Qq 26, 37 18 Qq 27, 30, 31, 37 19 Qq 32, 33 20 Committee of Public Accounts: High Speed 2: Spring 2020 Update, 3rd Report of Session 2019–21, HC 84, 17 May 2020 21 Committee of Public Accounts; HS2 Summer 2021, 17th Report of Session 2021–22, HC 329, 22 Sept 2021 22 HS2 6-monthly report to Parliament: November 2023 12 HS2 and Euston add a further £8 billion to £10 billion to the cost of Phase 1. It said that construction inflation over the past three years had been 27%, with, for example, steel rising by 47%, rebar by 53%, and concrete by 48%.23