HS2 Ltd has disclosed significant financial repercussions from the scaling back of its high-speed rail project, attributed to decisions made by Rishi Sunak.
- The company wrote off £1.1bn due to the cancellation of the Birmingham to Manchester route.
- An additional £1bn in accounting charges was flagged, reducing expected future income.
- The government justified the cuts with a projected saving of £36bn.
- This decision has ignited controversy in regions initially set to benefit from the project.
HS2 Ltd has announced considerable financial losses amounting to £2.17bn following the government’s decision to scale back the high-speed rail project. Specifically, £1.1bn was written off due to costs incurred during phase two, connecting Birmingham to Manchester, which has been cancelled.
The annual report highlighted an additional £1bn in accounting charges that are set to reduce the project’s future income. This downgrade is expected to have substantial economic implications, particularly for Manchester, which was poised to gain significant benefits from the new rapid link.
The Conservative government’s decision to cancel this leg of the project was seen as a political misstep by many in Manchester. The HS2 project, initially intended to be a Y-shaped line linking London with Manchester and Yorkshire, has faced long delays and escalating costs, with its estimated price now at £71bn.
Rishi Sunak, citing a potential saving of £36bn, announced the cancellation during the Conservative party conference. He pledged that the funds would be redirected towards other rail projects, such as Network North, aimed at improving connectivity between northern cities.
The move has sparked backlash from regions like Manchester and Leeds, which were expected to reap significant benefits. Labour has made it clear that it will not reverse the decision, with Keir Starmer stating in January that it was ‘not possible’ to do so.
The National Audit Office has warned that this decision could lead to higher fares on the west coast mainline from London to Manchester, potentially reducing the number of seats by 17%. The cancellation means HS2 Ltd will no longer gain economic benefits from preparatory work worth £850m and a loss of £1.07bn from phase two, which includes design and other preliminary activities.
Furthermore, an additional £95m will be required for winding down the project, including remediation and ensuring safe work stoppage. It is noted that some taxpayer costs might be recouped if funds are redirected or if future initiatives revive the scrapped sections of the project.
HS2’s former chief executive, Mark Thurston, received £652,569 in his final year, including a £34,345 bonus, before resigning in 2023. Reflecting on the northern phase’s cancellation, an HS2 spokesperson stated: ‘We are required to declare spending on the project that HS2 Ltd is no longer expected to gain any economic benefit from.’ Shadow transport minister Helen Whately defended the decision, emphasising that the £36bn saved would better serve road and rail improvements across the country.
The substantial financial implications of scaling back the HS2 project underscore the complexities and contentious nature of infrastructure planning in the UK.
