HS2 productivity “lower than planned”

The latest statutory six-monthly report to parliament was delivered yesterday, 27^th October, by the newly-appointed secretary of state. Previously it was a job for specifically designed HS2 minister Andrew Stephenson, but he was moved to a new job in July and his old one has yet to be re-assigned to anyone else.

Mark Harper reported that the final delivery cost of phase one of HS2 (London-Birmingham) was likely to exceed its target cost of £40.3bn but remained within its overall budget of £44.6bn, which includes contingency held by HS2 Ltd and by the government. However, HS2’s contingency pot has come down from £5.3bn to £4bn over the past two years.

All figures are 2019 prices.

So far, £18.3bn has been spent on the project, with an additional £1bn set aside for land and property provisions; £10.6bn has been contracted but not yet spent. The remaining amount is not yet under contract.

HS2 Ltd has drawn £1.5bn of its £5.6bn delegated contingency for phase one, an increase of £200m in the last six months, leaving about £4bn.

HS2 Ltd is projecting around £1.9bn of what is referred to as “net additional cost pressures” on phase one, an increase of £200m since March.

Of this £1.9bn, the biggest component is £1.1bn (up £300m since the last update) “for potential additional main works civils costs stemming largely from lower than planned productivity and additional design costs”.

The transport secretary said that £800m of net savings and efficiencies had been identified within phase one. These principally consist of savings across the main works civils portfolio and savings in the acquisition and resale of land and property.

All figures are 2019 prices.

 The full report can be found at www.gov.uk

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