Sunak’s scrapping of HS2 will cost £100m and take up to three years, National Audit Office warns

The decision to scrap the second phase of HS2 will cost up to £100m and could take three years to complete, an official report has revealed.

Rishi Sunak’s decision to slim down the high-speed rail link also means the government has £592m worth of land and property on the route from Birmingham to Manchester it needs to sell, which the government spending watchdog has warned could take years and distort local housing markets.

The National Audit Office (NAO) laid bare the costs and complications of Mr Sunak’s decision to scrap phase 2, first revealed by The Independent last September .

The former PM used his conference speech that October to confirm plans to scrap HS2’s northern leg, sparking fury among local leaders, business chiefs and senior Tories, including David Cameron.

He said the decision would save £36bn, which Mr Sunak promised to redirect towards transport projects including fixing potholes and upgrading motorways.

Labour’s newly appointed transport secretary Louise Haigh said the NAO report showed how the Conservatives had “allowed the costs to spiral entirely out of control”.

She added: “We are reviewing this report’s findings, alongside the position we have inherited on HS2 and wider transport infrastructure and will set out next steps in due course.

“Transport is an essential part of our mission to rebuild Britain – and we’re committed to delivering infrastructure that works for the whole country.”

Among the damning findings, the NAO confirmed warnings that Mr Sunak’s decision to scrap the northern leg of the rail project could lead to lower capacity and potentially higher prices for trains between London and Manchester.

“Department for Transport (DfT) plans for HS2 trains to run from the phase 1 track onto the West Coast Main Line (WCML) in place of conventional trains, but the trains will have fewer seats than existing services unless changes are made to existing infrastructure and stations to accommodate longer trains,” it said.

It added that the HS2 trains using existing track north of Birmingham will not resolve capacity issues on that section and that the line could reach full capacity by the mid-2030s. The HS2 project was originally launched in 2009 with the intention of improving capacity on the west coast.

The NAO report said HS2 Ltd – the government-owned company responsible for building the railway – estimates there could be a 17 per cent reduction in capacity between Birmingham and Manchester, while the DfT believes the WCML could reach capacity by the mid-2030s.

The NAO said one option for the DfT could involve “managing demand” – for example by “incentivising people to travel at different times or to not travel by rail”.

But it warned: “This may constrain economic growth in the region over the long term and increase environmental costs.”

Another possibility could be improving or adding infrastructure but “this may be expensive and disruptive”, according to the watchdog.

As well as its findings about scrapping phase 2 of the project, the NAO said completing phase 1 of HS2, which runs from London to Birmingham, will cost up to £57bn, significantly higher than the current £44.6bn in allocated funding.

The watchdog said costs on the project have spiralled due to the budget being set too early and significant delays to obtaining planning permissions. The estimated costs for phase 1 of the project have shot up by £6bn since 2020, the NAO added.

HS2’s first phase of disposals will focus on 179 plots of agricultural land across 63 farms which it bought to complete the northern leg.

A spokesperson for HS2 Ltd said: “This is a project of unprecedented scale and complexity, and the cancellation of phase 2 has increased our cost challenges.

“We are now making sweeping reforms to control costs better and deliver the next stage of the programme – passing peak construction between London and the West Midlands, and starting the transition to a working railway.”