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The cost of building the London-to-Birmingham section of Britain’s HS2 high-speed rail has risen by a fifth in just four months, underscoring the challenges the government still faces in delivering the troubled project.
Last week, Chancellor Rishi Sunak committed to building the full southern section of the scheme, despite announcing it would no longer extend to Manchester. He claimed the move would save £36bn.
Around the same time, data released by the UK Department for Transport showed that the estimated upper limit of the cost of the London to Birmingham route in 2019 had risen sharply from £45 billion in June to £54 billion in October.
At today’s prices, that figure would rise to £68 billion, according to calculations by the Financial Times.
This compares with the original budget of just under £33bn for the entire Y-shaped railway, which was approved in early 2012 and will link London to Manchester and Leeds via Birmingham.
Still six years away from opening, the London to Birmingham railway has been plagued by budget overruns, delays and accusations of mismanagement in the decade since construction began.
The state-funded organization running the program is without a chief executive after Mark Thurston resigned in July after six years in the job.
Jon Thompson, the former chief executive of the Financial Reporting Council, has temporarily taken over as executive chairman while a replacement is searched.
“There are fundamental problems with governance,” said Professor Stephen Glaister, a transport economist at Imperial College London, who pointed to the extensive redaction of board meeting minutes and a “continued lack of transparency”.
The Department for Transport said in a statement that HS2 “is strengthening governance to further enhance the focus on cost control and strengthen government oversight”.
The i newspaper had previously informed the DfT of the revelations.
Last week, the government stripped HS2 of management responsibility for the redevelopment of Euston station, HS2’s London terminus and one of the most expensive parts of the remainder of the scheme.
Although homes and businesses have been demolished in preparation, there are still no detailed plans for the site.
Sunak said he would bring in private developers to build Canary Wharf-style developments around Euston, subsidizing the redevelopment of the station.
Government officials have said Euston’s redevelopment may not be completed without private investment, but the transport department insists HS2 will run to the station.
While soaring construction costs have led to budget increases, an internal report last year pointed to wider problems.
The report found that two of the four consortiums hired to oversee the engineering work “did not have sufficient capacity and capability to manage all the various obligations” to which they had been assigned.
Internal reports also criticized the project’s decision to record costs in 2019 prices. This means that no number reflects the amount that has been or is being paid.
A senior civil servant warned last week that Sunak’s decision to build only the first phase of HS2 and ax the line north of Birmingham undermined the economic case for the project.
Dame Bernadette Kelly, permanent secretary at the Department for Transport, wrote in a letter to the House of Commons Public Accounts Committee: “The total cost of stage one is estimated and based on the estimated total benefits ( project) to evaluate it, it would be a bad result.” Value for money. “
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