The cancellation of HS2’s northern leg has led to significant financial repercussions, with over £2bn written off by the government.
- HS2 Ltd’s annual report reveals a £2.2bn loss due to the cancelled northern leg, with over £1bn attributed to the lost economic benefit following the cancellation decision made in October 2023.
- A significant portion of these losses stem from the delayed and eventually cancelled West Midlands to Crewe section, leading to a £713m loss.
- Additional financial impacts include £137m lost on the Crewe to Manchester section and £153m on the Euston site, with a reduction in planned station platforms contributing to the write-off.
- Spending on design, enabling works, and other preparatory measures for the cancelled phase amounted to £1.1bn.
The UK’s HS2 project has suffered a significant financial setback following the government’s decision to cancel its northern leg, leading to a write-off exceeding £2bn, according to recently released accounts. HS2 Ltd, the organisation tasked with overseeing the high-speed rail project, reported a staggering £2.2bn loss connected to the abandoned northern section for the fiscal year ending 31 March. More than half of this amount, specifically £1bn, is attributed to the economic benefits that were expected before then Prime Minister Rishi Sunak announced the project’s cessation in October 2023.
A considerable portion of the financial loss, totalling £713m, arose from the section initially planned to run from the West Midlands to Crewe. This segment was first delayed in March 2023 and subsequently cancelled seven months later. The fiscal ramifications extend to a £137m deficit linked to the planned corridor from Crewe to Manchester. Meanwhile, the Euston site, with changes in development strategy and a reduction from a 10-platform to a six-platform design, accounts for an additional £153m in losses.
Further compounding the financial difficulties, HS2 Ltd has written off £1.1bn relating to comprehensive planning and preparatory works associated with the discontinued phase. This amount reflects expenditures on design processes, enabling works, and essential environmental actions. Moreover, £95m was expended on proceedings to withdraw from phase two, encompassing rectification works and the safe cessation of ongoing activities.
Jon Thompson, the executive chair of HS2 Ltd, expressed the challenges faced due to the government’s decision to cancel phase two and implement a new station at London Euston through private financing. He commented on the impact of economic conditions, such as inflation and global supply chain instability, which complicated the project’s delivery and contributed to the government’s eventual decision to curtail further phases of the high-speed railway.
The cancellation has also sparked procedural requirements, such as restoring previously affected sites, with the government’s spending watchdog estimating that closure activities could tally up to £100m. Despite the absence of major construction efforts on the project’s second phase, legal obligations mandate the sites’ restoration to their original state. HS2 Ltd acknowledged missing several key internal milestones yet anticipates the first operational services between Birmingham and Old Oak Common to commence in the late 2020s.
The HS2 project’s financial write-offs underscore the complexities and challenges faced in large-scale infrastructure planning and implementation.
