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Government set to apply brakes to HS2 phase 2 programmes

HS2 has been working with Government in a renewed attempt to cut costs from the over-budget project.

It is understood delays will primarily affect section 2a from Birmingham to Crewe and then the latter 2b phase on to Manchester.

This could impact on Kier’s £50m phase 2a highways and utility enabling works contract as well as Balfour Beatty’s £52m advanced environmental works package.

Also bidders on tenterhooks since September for news of the award of the £500m design and delivery partner role to oversee the construction of the route to Crewe, could now also face a longer wait.

Teams in the chase include: 2 Connect JV (AECOM /Costain Integrated Services);  AMS JV (Atkins /Mace Consult / SYSTRA); and Jacobs UK.

While a project delay is unlikely to save cash over the full course of the project, it will allow Government to spread the cost over a longer period of time, making it more affordable by reducing annual expenditure.

There may also be a rethink on parts of the Euston station terminus despite previous assurances that the line would run into London as planned.

The decision to push back timelines on the HS2 project is part of a squeeze on all capital spending across government reported to total £600bn over five years in response to high inflation knocking construction budgets sideways.

Last month HS2 chief executive Mark Thurston said the project had suffered a “significant” impact from inflation adding to the cost of building materials, labour, fuel and energy.

“We’re looking at the timing of the project, the phasing of the project, we’re looking at where we can use our supply chain to secure a lot of those things that are costing us more through inflation.”

In the last six-monthly update to Parliament in October transport secretary Mark Harper said Phase 2a (West Midlands to Crewe) remained on track to be delivered between 2030 and 2034. Land possessions and enabling works are advanced.

On phase 2b Western Leg (Crewe to Manchester), the delivery into service date range remains 2035 to 2041 as provided in the strategic outline business case (SOBC).

Last official forecast costs in October HS2 update to Parliament

Stephen Marcos Jones, CEO of the Association for Consultancy and Engineering (ACE), which represents the companies who design, deliver and manage our national infrastructure and built environment, this news is potentially a real body blow for the UK’s economic recovery.
“I think every sensible person knows that global events have driven inflationary pressures to record highs.

“But we have already spent significant sums on the design and delivery of this transformational major project.

“Scaling back ambitions at this stage will mean the economic and social benefits of HS2 for communities across the UK is further watered down – and major delays like this are actually going to cost more in the longer term.

In a nutshell, the delays announced today are, quite simply, an absolutely false economy.